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G.Rama vs T.G.Seshagiri Rao(D) By Lrs on 7 July, 2008
G. Veeranna & Co. vs Income Tax Officer on 21 May, 2002

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Income Tax Appellate Tribunal - Bangalore
Mahalakshmi Cooperative Bank ... vs Assessee on 26 March, 2010
SP.107 & ITA.659/Bang/2010                                 Page - 1




         IN THE INCOME TAX APPELLATE TRIBUNAL
            BANGALORE BENCH 'A', BANGALORE

      BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT

                                  AND

         SMT. P. MADHAVI DEVI, JUDICIAL MEMBER

                       I.T.A No.659/Bang/2010
                     (Assessment Year : 2007-08)

                                  AND

                 Stay Application No.107/Bang/2010
                    (In I.T.A No.659/Bang/2010)
                    (Assessment Year : 2007-08)

M/s. Mahalakshmi Co-op Bank Ltd.,
I floor, "Shivakrupa", Maruthi Veethika,
Udupi 576 101                                      ..   Appellant

v.

Deputy Commissioner of Income-tax,
Circle -1, Udupi                                   ..   Respondent

Applicant by : Shri. R. Viayaraghavan, Advocate
Respondent by : Shri. G. V. Gopala Rao, Commissioner of Income-tax-I


                              ORDER

PER DR. O. K. NARAYANAN, VICE PRESIDENT :

This appeal is filed by the assessee co-operative bank. The relevant assessment year is 2007-08. The appeal is directed against6 the order of the Commissioner of Income-tax(A), Mangalore, dated 26.03.2010. The appeal arises out of the assessment completed u/s.143(3) of the IT Act, 1961.

SP.107 & ITA.659/Bang/2010 Page - 2

2. In the present case, the Assessing Officer has denied the assessee the benefit of carry forward and set off of business losses and unabsorbed depreciation of assessment years 2003-04, 2005-06 and 2006-07 aggregating to ` 2,42,63,927/- against the current year's net profit of ` 1,43,68,029/-, on the ground that the assessee had not filed returns of income for those assessment years within the time allowed u/s.139(1). He anyhow allowed set off of unabsorbed depreciation to the extent of ` 21,86,923/- and determined the taxable income at ` 1,21,81,110/-. This assessment order has been confirmed in first appeal. The assessee is aggrieved and therefore, the second appeal before us. The grounds raised by the assessee in this appeal read as below :

"1.1. The learned DCIT, Circle -1, Udupi has erred in passing the order in the manner passed by him and the learned Commissioner of Income-tax (A), Mangalore has erred in confirming the order passed by the DCIT, Circle-1, Udupi. The orders passed by the lower income tax authorities are bad in law and liable to be quashed.
2.1The learned DCIT, Circle-1, Udupi has erred in denying the set off of business losses in the process of computation of total income chargeable for the year under consideration and the learned Commissioner of Income-tax(A), Mangalore has erred in confirming the action of the learned DCIT, Circle-1, Udupi.
2.2On the facts and circumstances of the case and law applicable, the entire losses (including unabsorbed depreciation allowance) relating to AYs 2003-04, 2005-06 and 2006-07 amounting to ` 2,42,63,927/- is eligible for set off in computing the total income chargeable for the year under consideration.

3.1. The learned DCIT, Circle-1, Udupi has erred in levying interest u/s.234B amounting to ` 12,29,019/- and the learned Commissioner of Income-tax(A), Mangalore has erred in not adjudicating the issue of chargeability of interest u/s.234B. On the SP.107 & ITA.659/Bang/2010 Page - 3 facts and circumstances of the case, interest u/s.234B is not leviable. The appellant denies its liability to pay interest u/s.234B. 4.1In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that :

(i) The orders passed by the lower income tax authorities being bad in law is liable to be quashed :

(a) the set off and carry forward of brought forward losses totally amounting to ` 2,42,63,927/- be allowed or in the alternative and without prejudice, the lower authorities be directed to allow set off and carry forward of brought forward losses on condonation of delay in filing of income tax returns for AYs 2003- 04, 2005-06 and 2006-07 by the CBDT.

(b) interest levied u/s.234B be deleted."

3. We heard Shri. R. Vijayaraghavan, the learned counsel appearing for the assessee and Shri. G. V. Gopala Rao, the learned Commissioner of Income-tax appearing for the Revenue.

4. The assessee bank has filed a petition before the Central Board of Direct Taxes at New Delhi, praying for condonation of the delay caused in filing the returns for the assessment years 2003-04, 2005-06 and 2006-07 and consequently to allow the assessee to claim the carry forward of the loss for setting off against the profits of subsequent assessment years. The main grievance of the assessee bank is that the returns could be filed only after obtaining the audit report and the auditors are appointed by the State Cooperative Department on which the assessee bank had no role to play and the State Government had SP.107 & ITA.659/Bang/2010 Page - 4 appointed the auditors belatedly and the audit reports were delivered by the auditors to the assessee bank belatedly because of which the assessee bank had no option but to file the returns of income beyond the time prescribed u/s.139(1) of the Act.

5. The said petition is now pending adjudication before the Central Board of Direct Taxes. The Board has already interacted with the assessee bank through letters dt 6.11.2010, 15.11.2010 and also to the Chief Commissioner of Income-tax of Panaji, vide letter dated.12.11.2010. The matter is under the active consideration of the CBDT.

6. When the matter is subjudice before the Central Board of Direct Taxes having direct jurisdiction over the issue u/s.119(2)(b), it is not fair on our part to jump in between and adjudicate the matter. It will be an exercise premature.

7. The learned counsel appearing for the assessee has also produced before us a copy of the judgement of the Hon'ble Bombay High Court dated.20.09.2010 passed in the case of M/s. Bombay Mercantile Co-op Bank Ltd, in WP No.1544 of 2010. On the very same issue the Hon'ble Court has condoned the delay caused in filing SP.107 & ITA.659/Bang/2010 Page - 5 the returns and directed to extend the benefit of carry forward and set off of earlier losses to that assessee. The Hon'ble High Court has held that the delay was caused for reasons beyond the control of the assessee and for that matter the assessee should not be deprived of the benefits conferred on it by the statute.

8. In fact this decision of the Bombay High Court squarely applies to the assessee's case. But as we have already stated the matter is pending before the Central Board of Direct Taxes. We should await the outcome of that proceedings before the Central Board of Direct Taxes in accordance with law.

9. In the facts and circumstances of the case, we set aside the orders of the lower authorities and remit the matter back to the Assessing Officer to decide the issue afresh in the light of the order that may be passed by the CBDT and also in the light of the judgement of the Bombay High Court mentioned above. We make it clear that the Assessing Officer may wait for the order of the Central Board of Direct Taxes.

10. As the appeal itself has been disposed off, the stay application No.107/Bang/2010 filed by the assessee-bank has become infructuous.

SP.107 & ITA.659/Bang/2010 Page - 6

11. In result the appeal filed by the assessee is treated as allowed for statistical purposes and the stay application is dismissed as infructuous.

Order pronounced at the time of hearing in open court on Wednesday, the 29th December, 2010, at Bangalore.

           Sd/-                               Sd/-
      (P. MADHAVI DEVI)                (DR. O. K. NARAYANAN)
       JUDICIAL MEMBER                   VICE PRESIDENT