Tumkur DCC Bank Limited , Tumkur V. Assistant Commissioner of Income Tax Circle-1 , Tumkur

ITA 01/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8070 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 01-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SMARAK SWAIN
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Depreciation; Bad and doubtful debts; Capital receipt; Reason to believe; Capital expenditure; Set aside
• Section: 133A; 37(1); 143(1); 80P; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI P.K GADALE, JUDICIAL MEMBER ITA NOS.01 TO 04/BANG/2019 ASSESSMENT YEAR : 2012-13 TO 2015-16 TUMKUR DCC BANK LTD., NO.44, HEAD OFFICE, CHURCH CIRCLE, NEAR POLICE STATION, TUMKUR 572 101. PAN AAAAD 2860 J. VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-(1, TUMKUR. APPELLANT RESPONDENT APPELLANT BY : SHRI S RAMASUBRAMANIAN, C.A RESPONDENT BY : SHRI SMARAK SWAIN, JCIT (DR) DATE OF HEARING : 25.04.2019 DATE OF PRONOUNCEMENT : 12.07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER ALL THESE FOUR APPEALS HAVE BEEN FILED BY THE ASSE SSEE AND THEY ARE DIRECTED AGAINST THE ORDERS PASSED BY LD C IT(A)-7, BENGALURU FOR ASSESSMENT YEARS 2012-13 TO 2015-16. SINCE COMMON ISSUES ARE URGED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER, FOR THE SAKE OF CONVENIENCE. ITA NOS.01 TO 04/BANG/2019 PAGE 2 OF 32 2. THE ASSESSEE IS A CO-OPERATIVE BANK REGISTER ED UNDER KARNATAKA CO-OPERATIVE SOCIETYS ACT AND IS CARRYIN G ON THE BUSINESS OF BANKING. 3. WE SHALL FIRST TAKE UP THE APPEAL FILED BY T HE ASSESSEE FOR ASSESSMENT YEAR 2014-15. THE GROUND NO.1 IS GENERA L IN NATURE. THE GROUND NO.2 RELATES TO THE ADDITION OF UN-RECON CILED AMOUNT OF SHARE APPLICATION ACCOUNT TITLED AS SHARE SUSPENSE ACCOUNT. THE FACTS ARE THAT THE BALANCE SHEET OF THE ASSESSEE DI SCLOSED A SUM OF RS.226.24 LAKHS UNDER THE HEAD SHARE SUSPENSE ACCOU NT, WHICH REPRESENTED THE SHARE APPLICATION MONEY COLLECTED B Y THE ASSESSEE. THE AO ASKED THE ASSESSEE TO FURNISH THE BREAK-UP D ETAILS OF THIS AMOUNT AND NOTICED THAT THERE WAS A DIFFERENCE OF R S.1,45,449/-. THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE AND H ENCE THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE SAME. 4. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. THERE SHOULD NOT BE ANY DISPUTE THAT THE INITIAL RE SPONSIBILITY TO PROVE THE CASH CREDITS LIES UPON THE ASSESSEE. THE ASSESSEE HAS COLLECTED SHARE APPLICATION MONEY FROM ITS CUSTOMER S. PENDING ALLOTMENT OF SHARES, IT IS KEPT IN SHARE SUSPENSE A CCOUNT. HENCE THE ASSESSEE SHOULD BE IN A POSITION TO FURNISH THE DETAILS THEREOF. ADMITTEDLY, THE ASSESSEE COULD NOT FURNISH THE DETA ILS TO THE TUNE OF RS.1,45,449/-, MEANING THEREBY, THE ASSESSEE HAS FA ILED TO OFFER ANY EXPLANATION WITH REGARD TO THIS CREDIT. HENCE, WE A RE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. ITA NOS.01 TO 04/BANG/2019 PAGE 3 OF 32 5. GROUND NO.3 RELATES TO THE DISALLOWANCE OF C ONTRIBUTION TO CO- OPERATIVE EDUCATION FUND. THE ASSESSEE APPROPRIATE D A SUM OF RS.15.68 LAKHS, BEING 2% OF THE PROFIT, TO CO-OPERA TIVE EDUCATION FUND AND IT WAS PAID TO KARNATAKA CO-OPERATIVE FEDE RATION LTD. THE ASSESSEE CLAIMED THE SAME AS DEDUCTION WITH THE CONTENTION THAT THE SAME IS PAID AS PER THE REQUIREMENT OF KAR NATAKA CO- OPERATIVE SOCIETIES ACT TOWARDS EDUCATION FUND. THE ASSESSEE PLACED ITS RELIANCE ON THE DECISION RENDERED BY HONBLE KA RNATAKA HIGH COURT IN THE CASE OF CIT VS. PANDAVAPURA SAHAKARA S AKKARE KHARKHANE (174 ITR 475) IN SUPPORT ITS CLAIM. HOWE VER, THE AO TOOK THE VIEW THAT THE CONTRIBUTION TO EDUCATION FU ND IS ONLY APPROPRIATION OF PROFIT AND THE SAME CANNOT BE DEDU CTED WHILE COMPUTING TOTAL INCOME. HE ALSO HELD THAT THE CONTR IBUTION SO MADE IS NOT WHOLLY RELATED TO THE BUSINESS OF THE A SSESSEE AND HENCE NOT ALLOWABLE U/S 37(1) OF THE ACT. BY TAKIN G SUPPORT OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF POONA ELECTRICITY SUPPLY COMPANY LTD VS. CIT (57 ITR 521) , THE AO OBSERVED THAT THE INCOME TAX IS CHARGED ON REAL INC OME. ACCORDINGLY HE DISALLOWED THE ABOVE SAID CLAIM OF T HE ASSESSEE. 6. THE LD CIT(A) NOTICED THAT THE HONBLE KARNA TAKA HAS RENDERED DECISION IN FAVOUR OF THE ASSESSEE IN THE CASE OF PANDAVAPURA SAHAKARA SAKKARE KHARKHANE (SUPRA) BY F OLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF POONA ELECTRICITY SUPPLY COMPANY (SUPRA). HOWEVER, THE H ONBLE SUPREME COURT HAS DISTINGUISHED THE ABOVE SAID DECISION IN A LATER JUDGEMENT RENDERED IN THE CASE OF VELLORE ELECTRICI TY CORPORATION LTD VS. CIT (1997)(227 ITR 557). SINCE THE DECISIO N RENDERED BY ITA NOS.01 TO 04/BANG/2019 PAGE 4 OF 32 HONBLE SUPREME COURT IN THE CASE OF POONA ELECTRIC ITY SUPPLY COMPANY (SUPRA) WAS REVERSED IN THE CASE OF VELLORE ELECTRICITY CORPORATION (SUPRA) BY HONBLE SUPREME COURT AND SI NCE THE HONBLE KARNATAKA HIGH COURT HAD FOLLOWED THE DECIS ION OF POONA ELECTRICITY SUPPLY COMPANY (SUPRA) IN RENDERING ITS DECISION IN THE CASE OF PANDAVAPURA SAHAKARA SAKKARE KHARKHANE (SUP RA), THE LD CIT(A) CHOSE TO FOLLOW THE DECISION RENDERED IN THE LATER DECISION OF SUPREME COURT IN THE CASE OF VELLORE ELECTRICITY CO RPORATION LTD. ACCORDINGLY HE CONFIRMED THE DISALLOWANCE MADE BY T HE AO. 7. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. THE LD A.R FAIRLY ADMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NOS.1532 & 1533/BANG/2016 DATED 31-01-2019 RELATING TO ASSESSM ENT YEARS 2009-10 AND 2010-11AND THE TRIBUNAL HAS DECIDED THI S ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE DECISION REND ERED BY HONBLE SUPREME COURT IN THE CASE OF VELLORE ELECTRIC CORPO RATION LTD (SURPA) AND THE DECISION RENDERED BY HONBLE RAJAST HAN HIGH COURT IN THE CASE OF JODHPUR CO-OPERATIVE MARKETING SOCIE TY (140 TAXMAN 541). HOWEVER, HE SUBMITTED THAT NEITHER THE AO NOR THE TRIBUNAL HAS EXAMINED THE ISSUE UNDER THE PRINCIPLE OF DIVER SION OF OVERRIDING TITLE. 8. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE CO-ORDINATE BENCH HAS ALREADY CONSIDERED AN IDENTIC AL ISSUE IN THE ASSESSEES OWN CASE IN AN EARLIER YEAR, REFERRED AB OVE AND HAS DECIDED THE SAME AGAINST THE ASSESSEE. CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE CONFIRM THE ORDE R PASSED BY LD ITA NOS.01 TO 04/BANG/2019 PAGE 5 OF 32 CIT(A) ON THIS ISSUE. THE LD A.R CONTENDED THAT TH E CLAIM OF THE ASSESSEE HAS NOT BEEN EXAMINED FROM THE ANGLE OF D IVERSION BY OVERRIDING TITLE. SINCE THE TRIBUNAL HAS FOLLOWED THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF VE LLORE ELECTRIC CORPORATION LTD, IN OUR VIEW, THE QUESTION OF EXAMI NING DIVERSION BY OVERRIDING TITLE DOES NOT ARISE. ACCORDINGLY WE RE JECT THIS GROUND OF THE ASSESSEE. 9. GROUND NO.4 RELATES TO THE DISALLOWANCE OF R S.1,93,915/- TREATING THE SAME AS CAPITAL EXPENDITURE. THE AO N OTICED THAT THE ASSESSEE HAS INCURRED EXPENSES ON CONSTRUCTION OF C OMPOUND WALL TO THE TUNE OF RS.1,93,915/- AND CLAIMED THE SAME A S REPAIRS & MAINTENANCE EXPENSES. THE AO HELD THE SAME AS CAP ITAL EXPENDITURE AND ACCORDINGLY DISALLOWED THE SAME. T HE LD CIT(A) CONFIRMED THE SAME BY OBSERVING THAT THE COMPOUND W ALL ENTAILS ENDURING BENEFIT TO THE ASSESSEE. 10. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSE D THE RECORD. BEFORE US, NO MATERIAL WAS PLACED TO CONTRADICT THE DECISION TAKEN BY LD CIT(A). THERE SHOULD NOT BE ANY DISPUTE THAT THE COMPOUND WALL IS A PERMANENT STRUCTURE GIVING ENDURING BENEF IT TO THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF THE SAM E HOLDING IT AS CAPITAL EXPENDITURE. ITA NOS.01 TO 04/BANG/2019 PAGE 6 OF 32 11. GROUND NO.5 RELATES TO THE ADDITION OF AMOUNT RELATING TO REVERSAL OF NPA PROVISIONS. DURING THE YEAR RELE VANT TO AY 2012- 13, THE ASSESSEE REVERSED PART OF NPA PROVISION CRE ATED IN EARLIER YEARS AND CREDITED THE SAME TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE AMOUNT SO CREDITED WAS RS.526.47 LAK HS. THE ASSESSEE REDUCED THE SAME FROM NET PROFIT WHILE COM PUTING TOTAL INCOME, ADMITTEDLY, WITH THE CONTENTION THAT THE SA ME IS NOT TAXABLE. 12. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE NPA PROVISION REVERSED DURING THE PREVIOUS YEAR WAS RELATED TO A SST. YEAR 2006-07 AND EARLIER YEARS. IT WAS SUBMITTED THAT THE ASSES SEE WAS NOT SUBJECTED TO TAX UP TO ASST. YEAR 2006-07 IN VIEW O F AVAILABILITY OF DEDUCTION U/S 80P OF THE ACT. ACCORDINGLY IT WAS S UBMITTED THAT THE ABOVE SAID NPA PROVISION CANNOT BE CONSIDERED A S ALLOWED AS DEDUCTION WHILE COMPUTING TOTAL INCOME OF THE ASSES SEE AND HENCE THE PROVISION REVERSED AND CREDITED TO PROFIT AND L OSS ACCOUNT OF THE YEAR UNDER CONSIDERATION SHOULD NOT BE TAXED. IT W AS FURTHER SUBMITTED THAT THE INCOME-TAX ACT HAS ENACTED SPECI FIC PROVISIONS WHENEVER THE LEGISLATURE WANTED TO TAX PARTICULAR R ECEIPTS. IN THIS REGARD REFERENCE WAS MADE TO THE PROVISION OF SEC. 41(4) WHEREIN THE TAXABILITY OF INCOME REALIZED OUT OF BAD DEBTS ALLO WED IN THE EARLIER YEARS IS PROVIDED. SIMILARLY PROVISIONS OF SEC. 41 (4A) PROVIDED FOR TAXABILITY OF SPECIAL RESERVE CREATED U/S 36(1)(VII I) IN THE YEAR IN WHICH THE RESERVES ARE WITHDRAWN. SIMILARLY THE ASS ESSEE REFERRED TO THE PROVISIONS OF SEC. 32A RELATING TO INVESTMENT A LLOWANCE WHICH CONTAINED PROVISIONS TO TAX THE AMOUNT OF DEDUCTION ALLOWED IN THE EARLIER YEARS, IF THE ASSESSEE FAILED TO FULFILL TH E CONDITIONS IN THE ITA NOS.01 TO 04/BANG/2019 PAGE 7 OF 32 SUBSEQUENT YEAR. IT WAS FURTHER SUBMITTED THAT THE PROVISIONS OF SEC. 41(1) WILL BE ATTRACTED ONLY WHEN THERE IS REM ISSION OR CESSATION OF TRADING LIABILITY. ACCORDINGLY, IT WAS CONTENDED THAT THE AMOUNT OF NPA PROVISION REVERSED DURING THE YEAR UN DER CONSIDERATION CANNOT BE BROUGHT TO TAX. 13. THE AO OBSERVED THAT WHOLE OF THE ASSESSEES IN COME HAS BEEN EXEMPTED U/S 80P OF THE ACT AND HENCE THE QUES TION AS TO WHETHER THE DEDUCTION WAS CLAIMED OR NOT CLAIMED DO ES NOT ARISE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, HE TOOK TH E VIEW THAT REVERSAL OF NPA PROVISION IS BENEFIT RECEIVED BY TH E ASSESSEE FROM BUSINESS AND HENCE TAXABLE U/S 28(IV) OF THE ACT. ACCORDINGLY, HE REJECTED THE CLAIM OF THE ASSESSEE AND ASSESSED THE NPA PROVISION REVERSAL OF 526.47 LAKHS. THE LD CIT(A) ALSO CONFI RMED THE VIEW TAKEN BY THE AO BY OBSERVING THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P OF THE ACT IN THE EARLIER YEARS, WHEREIN THE PROVISION FOR BAD AND DOUBTFUL DEBTS WAS CLAIMED. SINCE THE CLAIM SO MADE BY THE ASSESSEE TO BE IN EXCESS, IT HAS REV ERSED THE SAME AND HENCE THE AMOUNT SO REVERSED SHOULD BE TAXED. 14. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THAT THE REVERSAL OF NPA PROVISION CANNOT BE CONSID ERED AS CESSATION OF LIABILITY WITHIN THE MEANING OF SEC.41 (1) OF THE ACT. HE FURTHER SUBMITTED THAT THE PROVISIONS OF SEC.41(1) CANNOT BE APPLIED TO THIS REVERSAL OF NPA PROVISION, SINCE THE ASSESS EE DID NOT GET ANY BENEFIT BY WAY OF REMISSION OR CESSATION OF LIABILI TY. HE SUBMITTED THAT THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD (1999)(236 ITR 518) THA T THE LIABILITY ITA NOS.01 TO 04/BANG/2019 PAGE 8 OF 32 SHOWN AS CEASED BY PASSING AN UNILATERAL TRANSFER E NTRY IN THE BOOKS OF ACCOUNTS WILL NOT BE TAXABLE U/S 41(1), SI NCE NO BENEFIT WAS OBTAINED BY THE ASSESSEE. THE HONBLE APEX COU RT HELD THAT THE PROVISIONS OF SEC.41(1) SHALL BE ATTRACTED ONLY IF ANY BENEFIT IS OBTAINED ON ACCOUNT OF REMISSION OR CESSATION OF LI ABILITY. THE HONBLE APEX COURT HAS EXPLAINED THAT THE BENEFIT S HOULD RESULT IN RECEIPT OF CASH OR CASH EQUIVALENT. THE LD A.R SUB MITTED THAT THE ASSESSEE HAS ONLY REVERSED THE EXCESS PROVISION FOR NPA AND IT IS A CASE OF UNILATERAL REVERSAL OF LIABILITY WITHOUT OB TAINING ANY BENEFIT, I.E., NO CASH OR CASH EQUIVALENT WAS RECEIVED BY TH E ASSESSEE. HENCE THE PROVISIONS OF SEC.41(1) CANNOT BE APPLIED HERE. 15. THE LD A.R SUBMITTED THAT THE AO HAS INVOKED TH E PROVISIONS OF SEC.28(IV) OF THE ACT TO TAX THE IMPUGNED AMOUNT . HOWEVER, THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF COMMI SSIONER VS. MAHINDRA AND MAHINDRA LTD (2018)(404 ITR 1) THAT TH E BENEFIT OR AMENITY REFERRED IN SEC.28(IV) SHOULD RESULT IN CAS H RECEIPT BY THE ASSESSEE. SINCE THE REVERSAL OF NPA PROVISION WILL NOT RESULT IN CASH RECEIPT, THE PROVISIONS SEC. 28(IV) WILL ALSO NOT B E APPLICABLE. 16. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT LIABLE TO TAX UP TO THE ASSESSMENT YEAR 2006-07, SINCE IT WAS ENTITL ED TO DEDUCTION U/S 80P OF THE ACT. HENCE THE REVERSAL OF PROVISIO N RELATING TO AY 2006-07 AND EARLIER YEARS SHOULD NOT BE BROUGHT TO TAX. 17. WE HEARD LD D.R AND PERUSED THE RECORD. BE FORE PROCEEDING TO ADDRESS THIS ISSUE, WE SHOULD UNDERSTAND THE NAT URE OF PROVISION FOR NPA CREATED IN THE BOOKS OF ACCOUNT S. THE ASSESSEE ITA NOS.01 TO 04/BANG/2019 PAGE 9 OF 32 IS ENGAGED IN BANKING BUSINESS AND HENCE LENDING OF MONEY IS ITS PRIME BUSINESS. THE AMOUNTS LENT TO VARIOUS BORROWE RS CONSTITUTE ASSETS IN THE HANDS OF THE ASSESSEE. IN THE CASE OF MONEY LENDING BUSINESS, THE POSSIBILITY OF 100% RECOVERY OF LOANS IS NORMALLY NOT POSSIBLE, I.E., DEFAULT BY SOME OF THE BORROWERS IS NORMAL IN MONEY LENDING ACTIVITY. HENCE THE BANKS AND FINANCIAL CO MPANIES USUALLY REVIEW THEIR DEBT PORTFOLIO BY EXAMINING THE QUAL ITY OF EACH OF THE DEBT. IF THE RECOVERABILITY OF SOME OF THE DEBTS I S IN DOUBT, USUALLY A PROVISION IS CREATED IN THE BOOKS, WHICH IS TITLED AS PROVISION FOR BAD AND DOUBTFUL DEBTS, BY PASSING A JOURNAL ENTRY IN THE BOOKS OF ACCOUNTS. THE DEBIT AMOUNT IS CLAIMED AS EXPENDITUR E IN THE PROFIT AND LOSS ACCOUNT AND THE CREDIT AMOUNT IS SHOWN EIT HER AS LIABILITIES & PROVISIONS IN THE LIABILITY SIDE OF BALANCE SHEET OR BY REDUCING THE SAME FROM THE AGGREGATE AMOUNT OF DEB TORS IN THE ASSET SIDE OF BALANCE SHEET. 18. IT IS PERTINENT TO NOTE THAT THE REVIEWING OF DEBTORS BALANCES IS CARRIED OUT EVERY YEAR. A DEBTOR ACCO UNT, WHICH WAS CONSIDERED TO BE DOUBTFUL OF RECOVERY IN ONE YEAR, MAY TURN OUT TO BE A GOOD ACCOUNT IN THE SUBSEQUENT YEARS. IN THAT KIND OF SITUATION, THE PROVISION CREATED EARLIER SHALL BE R EVERSED IN THE SUBSEQUENT YEAR. ONE OF THE METHODS OF REVERSAL IS BY CREDITING THE AMOUNT TO THE CREDIT OF PROFIT AND LOSS ACCOUNT AND EQUAL AMOUNT IS REDUCED FROM THE PROVISION FOR BAD AND DOUBTFUL DEBTS. THE ISSUE BEFORE US IS ABOUT THE AMOUNT SO CREDITED TO THE PROFIT AND LOSS ACCOUNT BY REDUCING THE AMOUNT OF PROVISION FO R BAD AND DOUBTFUL DEBTS. THE CONTENTION OF THE ASSESSEE IS THAT THE SAME IS ITA NOS.01 TO 04/BANG/2019 PAGE 10 OF 32 NOT TAXABLE; WHILE THE CASE OF THE TAX AUTHORITIES IS THAT THE SAME IS TAXABLE. 19. FROM THE FOREGOING DISCUSSIONS, IT CAN BE NOTICED THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS IS IN THE NA TURE OF PROVISION MADE FOR DIMINUTION IN THE VALUE OF ASSETS. IT IS AKIN TO DEPRECIATION, WHICH IS ALSO PROVIDED FOR DIMINUTION IN THE VALUE OF ASSETS. THESE KINDS OF PROVISIONS ARE CATEGORISED AS NON-CASH EXPENDITURE, MEANING THEREBY, THOUGH THESE ITEMS A RE CLAIMED AS EXPENDITURE, THEY DO NOT INVOLVE CASH OUTGO AS IN T HE CASE OF OTHER EXPENSES. AMOUNT CLAIMED AS EXPENDITURE TOWARDS P ROVISION IS NORMALLY REDUCED FROM THE VALUE OF CORRESPONDING AS SET. SOMETIMES, THE SAME IS DISCLOSED AS PROVISION IN TH E LIABILITY SIDE OF BALANCE SHEET INSTEAD OF REDUCING THE SAME FROM THE VALUE OF CONCERNED ASSET. IT IS PERTINENT TO NOTE THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS AND DEPRECIATION ARE ACCOUNTED F OR IN THE BOOKS OF ACCOUNTS UNDER ACCOUNTING PRINCIPLE OF PRUDENCE , I.E., TO PROVIDE FOR KNOWN LOSSES. 20. WE HAVE NOTICED EARLIER THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS CAN BE DISCLOSED IN THE BALANCE SHE ET EITHER AS A LIABILITY IN THE LIABILITY SIDE OF BALANCE SHEET OR IT MAY BE REDUCED FROM THE CORRESPONDING ASSET ACCOUNT IN THE ASSET SIDE OF BALANCE SHEET. IT IS ONLY TWO DIFFERENT WAYS OF PRESENTATI ON. WHATEVER MAY BE THE METHOD OF PRESENTATION IN THE BALANCE SHEET, IT IS A PROVISION CREATED FOR DIMINUTION IN THE VALUE OF ASSETS. A LIABILITY UNDER ACCOUNTING PRINCIPLES REPRESENTS AMOUNTS REQUIRED T O BE REPAID. FOR EXAMPLE, IF TRADING GOODS ARE PURCHASED ON CRED IT TERMS, THE ITA NOS.01 TO 04/BANG/2019 PAGE 11 OF 32 AMOUNT PAYABLE TOWARDS THE SAME IS SHOWN AS CREDIT OR. SINCE THE BUSINESS CONCERN IS REQUIRED TO PAY TO THE CRED ITOR TOWARDS PURCHASE OF GOODS, THE SAME REPRESENTS LIABILITY. IF ANY ASSET IS PURCHASED ON CREDIT TERMS OR BY USING LOAN TAKEN FR OM FINANCIAL INSTITUTIONS, THEN THE AMOUNT PAYABLE TOWARDS THE P URCHASE OF ASSET OR TOWARDS REPAYMENT OF LOAN REPRESENTS LIABI LITY. WE HAVE NOTICED THAT THE PROVISION FOR BAD AND DOUBTFUL DE BTS REPRESENTS A PROVISION MADE TO TAKE CARE OF DIMINUTION IN THE VA LUE OF ASSETS. IT DOES NOT REPRESENT ANY AMOUNT LIABLE TO BE REPAID T O ANY THIRD PERSON. HENCE, MERELY BECAUSE IT IS SHOWN AS AN I TEM OF LIABILITY IN THE LIABILITY SIDE OF BALANCE SHEET, IT CANNOT A CQUIRE THE CHARACTER OF LIABILITY. 