The Principal Commissioner Of Income Tax-3, Ludhiana v. M/S The Ludhiana Central Co-Operative Bank Ltd., Ludhiana

ITA-200-2018 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-200-2018 (O&M) Date of Decision: 8.10.2018 The Principal Commissioner of Income Tax-3, Ludhiana Versus ....Appellant. M/s The Ludhiana Central Co-Operative Bank Ltd., Ludhiana ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AVNEESH JHINGAN. PRESENT: Mr. Rajesh Katoch, Sr. Standing Counsel for the appellant. *** AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 21.9.2017 (Annexure-4) passed by the Income Tax AppellateTribunal, Chandigarh Benches 'A', Chandigarh (hereinafter referred to as“the Tribunal”) in ITA No. 749/CHD/2017, for the assessment year 2010-11, claiming the following substantial questions of law:- (i)Whether on the facts and in the circumstances ofthe case, the Hon'ble ITAT, Chandigarh isjustified in deleting the addition of ` 2,67,88,000/-made by the Assessing Officer on account ofinterest accrued on non-performing assets bythe case, the Hon'ble ITAT, Chandigarh isjustified in deleting the addition of ` 2,67,88,000/-made by the Assessing Officer on account ofinterest accrued on non-performing assets by -2- ignoring the decision of the Hon'ble SupremeCourt in the case of State Bank of Travancore 158ITR 102? (ii)Whether on the facts and in the circumstances ofthe case, the Hon'ble ITAT, Chandigarh is justifiedin deleting the addition of ` 2,67,88,000/- madeby the Assessing Officer on account of interestaccrued on non performing assets ignoring the factthat the scope of Section 43D of the Income TaxAct was broadened for co-operative society byFinance Bill 2017?the case, the Hon'ble ITAT, Chandigarh is justifiedin deleting the addition of ` 2,67,88,000/- madeby the Assessing Officer on account of interestaccrued on non performing assets ignoring the factthat the scope of Section 43D of the Income TaxAct was broadened for co-operative society byFinance Bill 2017? (iii)Whether on the facts and in the circumstances ofthe case, the Hon'ble ITAT, Chandigarh is justifiedin deleting the addition of ` 2,67,88,000/- made bythe Assessing Officer on account of interestaccrued on non performing assets by accepting theassessee's hybrid system of accounting one forsticky loans and another for non-sticky loanscontrary to the provisions of Section 145 of theIncome Tax Act?the case, the Hon'ble ITAT, Chandigarh is justifiedin deleting the addition of ` 2,67,88,000/- made bythe Assessing Officer on account of interestaccrued on non performing assets by accepting theassessee's hybrid system of accounting one forsticky loans and another for non-sticky loanscontrary to the provisions of Section 145 of theIncome Tax Act? 2.Put shortly, the facts necessary for adjudication of the instantappeal as narrated therein may be noticed. The assessee filed its return ofincome on 1.10.2010 declaring net income at ` 4,50,16,970/- claimingrefund of ` 2,25,840/- which was revised on the same date by declaringsame income but claiming refund of ` 2,90,420/- as the claim of TDS wasenhanced from ` 12,94,260/- to ` 13,58,260/-. The said return was again ITA-200-2018 2.Put shortly, the facts necessary for adjudication of the instantappeal as narrated therein may be noticed. The assessee filed its return ofincome on 1.10.2010 declaring net income at ` 4,50,16,970/- claimingrefund of ` 2,25,840/- which was revised on the same date by declaringsame income but claiming refund of ` 2,90,420/- as the claim of TDS wasenhanced from ` 12,94,260/- to ` 13,58,260/-. The said return was again ITA-200-2018 revised on 30.3.2012 by declaring total income at ` 4,45,26,050/- claimingrefund of ` 4,96,860/- as the TDS was shown at ` 14,10,992/-. Theassessment was completed under Section 143(3) of the Act by the AssessingOfficer vide order dated 15.2.2013 (Annexure-1) at an income of` 7,13,14,050/- as against the returned income of ` 4,45,26,050/- by makingan addition of ` 2,67,88,000/- on account of non-crediting of interest onNon-Performing Assets (NPA) in the Profit and Loss account by theassessee. The case of the assessee of the relevant year was reopened on theground that the assessee had not made any disallowance out of interestpayment to other cooperative societies under Section 40(a)(ia) of the Act asit had failed to deduct tax on such interest payment. The re-assessment wascompleted by the Assessing Officer under Section 143(3) read with Section147 of the Act vide order dated 25.7.2014 (Annexure-2) at ` 14,03,08,310/-.Feeling aggrieved, the assessee filed an appeal before the Commissioner ofIncome Tax (Appeals) [for brevity “the CIT(A)”]. The CIT (A) vide orderdated 24.2.2017 (Annexure-3) deleted the addition of ` 2,67,88,000/- madeby the Assessing Officer. Against the order, Annexure-3, the revenue filedan appeal before the Tribunal who vide order dated 21.9.2017 (Annexure-4)dismissed the appeal of the revenue upholding the deletion made by the CIT(A). Hence, the present appeal by the revenue. 3.It could not be disputed by the learned counsel for the revenuethat the similar issues came up before this Court in ITA-349-2017 (ThePrincipal Commissioner of Income Tax-3, Ludhiana v. The LudhianaCentral Co-Op. Bank Ltd., Ludhiana) and other connected appeals in thecase of the respondent-assessee as well and this Court vide order dated24.9.2018 dismissed the appeal filed by the revenue. ITA-200-2018 4.Accordingly, the present appeal is also dismissed.