Surat Peoples Co.Op.Bank Ltd.,, Surat vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No. 2455/AHD/2011 (Assessment Year: 2007-08)

The Surat Peoples Co- V/S The A.C.I.T., Circle-5, Surat operative Bank Ltd. "Vasudhara Bhavan", Timaliyawad Nanpura, Surat

(Appellant) (Respondent)

PAN: AAAAT2885P

Appellant by : Shri Kamlesh. N. Bhatt, A.R. Respondent by : Smt. Sonia Kumar, Sr. D.R.

(आदे श)/ORDER

Date of hearing : 24-04-2015 Date of Pronouncement : 30-04-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. This appeal filed by the Assessee is against the order of CIT(A)-IV, Surat dated 30.06.2011 for A.Y. 2007-08.

2. The relevant facts as culled out from the material on record are as under.

3. Assessee is a Co-operative Society engaged in the business of banking. Assessee filed its return of income for A.Y. 2007-08 on 24.10.2007 declaring total income of Rs. 17,70,31,490/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide 2 ITA No 2455/AHD/2011 . A.Y.2007-08 order dated 30.12.2009 and the total income was determined at Rs. 16,70,31,491/-. Subsequently, A.O noticed that loss on sale of depreciable assets ( electrical fittings) amounting to Rs. 10,23,600/- was allowed as an expenditure. Therefore order u/s. 154 of the Act was passed on 19.10.2010 and the loss on sale of depreciable assets was disallowed and the total income was revised at Rs. 16,80,55,154/-. Aggrieved by the order of A.O, Assessee carried the matter before ld. CIT(A) who confirmed the action of A.O. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following ground;-

1. In view of the facts and circumstances of the case, the learned CIT (A) erred in confirming the disallowance of loss on sale of depreciable assets i.e. electric fittings of Rs. 10,23,600/- and Your Appellant prays that the same be allowed as claimed by the appellant.

4. Subsequent to the passing of order u/s. 143(3), A.O had noticed that while passing the order u/s. 143(3) the loss on sale of electrical fittings amounting to Rs. 10,23,600/- was allowed as an expenditure and allowing the loss has resulted in understatement of income. He therefore by resorting to provisions u/s. 154, disallowed the loss on sale of assets. The action of A.O was confirmed by ld. CIT(A) by order dated 30.06.2011 by holding as under:-

4.I have gone through the facts. After introduction of concept of Block of assets, no write off of assets can be claimed as deduction for determination of income under the I.T. Act.

On the one hand the appellant claims deduction of depreciation on the same assets as they have not been excluded from the Block of assets and on the other it claims deduction of total value treating the write off as admissible deduction for Income-tax purposes also. This double deduction is not permitted. Assets lose their individuality once they become part of a Block of asset. Loss on write off of capital asset is not admissible deduction. Adjustments to the Block happen automatically when sale proceeds (in this case 3 ITA No 2455/AHD/2011 . A.Y.2007-08 insurance claim) will be reduced from the block. Wrong accounting of insurance claim and resulting excess income, if any, in subsequent year cannot justify wrong treatment in an earlier year. As far as this year is concerned, claim of loss on asset is inadmissible. The action of the A.O. is therefore upheld. This ground fails.

5. Aggrieved by the order of ld. CIT(A), Assessee is now in appeal before us. Before us, ld. A.R. reiterated the submission made before ld. CIT(A). The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A).

6. We have heard the rival submissions and perused the material on record. We find that while framing the assessment u/s. 143(3) loss of sale of assets was allowed by the A.O which was subsequently rectified by A.O by passing order u/s. 154 of the Act. We find that while upholding the order of A.O, CIT(A) has noted that after the introduction of concept of block of assets, no write off of assets can be claimed as deduction and has further noted that if the claim of deduction is allowed it would amount to double deduction in the form of depreciation and loss, which is not permissible. Before us, Assessee has not brought any material on record to controvert the findings of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Assessee is dismissed.

7. In the result, the appeal of Assessee is dismissed.

Order pronounced in Open Court on 30 - 04 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER