Case Law Details
ACIT Vs Dharmapuri District Central Co-operative Bank Ltd. (ITAT Chennai)
The material facts are that during assessment proceedings, the assessee’s claim of deduction u/s 36(1)(viia) was examined by Ld. AO. As per the statutory provisions, the assessee was entitled to claim deduction for an amount not exceeding 7.5% of total income and an amount not exceeding 10% of aggregate average advances made by the rural branches of the bank. The assessee claimed deduction of Rs.578.74 Lacs. However, in the revised computation as filed during the course of assessment proceedings, the assessee claimed deduction of Rs.1199.35 Lacs which has been extracted on page nos. 13 & 14 of assessment order dated 30.12.2010. The Ld. AO noted that the rural advances at Head Office amounted to Rs.1906.30 Lacs which could not be considered at par with rural branches while computing monthly average outstanding as prescribed under Rule 6ABA. After excluding these advances and after making certain other adjustments, Ld. AO computed the eligible deduction as Rs.946.77 Lacs and granted the same to the assessee.
During appellate proceedings, the assessee submitted that it was not having any business transactions at the head office and all such transactions were affected at branch level only. It was only for the purpose of management control, the primary agricultural cooperative societies advance functioning at village level were consolidated and shown as Head office account in the financial statements. Therefore, Ld. AO erred in classifying the same as Head office advances.
Upon careful consideration, the undisputed position that emerges is that the assessee does not make any such advances at Head Office level and all such transactions were affected at branch level only. It was only for the purpose of management control, the primary agricultural cooperative societies advance functioning at village level were consolidated and shown as Head office account in the financial statements. Therefore, as rightly held by Ld. CIT(A), the assessee would be eligible to claim the deduction on these advances only since these advances are otherwise eligible for deduction. The Ld. Sr. DR submitted that Ld. CIT(A), in its order dated 17.03.2016 pertaining to assessment framed u/s 143(3) r.w.s. 147, has restricted the deduction to the extent of Rs.7.36 Lacs and therefore, the ground should have been dismissed by Ld. CIT(A) as infructuous in subsequent order. However, we find that both the order emanates out of separate assessment proceedings. The issue in assessment framed u/s 143(3) is limited to adjudication of assessee’s eligibility to claim deduction on advances which have been classified as Head Office Advances. Therefore, this argument does not carry much weight.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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