21. WE MAY ILLUSTRATE THIS PRINCIPLE BY GIVING CERTAIN EXAMPLES. EXAMPLE 1 :- IN THE FIRST YEAR, THE PROVISION FOR NPA IS CREATE D FOR RS.1000/-. IN THE SECOND YEAR, ON REVIEW OF THE AS SETS, IT WAS NOTICED THAT THE PROVISION FOR NPA REQUIRED IS RS.1 200/-. THERE ARE TWO METHODS OF ACCOUNTING THIS KIND OF SI TUATION. THE ASSESSEE MAY DEBIT PROFIT AND LOSS ACCOUNT WITH INCREMENTAL AMOUNT OF RS.200/- ONLY (OR) THE ASSESS EE MAY REVERSE RS,1000/- CREATED IN THE EARLIER YEAR BY CR EDITING THE SAME TO THE PROFIT AND LOSS ACCOUNT AND DEBIT THE P ROFIT AND LOSS ACCOUNT WITH RS.1200/- WITH THE NEW PROVISION. THE NET EFFECT OF THIS SECOND METHOD OF ACCOUNTING ALSO THE SAME, I.E., IT RESULTS IN NET DEBIT OF RS.200/- TO PROFIT AND L OSS ACCOUNT. ITA NOS.01 TO 04/BANG/2019 PAGE 12 OF 32 EXAMPLE 2 :- IN THE FIRST YEAR, THE PROVISION FOR NPA IS CREATED FOR RS.1000/-. IN THE SECOND YEAR, ON REVIEW OF THE AS SETS, IT WAS NOTICED THAT THE PROVISION FOR NPA REQUIRED IS RS.8 00/-. THERE ARE TWO METHODS OF ACCOUNTING THIS KIND OF SI TUATION. THE ASSESSEE MAY CREDIT PROFIT AND LOSS ACCOUNT WIT H THE AMOUNT OF RS.200/- ONLY, BEING THE NET AMOUNT OF FA LL IN NPA PROVISION (OR) THE ASSESSEE MAY REVERSE RS.1000/- CREATED IN THE EARLIER YEAR BY CREDITING THE SAME TO THE PR OFIT AND LOSS ACCOUNT AND DEBIT THE PROFIT AND LOSS ACCOUNT WITH RS.800/- WITH THE NEW PROVISION. THE NET EFFECT OF THE SECO ND METHOD OF ACCOUNTING IS THE SAME, I.E., IT RESULTS IN NET CREDIT OF RS.200/- TO PROFIT AND LOSS ACCOUNT. IN THE INSTANT CASE, THE ASSESSEE HAS CREDITED THE PROFIT AND LOSS ACCOUNT WITH THE NET AMOUNT OF REDUCTION IN THE PRO VISION. IT CAN BE NOTICED THAT THESE ARE MERE ACCOUNTING ADJUSTMEN TS MADE WHILE COMPUTING PROFIT U/S 28 OF THE ACT. THE ASSESSEE H AD ARGUED THAT THERE IS NO PROVISION TO BRING THESE KINDS OF CREDI T TO TAXATION. IT MAY BE NOTICED THAT THERE IS NO SPECIFIC PROVISION IN THE INCOME TAX ACT FOR DEDUCTING PURCHASE OF INVENTORIES. IT IS ALLOWED AS DEDUCTION U/S 28 OF THE ACT, IN THE ABSENCE OF ANY SPECIFIC PROVISION. SIMILAR IS THE CASE WITH THESE KINDS OF PROVISIONS ALSO. THE ASSESSEE MAY ARGUE THAT THERE ARE SPECIFIC PROV ISIONS LIKE SEC.36(1)(VII) AND 36(1)(VIIA). THE ASSESSEE HAS CL AIMED THAT THE REVERSAL OF NPA PERTAINS TO AY 2006-07 AND EARLIER YEARS. ADMITTEDLY, DURING THOSE YEARS, THE ENTIRE INCOME O F THE ASSESSEE WAS DEDUCTIBLE U/S 80P OF THE ACT. HENCE GENERAL A CCOUNTING ITA NOS.01 TO 04/BANG/2019 PAGE 13 OF 32 PRINCIPLES GOVERNED THE ASSESSEE AND THERE WAS NO O CCASION TO INVOKE SPECIFIC PROVISIONS. 22. ACCORDINGLY, WHEN THE ASSESSEE REVERSES A PART OF PROVISION FOR BAD AND DOUBTFUL DEBTS, IT ACTUALLY DENOTES THA T THERE IS IMPROVEMENT OF ASSET QUALITY AND IT DOES NOT RESULT IN CESSATION OF ANY LIABILITY. SIMILARLY, WHEN THE ASSESSEE REVERS ES ENTIRE PROVISION MADE AND CREATES A FRESH PROVISION, IT REPRESENTS D IFFERENT METHOD OF PRESENTING THEM IN THE ACCOUNTS. HENCE IT CANNO T BE SAID TO BE A CASE OF CESSATION OF LIABILITY, AS RIGHTLY OBSERVED BY THE ASSESSING OFFICER. 23. WE HAVE ALREADY NOTICED THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS REPRESENT NON-CASH EXPENDITURE AND F URTHER IT IS PROVIDED FOR IN THE BOOKS OF ACCOUNTS UNDER THE PRI NCIPLES OF PRUDENCE TO ACCOUNT FOR THE DIMINUTION IN THE VALUE OF ASSETS. AS NOTICED EARLIER, ANY REVERSAL OF THE PROVISION WOUL D SIGNIFY ONLY IMPROVEMENT IN THE QUALITY OF ASSET. SINCE THE AMOU NT OF PROVISION INITIALLY PROVIDED FOR IS NO LONGER IS REQUIRED, TH E SAME IS REVERSED AND CREDITED TO THE PROFIT AND LOSS ACCOUNT. HENCE THE QUESTION OF OBTAINING ANY BENEFIT DOES NOT ARISE WHEN THE PROVI SION FOR BAD AND DOUBTFUL DEBTS INITIALLY CREATED IS REVERSED. IT IS NOTHING BUT AN ACCOUNTING ADJUSTMENT MADE ON ACCOUNT OF FLUCTUATIO N IN THE VALUE OF ASSETS. HENCE THE PROVISIONS OF SEC.41(1) SHAL L NOT APPLY TO IT AT ALL. BEFORE US, THE LD A.R CONTENDED THAT THE PROV ISIONS OF SEC.41(1) SHALL APPLY ONLY IF THE BENEFIT IS DERIVED BY WAY O F CASH OR CASH EQUIVALENT. ACCORDINGLY, HE CONTENDED THAT THE REVE RSAL OF PROVISION DID NOT GIVE CASH OR CASH BENEFIT TO THE ASSESSEE A ND HENCE THE ITA NOS.01 TO 04/BANG/2019 PAGE 14 OF 32 PROVISIONS OF SEC.41(1) SHALL NOT APPLY TO THE REVE RSAL OF NPA PROVISION. ON THE SAME REASONING, THE LD A.R CONTE NDED THAT THE PROVISIONS OF SEC.28(IV) SHALL ALSO NOT APPLY. 24. WE HAVE ALREADY EXPRESSED THE VIEW THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS AND REVERSAL THEREOF REPRESENT A CCOUNTING ADJUSTMENTS TO TAKE CARE OF FLUCTUATION IN THE VALU E OF ASSETS. THE QUESTION OF RECEIPT OF BENEFIT BY WAY OF CASH OR CA SH EQUIVALENT MAY ARISE ONLY IF THE CONCERNED EXPENDITURE WAS INCURRE D BY WAY OF CASH. HERE IS A CASE WHERE THERE ASSESSEE IS REDUC ING THE VALUE OF ITS ASSET UNDER ACCOUNTING PRINCIPLES OF PRUDENCE. THE CASH OUTGO INITIALLY WAS FOR ACQUIRING AN ASSET AND NOT FOR TH E PURPOSE OF INCURRING EXPENDITURE. HENCE THE QUESTION OF APPLYI NG PROVISIONS OF SEC.41(1) AND SEC.28(IV) OF THE ACT DOES NOT ARISE HERE. 25. BEFORE THE TAX AUTHORITIES, THE ASSESSEE HAS CONTENDED THAT THE REVERSAL OF NPA PROVISION DOES NOT RESULT IN ACCRUA L OF ANY INCOME. TO SUPPORT THIS CONTENTION, IT WAS SUBMITTED THAT T HE LEGISLATURE SHOULD CONTAIN SPECIFIC PROVISION TO BRING SUCH KIN D OF RECEIPTS TO TAX. REFERENCE OF TAX AUTHORITIES WAS INVITED TO T HE PROVISIONS OF SEC.41(4), 41(4A), 32A, ETC. FOR THE REASONS DISCU SSED IN THE EARLIER PARAGRAPHS, WE ARE OF THE VIEW THAT THE CONTENTIONS OF THE ASSESSEE ARE MISPLACED. 