DCIT Vs Uttar Bihar Gramin Bank (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT) Kolkata has dismissed the appeal filed by the Deputy Commissioner of Income Tax (DCIT) against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in the case of Uttar Bihar Gramin Bank for Assessment Year 2013-14. The dispute revolved around the bank’s claims for deductions under Section 36(1)(viia) and 36(1)(viii) of the Income Tax Act. The Assessing Officer (AO) had initially disallowed Rs. 10.7 crore under Section 36(1)(viia) and Rs. 6.79 crore under Section 36(1)(viii), leading to an increased taxable income for the bank. However, the CIT(A) ruled in favor of the assessee, directing the deletion of the disallowances. The revenue department challenged this decision, arguing that the rural branches cited in the deduction calculations included locations with populations exceeding 10,000 and that Kisan Credit Card (KCC) loans should not qualify as long-term finance under Section 36(1)(viii).
Upon review, ITAT Kolkata found no infirmity in the CIT(A) order. It observed that the assessee had submitted a verified list of rural branches based on the 2011 Census and RBI’s classification. Additionally, the tribunal noted that the AO failed to provide a counter-list of ineligible branches. Regarding KCC loans, the ITAT upheld the CIT(A)’s ruling that these loans qualify as long-term finance under Section 36(1)(viii), allowing the bank to claim the full deduction of Rs. 10 crore. Given the lack of substantive evidence against the CIT(A)’s decision, ITAT Kolkata dismissed the revenue’s appeal, reaffirming the bank’s eligibility for deductions.