26. THE ASSESSEE HAS SUBMITTED THAT THE NPA PROV ISION REVERSED DURING THE YEAR UNDER CONSIDERATION REPRESENTS PROV ISION CREATED IN AY 2006-07 AND EARLIER. IT WAS ALSO CONTENDED THAT ITS INCOME WAS NOT TAXED UP TO ASSESSMENT YEAR 2006-07 AND HENCE T HE REVERSAL OF ITA NOS.01 TO 04/BANG/2019 PAGE 15 OF 32 PROVISION SHALL NOT LIABLE TO TAX. THE FACT REMAIN S THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT AND I T HAS CLAIMED THE SAME IN AY 2006-07 AND EARLIER YEARS. THERE SHOULD NOT BE ANY DISPUTE THAT THE DEDUCTION U/S 80P IS ALLOWED FROM THE GROSS TOTAL INCOME. PROFITS OF BUSINESS COMPUTED UNDER THE PRO VISIONS OF THE ACT ARE INCLUDED IN THE GROSS TOTAL INCOME AND THER EAFTER ONLY THE DEDUCTION U/S 80P OF THE ACT WAS ALLOWED TO THE ASS ESSEE. THE PROFIT OF BUSINESS WAS COMPUTED BY THE ASSESSEE AFT ER DEDUCTING THE PROVISION FOR NPA. HENCE, WE ARE OF THE VIEW THA T THE ASSESSEE WAS NOT CORRECT IN CONTENDING THAT THE DEDUCTION TO WARDS PROVISION FOR NPA CANNOT BE CONSIDERED TO HAVE BEEN ALLOWED, SINCE ITS INCOME WAS NOT SUBJECTED TO TAX. ACCORDINGLY, WE ARE OF T HE VIEW THAT THE TAX AUTHORITIES ARE JUSTIFIED IN REJECTING THIS CON TENTION OF THE ASSESSEE. 27. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THE REVERSAL OF NPA PROVISION CANNOT BE EXCLUDED WHILE COMPUTING PROFITS AND GAINS OF BUSINESS UNDER INCOME TAX ACT. ACCORDINGLY WE REJECT THIS GROUND OF APPEAL OF THE ASSESSEE AND CO NFIRM THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE FOR THE REASONS D ISCUSSED ABOVE. 28. GROUND NO.6 RELATES TO THE DEDUCTION CLAIMED U/S 36(1)(VIIA) AND 36(1)(VII) OF THE ACT. THE ASSESSEE HAS RAISED THREE SUB- GROUNDS BELOW THIS GROUND. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT GROUND NO.6.1 IS ACADEMIC IN NATURE. ACCORDINGLY IT DOES NOT REQUIRE ADJUDICATION. THE GROUND NO.6.2 R ELATES TO THE RESTRICTION OF DEDUCTION CLAIMED U/S 36(1)(VIIA) TO THE ACTUAL AMOUNT OF PROVISION DEBITED TO THE PROFIT AND LOSS ACCOUNT . THE ASSESSEE ITA NOS.01 TO 04/BANG/2019 PAGE 16 OF 32 CLAIMED A SUM OF RS.505.77 LAKHS, WHICH CONSISTED O F 10% OF AVERAGE RURAL ADVANCES OF RS.443.60 LAKHS AND PROVI SION FOR DOUBTFUL DEBTS OF RS.62.17 LAKHS, AS DEDUCTION U/S 36(1)(VIIA) OF THE ACT. THE AO NOTICED THAT THE ASSESSEE DID NOT CREA TE ANY PROVISION IN THE BOOKS OF ACCOUNT AS PER THE REQUIREMENT OF P ROVISIONS OF SEC.36(1)(VIIA) AND HENCE HE DISALLOWED THE CLAIM O F THE ASSESSEE. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAD CREAT ED A PROVISION OF RS.19,71,906/- AS SPECIAL RESERVE. THE ASSESSEE SU BMITTED THAT THE ABOVE SAID AMOUNT MAY BE TREATED AS THE PROVISI ON MADE U/S 36(1)(VIIA) OF THE ACT. THE AO, HOWEVER, HELD THAT THE SAME CANNOT BE TREATED AS A PROVISION MADE AS PER THE REQUIREME NTS OF SEC.36(1)(VIIA) OF THE ACT. THE LD CIT(A) ALSO CO NFIRMED THE SAME. 29. THE LD A.R FAIRLY CONCEDED THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE CO-ORDINATE BENCH IN TH E CASE OF SYNDICATE BANK VS. DCIT (2013)(26 ITR (TRIB.) 501)( ITAT BANG.). WE NOTICE THAT THE CO-ORDINATE BENCH HAS EXPRESSED THE VIEW THAT THE DEDUCTION U/S 36(1)(VIIA) SHOULD BE RESTRICTED TO THE AMOUNT OF PROVISION ACTUALLY MADE IN THE BOOKS OF ACCOUNT. S INCE THE ASSESSEE DID NOT MAKE ANY PROVISION IN THE BOOKS OF ACCOUNTS FOR BAD AND DOUBTFUL DEBTS, FOLLOWING THE ABOVE SAID D ECISION OF CO- ORDINATE BENCH, WE REJECT THIS GROUND. 30. IN GROUND NO.3, THE ASSESSEE IS CONTENDING T HAT THE DEDUCTION U/S 36(1)(VIIA) OF THE ACT SHOULD HAVE BEEN ALLOWED FOR FURTHER SUM OF RS.4,51,982/-. THE LD A.R EXPLAINED THAT THE AS SESSEE HAD CREATED PROVISION OF RS.19,71,906/- AS SPECIAL RESE RVE. THE ASSESSEE CLAIMED THE SAME U/S 36(1)(VIII), WHICH WA S ALLOWED TO THE ITA NOS.01 TO 04/BANG/2019 PAGE 17 OF 32 EXTENT OF RS.15,19,924/-. THE ASSESSEE CONTENDS TH AT THE REMAINING AMOUNT OF RS.4,51,982/- (19,17,906/- (-) 15,19,924/-) SHOULD BE CONSIDERED AS PROVISION MADE U/S 36(1)(VI IA) OF THE ACT AND THE SAME SHOULD BE ALLOWED. 31. WE HAVE NOTICED THAT THE AO HAS ALREADY TAK EN THE VIEW THAT THE PROVISION CREATED U/S 36(1)(VIII) IS TOWARDS SP ECIAL RESERVE AND THE SAME CANNOT BE CONSIDERED FOR DEDUCTION U/S 36( 1)(VIIA) OF THE ACT, WHICH IS A DEDUCTION ALLOWABLE FOR CREATION OF PROVISION FOR DOUBTFUL DEBTS. WE AGREE WITH THE REASONING GIVEN BY THE AO. A PROVISION CREATED FOR DIMINUTION IN THE VALUE OF AS SETS CANNOT BE EQUATED WITH THE RESERVE CREATED FOR SPECIFIC PURPO SES. ACCORDINGLY, WE REJECT THIS GROUND OF THE ASSESSEE. 32. WE SHALL NOW TAKE UP THE APPEAL FILED FOR AY 2013-14. THE FIRST ISSUE RELATES TO THE CLAIM OF NON-TAXABILITY OF REVERSAL OF NPA PROVISIONS OF RS.200.00 LAKHS CREDITED TO THE PROF IT AND LOSS ACCOUNT. THE ASSESSEE ADVANCED IDENTICAL CONTENTIO NS BEFORE THE AO, I.E., IT PERTAINED TO THE PROVISION CREATED FOR AY 2006-07 AND EARLIER YEARS; THERE IS NO SPECIFIC PROVISION UNDER THE ACT TO TAX THE SAME, ETC. WE HAVE CONSIDERED AN IDENTICAL ISSUE I N AY 2012-13 SUPRA AND REJECTED THE GROUND OF THE ASSESSEE IN TH E EARLIER PARAGRAPHS. FOLLOWING THE SAME, WE REJECT THIS GRO UND OF THE ASSESSEE. 33. THE NEXT GROUND RELATES TO THE DEDUCTION CL AIMED U/S 36(1)(VIIA) AND 36(1)(VIII) OF THE ACT. THE ASSESS EE CLAIMED DEDUCTION TO THE EXTENT PERMISSIBLE UNDER THE ABOVE SAID PROV ISIONS. THE AO ITA NOS.01 TO 04/BANG/2019 PAGE 18 OF 32 NOTICED THAT THE ASSESSEE HAS CREATED PROVISION IN THE BOOKS OF ACCOUNT FOR A LESSER AMOUNT. HE TOOK THE VIEW THAT THE DEDUCTION UNDER THE ABOVE SAID SECTIONS IS ALLOWABLE ONLY TO THE EXTENT OF PROVISION CREATED IN THE BOOKS OF ACCOUNT. ACCORDI NGLY HE DISALLOWED EXCESS CLAIM. THE LD CIT(A) ALSO CONFIR MED THE SAME. 34. THE LD A.R, AS IN THE CASE OF AY 2012-13, F AIRLY CONCEDED THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESS EE BY THE CO- ORDINATE BENCH IN THE CASE OF SYNDICATE BANK VS. DC IT (2013)(26 ITR (TRIB.) 501)(ITAT BANG.). ACCORDINGLY, FOLLO WING THE ABOVE SAID DECISION OF CO-ORDINATE BENCH, WE REJECT THIS GROUN D. 35. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE A SSESSEE FOR AY 2014-15. THE FIRST ISSUE URGED IN GROUND NO.2 RELA TES TO THE DEDUCTION CLAIMED TOWARDS CONTRIBUTION TO CO-OPERAT IVE EDUCATION FUND. AN IDENTICAL ISSUE WAS CONSIDERED BY US IN A Y 2012-13 IN THE EARLIER PARAGRAPHS, WHEREIN WE HAVE FOLLOWED TH E DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NOS.1532 & 1533/BANG/2016 DATED 31-01-2019 RELATING TO ASSESSMENT YEARS 2009-10 AND 2010-11 AND REJECTED T HIS GROUND OF THE ASSESSEE. WE HAVE NOTICED THAT THE CO-ORDINATE BENCH HAD DECIDED THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWIN G THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF VE LLORE ELECTRIC CORPORATION LTD (SURPA) AND THE DECISION RENDERED B Y HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JODHPUR CO-OPER ATIVE MARKETING SOCIETY (140 TAXMAN 541). FOLLOWING THE SAME, WE REJECT THIS GROUND OF THE ASSESSEE. ITA NOS.01 TO 04/BANG/2019 PAGE 19 OF 32 36. THE NEXT ISSUE URGED IN GROUND NO.3 RELATES TO THE REVERSAL OF EXCESS PROVISION MADE TOWARDS RURAL ADVANCES OF RS. 300.00 LAKHS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE D EBITED THE PROFIT AND LOSS ACCOUNT TOWARDS PROVISION FOR RURAL ADVANC ES TO THE TUNE OF RS.673.12 LAKHS. THE ASSESSEE ALSO CLAIMED TO H AVE REVERSED THE PROVISION FOR RURAL ADVANCES CREATED IN THE YEAR RE LEVANT TO AY 2013-14 TO THE TUNE OF RS.300.00 LAKHS AND CREDITED THE SAME TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE CLAIMED THE AMOUNT SO CREDITED TO THE P & L ACCOUNT AS NOT TAXABLE, AS TH ERE IS NO SPECIFIC SECTION IN THE ACT TO BRING SUCH KIND OF ITEMS TO T AX. REFERENCE WAS MADE TO THE PROVISIONS OF SEC.41(4), 41(4A) ETC., A S IN AY 2012-13. THE AO, HOWEVER, TOOK THE VIEW THAT THE ASSESSEE HA S CREATED ONLY NET PROVISION OF RS.373.12 LAKHS (673.12 LESS 300.0 0) AND ACCORDINGLY, THE NET AMOUNT CLAIMED WAS ONLY RS.373 .12 LAKHS. ACCORDINGLY HE REJECTED THE CLAIM FOR EXEMPTION OF RS.300 LAKHS. THE LD CIT(A) ALSO CONFIRMED THE SAME. 37. WE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. WE HAVE DEALT WITH THE MANNER OF CREATION OF PROVI SION FOR BAD AND DOUBTFUL DEBTS IN AY 2012-13 IN THE EARLIER PARAGR APHS. WE HAVE ALSO OBSERVED THAT THE REVERSAL OF PROVISION FOR NP A REPRESENTS IMPROVEMENT IN THE QUALITY OF ASSETS. BY GIVING TW O EXAMPLES, WE HAVE ALSO EXPLAINED AS TO HOW THIS PROVISION CAN BE DEPICTED IN THE BOOKS OF ACCOUNTS. IN THE INSTANT YEAR, THE ASSESS EE HAS DEBITED THE PROFIT AND LOSS ACCOUNT WITH RS.673.12 LAKHS AN D CREDITED THE SAME WITH RS.300.00 LAKHS. THE OTHER WAY OF PRESEN TATION IS TO DEBIT THE PROFIT AND LOSS ACCOUNT WITH THE NET DEBI T OF RS.373.12 LAKHS. THUS, WE NOTICE THAT THE ASSESSEE HAS CLAIM ED EXEMPTION OF ITA NOS.01 TO 04/BANG/2019 PAGE 20 OF 32 RS.300 LAKHS BY FOLLOWING FIRST METHOD OF PRESENTAT ION. WE HAVE NOTICED THAT THE PROVISION FOR BAD AND DOUBTFUL DEB TS REPRESENT PROVISION CREATED FOR DIMINUTION IN THE VALUE OF AS SETS UNDER ACCOUNTING PRINCIPLE OF PRUDENCE. EVEN THOUGH TH E ASSESSEE HAS FOLLOWED THE FIRST METHOD OF PRESENTATION, I.E., DE BITING THE PROFIT AND LOSS ACCOUNT WITH RS.673.12 LAKHS AND CREDITING THE SAME WITH RS.300 LAKHS, THE NET EFFECT OF THE SAME IS THAT TH E ASSET OF THE ASSESSEE HAS DETERIORATED BY A FURTHER SUM OF RS.37 3.12 LAKHS DURING THE YEAR UNDER CONSIDERATION. HENCE WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE NET AMOUNT OF PROVISION DEBITED TO THE PROFIT AND LOSS ACCOUNT WA S ONLY RS.373.12 LAKHS. IF THE CONTENTION OF THE ASSESSEE IS ACCEPTE D, THEN IT WOULD LEAD TO ILLOGICAL SITUATION. THE ASSESSEE MAY CLAI M X AMOUNT IN THE FIRST YEAR. IN THE NEXT YEAR, THE ASSESSEE MAY DEBIT THE PROFIT AND LOSS ACCOUNT WITH THE GROSS AMOUNT OF NPA PROVI SION AND CREDIT THE SAME WITH THE X AMOUNT BY REVERSING EARLIER P ROVISION, INSTEAD OF PROVIDING FOR INCREMENTAL AMOUNT. IN THIS PROCE SS, THE ASSESSEE WOULD CLAIM DEDUCTION IN THE FIRST YEAR AND CLAIM E XEMPTION OF THE VERY SAME AMOUNT IN THE SECOND YEAR. AS RIGHTLY PO INTED OUT BY THE AO, THE SAME WOULD LEAD TO DOUBLE DEDUCTION. ACCOR DINGLY WE ARE OF THE VIEW THAT THE ASSESSEE WAS NOT JUSTIFIED IN CLAIMING EXEMPTION OF RS.300.00 LAKHS, AS THE SAME REPRESENT S ONLY ACCOUNTING ADJUSTMENTS. ACCORDINGLY WE REJECT THE CLAIM OF THE ASSESSEE AND CONFIRM THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 38. THE NEXT ISSUE URGED IN GROUND NO.4 RELATES TO THE CLAIM OF EXEMPTION OF REVERSAL OF NPA PROVISION OF RS.39.92 LAKHS RELATING TO AY 2006-07 AND EARLIER YEARS. IDENTICAL ISSUE WAS CONSIDERED BY US ITA NOS.01 TO 04/BANG/2019 PAGE 21 OF 32 IN AY 2012-13 AND 2013-14 AND WE HAVE REJECTED THE CLAIM OF THE ASSESSEE. FOR THE VERY SAME REASONS, WE REJECT THI S GROUND OF THE ASSESSEE ALSO. 39. WE SHALL NOW TAKE UP THE APPEAL FILED FOR AY 2015-16. 40. THE ASSESSE IS CHALLENGING THE VALIDITY OF REOP ENING OF THE ASST. THE FACTS RELATING TO THIS ISSUE ARE STATED IN BRIEF:- THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASST. YEAR 2015-16 ON 24/9/2015 WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE REVENUE CARRIED OUT A SURVEY OPERATION U/S 133A OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 28/12/2016. IT WAS NOT ICED THAT THE ASSESSEE HAS CREDITED A SUM OF RS.952.57 LAKHS ON A CCOUNT OF REVERSAL OF NPA PROVISION IN THE FINANCIAL YEAR REL EVANT TO ASST. YEAR 2015-16. IT WAS SEEN THAT THE ASSESSEE HAS REDUCED THAT AMOUNT FROM THE NET PROFIT WHILE COMPUTING THE TOTAL INCOM E. SIMILARLY THE ASSESSEE HAS REDUCED A SUM OF RS.174.28 LAKHS, WHIC H WAS CREDITED TO PROFIT AND LOSS ACCOUNT RELATING TO REVERSAL OF GENERAL RESERVE. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDU CTION OF 18.44 LAKHS FROM THE NET PROFIT ON ACCOUNT OF PAYMENT OF COOPERATIVE EDUCATION FUND. IT WAS NOTICED THAT ALL THESE DEDU CTIONS HAVE BEEN DISALLOWED IN THE EARLIER YEARS WHILE COMPLETING TH E ASSESSMENTS OF THOSE YEARS. ACCORDINGLY THE AO REOPENED THE ASSES SMENT, AS THE ABOVE SAID DEDUCTIONS HAVE LED TO ESCAPEMENTS OF IN COME. BEFORE THE LD CIT(A), THE ASSESSEE HAS CHALLENGED THE REOP ENING OF ASSESSMENT, BUT DID NOT GET FAVOURABLE ORDER FROM HIM. ITA NOS.01 TO 04/BANG/2019 PAGE 22 OF 32 41. THE LD AR SUBMITTED THAT THE AO HAS ISSUED NOTI CE U/S 148 OF THE ACT ON 19/1/2017 AND HE HAS REOPENED THE ASSESS MENT IN ORDER TO CARRY OUT FURTHER INVESTIGATION IN THE MAT TERS AND TO VERIFY THE DETAILS. ACCORDINGLY THE LD AR SUBMITTED THAT REOPENING IS NOT VALID. IN THIS REGARD HE PLACED RELIANCE ON THE FOL LOWING CASE LAW. A) CM MAHADEVA VS. CIT, 404 ITR 747 (KAR) B) NIVE TRADING LTD., VS. UOI, 375 ITR 308 (BOM) 42. WE HAVE HEARD LD DR AND PERUSED THE RECORD. WE HAVE NOTICED THAT THE RETURN OF INCOME FILED BY THE ASSE SSEE WAS PROCESSED U/S 143(1) OF THE ACT. FROM THE REASONS RECORDED BY THE AO, WHICH IS EXTRACTED IN THE ASSESSMENT ORDER, WE NOTICED THAT THE ASSESSEE HAS CLAIMED CERTAIN DEDUCTIONS WHICH WERE NOT ALLOWED IN THE EARLIER YEARS. DURING THE YEAR UNDER CONSIDERA TION, THE RETURN OF INCOME OF THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT AND HENCE THERE WAS NO OCCASION FOR THE AO TO EXAMINE T HESE CLAIMS OF THE ASSESSEE. ACCORDINGLY THE AO TOOK THE VIEW THA T THE DEDUCTIONS SO CLAIMED BY THE ASSESSEE ARE NOT ALLOWABLE AND TH E SAME HAS LED HIM TO FORM THE VIEW THAT THERE IS ESCAPEMENT OF IN COME WHICH IS CHARGEABLE TO TAX FOR ASST. YEAR 2015-06. WE NOTICE D THAT THE LD CIT(A) HAS TAKEN SUPPORT OF THE DECISION RENDERED B Y HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKER PVT. LTD., 291 ITR 500 AND HAS HELD THAT THE AO HAS REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME. WE FURTHER NOTICED THAT THE LD CIT(A) HAS TAKEN SUPPORT OF DECISION RENDERED BY HO NBLE HIGH COURT OF KARNATAKA IN THE CASE OF RINCO CHAKARAVAR THY (2012) 20 TAXMANN.COM 609 AND ALSO VARIOUS OTHER DECISIONS. ACCORDINGLY HE HAS CONFIRMED THE VALIDITY OF REOPENING OF ASSES SMENT. IN OUR ITA NOS.01 TO 04/BANG/2019 PAGE 23 OF 32 VIEW ALSO THE AO HAS GIVEN PROPER REASONS FOR REOPE NING OF ASSESSMENT AND HENCE WE DO NOT FIND ANY INFIRMITY I N THE ORDER PASSED BY THE LD CIT(A) ON THIS ISSUE. 43. THE NEXT ISSUE RELATES TO DISALLOWANCE OF CONTR IBUTION MADE TO COOPERATIVE EDUCATION FUND. 44. AN IDENTICAL ISSUE WAS CONSIDERED BY US IN AY 2 012-13 IN THE EARLIER PARAGRAPHS, WHEREIN WE HAVE FOLLOWED THE DE CISION RENDERED BY THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NOS.1532 & 1533/BANG/2016 DATED 31-01-2019 RELATING TO ASSESSMENT YEARS 2009-10 AND 2010-11 AND REJECTED T HIS GROUND OF THE ASSESSEE. WE HAVE NOTICED THAT THE CO-ORDINATE BENCH HAD DECIDED THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWIN G THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF VE LLORE ELECTRIC CORPORATION LTD (SURPA) AND THE DECISION RENDERED B Y HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JODHPUR CO-OPER ATIVE MARKETING SOCIETY (140 TAXMAN 541). FOLLOWING THE SAME, WE REJECT THIS GROUND OF THE ASSESSEE. 45. THE NEXT ISSUE RELATES TO ADDITION RELATING TO REVERSAL OF EXCESS PROVISION OF NPA MADE IN THE EARLIER YEARS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CREDITED THE P ROFIT AND LOSS ACCOUNT WITH RS.952.57 LAKHS AS RELATING TO REVERSA L OF EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE EA RLIER YEAR. THE BREAKUP OF THE ABOVE SAID AMOUNT WAS EXPLAINED AS U NDER BY ASSESSEE. ITA NOS.01 TO 04/BANG/2019 PAGE 24 OF 32 PROVISION FOR BAD AND DOUBTFUL DEBTS (RURAL AND URBAN) 8,37,33,081 (AS PER BALANCE SHEET AS ON 31.3.2013) PROFIT APPROPRIATION OF 2013-14 MADE TOWARDS BAD 1,15,23,941 AND DOUBT DEBTS (COPY OF RESOLUTION DATED 15/12/ 2014 --------------------- (IS ENCLOSED) TOTAL 9,52,57,022 ---------------------- WITH REGARD TO THE AMOUNT OF RS.115.23 LAKHS REFERR ED IN THE TABLE ABOVE, THE AO ACCEPTED THE CONTENTIONS OF THE ASSES SEE. HENCE THE DISPUTE IS RELATED TO RS.837.33 LAKHS. 46. THE AO NOTICED THAT, OUT OF 837.33 LAKHS REFERR ED ABOVE, A SUM OF RS.575.24 LAKHS REPRESENTED PROVISIONS CREAT ED DURING THE YEARS 2006-07 TO 2008-09 BY DEBITING PROFIT AND LOS S ACCOUNT. WHILE COMPUTING THE TOTAL INCOME OF THOSE YEARS, TH E SAME WAS ADDED BACK TO INCOME OF THE ASSESSEE AND SOME OTHER FIGURE WAS CLAIMED AS DEDUCTION IN THOSE YEARS. HENCE, THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS RELATING TO REVERSA L OF EXCESS PROVISION. HOWEVER, THE ASSESSEE DID NOT FURNISH T HE DETAILS. ACCORDINGLY THE AO TOOK THE VIEW THAT IT MAY NOT BE POSSIBLE FOR HIM TO VERIFY CLAIM OF THE ASSESSEE WITHOUT EXAMINING THE DETAILS THAT WERE CALLED FOR BY HIM IN ORDER TO VERIFY WHETHER THESE PROVISIONS WAS MADE AS PER SEC. 36(1)(VIIA) OF THE ACT. ACCOR DINGLY, THE AO DISALLOWED THE CLAIM OF RS.575.24 LAKHS. WITH REGA RD TO THE BALANCE AMOUNT OF 262.08 LAKHS OUT OF 837.33 LAKHS, THE ASS ESSEE CLAIMED THAT THE ABOVE SAID AMOUNT REPRESENTED PROVISION FO R BAD AND DOUBTFUL DEBTS CREATED PRIOR TO 2006-07. IT WAS SU BMITTED THAT THE ASSESSEE WAS NOT LIABLE TO PAY TAX IN VIEW OF PROVI SIONS OF SEC. 80P OF THE ACT IN THOSE YEARS HENCE REVERSAL OF NPA PRO VISION PERTAINING TO THOSE YEARS SHOULD NOT BE SUBJECTED TO TAX. THE AO NOTICED THAT ITA NOS.01 TO 04/BANG/2019 PAGE 25 OF 32 SIMILAR CLAIM MADE BY THE ASSESSEE WAS REJECTED IN ASST. YEAR 2012- 13 AND 2013-14. ACCORDINGLY, FOLLOWING THE DECISIO N TAKEN IN THOSE YEARS, HE REJECTED THE CLAIM FOR DEDUCTION OF RS.26 2.08 LAKHS ALSO. 47. THE LD CIT(A) CONFIRMED THE ORDER PASSED BY AO ON THIS ISSUE AND HENCE THE ASSESSEE IS CHALLENGING THE SAID DECI SION OF CIT(A). 48. WE HEARD THE PARTIES AND PERUSED THE RECORD. W E HAVE CONSIDERED AN IDENTICAL ISSUE IN ASST. YEAR 2014-15 AND THE SAME HAS BEEN DEALT IN PARAGRAPH 36 TO 38 (SUPRA). FOLL OWING THE DECISION SO TAKEN, WE CONFIRM THE ORDER PASSED BY T HE LD CIT(A) ON THIS ISSUE. 49. THE NEXT ISSUE RELATES TO DISALLOWANCE OF RS.11 .42 LAKHS MADE BY THE AO IN THE ABSENCE OF PROVISION MADE FOR CLAI MING DEDUCTION U/S 36(1)(VIIA) OF THE ACT. THE LD AR SUBMITTED TH AT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN THE EARLIER YE ARS AND ACCORDINGLY WE REJECT THE SAME. 50. THE NEXT ISSUE RELATES TO ADDITION OF RS.174.28 LAKHS BEING THE AMOUNT CREDITED TO PROFIT AND LOSS ACCOUNT FORM THE GENERAL RESERVE. THE FACTS RELATING TO THE SAME ARE STATED IN BRIEF. THE AO NOTICED THAT THE ASSESSEE HAS REDUCED FOLLOWING AMO UNTS FROM THE NET PROFIT WHILE COMPUTING TOTAL INCOME FOR AY 2015 -16 CLAIMING THAT THESE AMOUNTS WERE TRANSFERRED FROM GENERAL RE SERVE:- ITA NOS.01 TO 04/BANG/2019 PAGE 26 OF 32 FINANCIAL ASSISTANCE FOR COMPUTERISATION FROM APEX BANK - 67,68,105 (A) AMOUNT APPROPRIATED IN 2005-06 FOR COMPUTERISATION - 1,00,00,000 (B) SALE PROCEEDS OF VEHICLE - 6,60,000 ----------------- 1,74,28,105 ============= THE ASSESSEE CLAIMED BEFORE THE AO THAT THESE AMOUN TS ARE NOT TAXABLE. 51. WITH REGARD TO THE AMOUNT OF RS.67,68,105/-, THE ASSESSEE SUBMITTED THAT IT HAD RECEIVED FINANCIAL ASSISTANCE FROM KARNATAKA STATE CO-OPERATIVE BANK FROM TIME TO TIME FOR COMPU TERISATION OF THE BANK. THE AMOUNT SO RECEIVED WAS CREDITED IN T HE LEDGER ACCOUNT TITLED AS COMPUTER ASSISTANCE FROM APEX BA NK. IT WAS SUBMITTED THAT THE UN-UTILIZED AMOUNT OF RS.67,68,1 05/- WAS TRANSFERRED TO GENERAL RESERVE ON 20-07-2013 AND IT WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT DURING THE Y EAR UNDER CONSIDERATION. THE AO ASKED THE ASSESSEE TO FURNIS H DETAILS AND PROOF FOR CLAIM THAT FINANCIAL ASSISTANCE WAS RECEI VED FROM APEX BANK, I.E., KARNATAKA STATE CO-OPERATIVE BANK FROM TIME TO TIME. THE ASSESSEE, HOWEVER, PRODUCED A LETTER DATED 31.1 2.2002 AND ON EXAMINATION OF THE SAME, THE AO NOTICED THAT THE AS SESSEE IS REQUIRED TO USE THE FUNDS WITHIN SIX MONTHS FROM TH E DATE OF SANCTION AND FURTHER, THE ASSISTANCE CAN BE USED ON LY FOR THE PURPOSES FOR WHICH IT WAS SANCTIONED. THE AO ALSO NOTICED THAT THE ASSESSEE HAS NOT REDUCED THE VALUE OF ASSETS WI TH THE AMOUNT OF ASSISTANCE RECEIVED WHILE CLAIMING DEPRECIATION, WH ICH WAS IN ITA NOS.01 TO 04/BANG/2019 PAGE 27 OF 32 CONTRAVENTION OF SEC.43(1) OF THE ACT. BEFORE THE AO, THE ASSESSEE CLAIMED THAT THE FINANCIAL ASSISTANCE RECEIVED BY T HE ASSESSEE IS CAPITAL IN NATURE. HOWEVER, THE AO HELD THAT THE S AME IS TAXABLE IN THIS YEAR, SINCE THE ASSESSEE DID NOT OFFER THE FIN ANCIAL ASSISTANCE IN THE YEAR OF RECEIPT NOR DID IT REDUCE THE SAME FROM THE VALUE OF ASSETS. ACCORDINGLY HE ASSESSED THE ABOVE SAID AMO UNT OF RS.67.68 LAKHS AS INCOME OF THE ASSESSEE. THE LD CIT(A) AL SO CONFIRMED THE SAME. 52. WE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. ADMITTEDLY, THE ASSESSEE HAS RECEIVED FINANCIAL ASS ISTANCE FROM KARNATAKA STATE CO-OPERATIVE BANK FOR THE PURPOSE O F COMPUTERIZATION. ACCORDING TO THE AO, THE ASSESSEE CAN USE THE FINANCIAL ASSISTANCE ONLY FOR THE PURPOSE OF COMPUT ERISATION. SINCE THE ASSISTANCE WAS RECEIVED FOR ACQUIRING ASSETS, T HE SAME SHOULD HAVE BEEN REDUCED FROM THE COST OF ASSET FOR THE PU RPOSE OF CLAIMING DEPRECIATION AS PER SEC. 43(1) OF THE ACT. HOWEVER, THE ASSESSEE HAS FAIRLY ADMITTED THAT IT DID NOT REDUCE THE AMOUNT OF FINANCIAL ASSISTANCE FROM THE VALUE OF ASSETS, MEAN ING THEREBY, THE ASSESSEE HAS CLAIMED HIGHER AMOUNT OF DEPRECIATION. FURTHER THE ASSESSEE ALSO COULD NOT FURNISH DETAILS AND PROOF O F FINANCIAL ASSISTANCE RECEIVED EXCEPT FURNISHING COPY OF A LET TER. UNDER THESE SET OF FACTS, THE AO HAS HELD THAT THE ABOVE SAID A MOUNT OF RS.67.68 LAKHS IS LIABLE FOR TAXATION. 53. WE FIND OURSELVES IN AGREEMENT WITH THE TAX AUTHORITIES. THOUGH THE ASSESSEE CLAIMS THAT THE FINANCIAL ASSIS TANCE RECEIVED IS A CAPITAL RECEIPT, YET IT COULD NOT FURNISH THE DET AILS AND PROOFS ITA NOS.01 TO 04/BANG/2019 PAGE 28 OF 32 THEREOF. EVEN IF IT IS CONSIDERED TO BE CAPITAL RE CEIPT, THE PROVISIONS OF SEC.43(1) REQUIRES THAT THE SAME IS REQUIRED TO BE REDUCED FROM THE COST OF ASSET FOR THE PURPOSE OF CLAIMING DEPRE CIATION, IN WHICH CASE, THE CAPITAL RECEIPT IS AUTOMATICALLY CONVERTE D INTO REVENUE RECEIPT IN THE FORM OF REDUCED AMOUNT OF DEPRECIATI ON. ADMITTEDLY, THE ASSESSEE HAS FAILED TO REDUCE THE FINANCIAL ASS ISTANCE FROM THE COST OF ASSET. IN THE ABSENCE OF DETAILS, IT WILL BE DIFFICULT FOR THE AO TO IDENTIFY THE ASSESSMENT YEARS IN WHICH HIGHER AM OUNT OF DEPRECIATION WERE CLAIMED. HENCE REMEDIAL ACTION C OULD NOT BE TAKEN BY HIM AT THIS STAGE. UNDER THESE SET OF FAC TS, THE AO HAD NO OTHER OPTION BUT TO ASSESS THIS AMOUNT AS INCOME OF THE ASSESSEE. WE ARE ALSO OF THE VIEW THAT THE ASSESSEE CANNOT BL OW HOT AND COLD AT THE SAME TIME. IN SOME YEARS, THE ASSESSEE CONT RAVENES THE PROVISIONS OF SEC.43(1) BY NOT REDUCING THE AMOUNT OF FINANCIAL ASSISTANCE FROM THE COST OF ASSET AND THUS CLAIM HI GHER DEPRECIATION IN ALL THE YEARS AND LATER CLAIM THE FINANCIAL ASSI STANCE TO BE CAPITAL RECEIPT. ACCORDINGLY WE CONFIRM THE ORDER PASSED B Y LD CIT(A) ON THIS ISSUE. 54. THE NEXT ITEM RELATES TO THE AMOUNT OF RS.1 00.00 LAKHS, BEING THE AMOUNT RELATING TO BRANCH COMPUTERISATION FUND. FROM THE ASSESSMENT ORDER, WE NOTICE THAT THE ASSESSEE H AS APPROPRIATED THE ABOVE SAID AMOUNT IN FY 2005-06 OUT OF ITS PROF ITS AND CREDITED THE SAME TO BRANCH COMPUTERISATION FUND. IN FY 2 013-14, THIS ACCOUNT WAS CLOSED BY TRANSFERRING THE BALANCE TO G ENERAL RESERVE. DURING THE YEAR UNDER CONSIDERATION, THE ABOVE SAID AMOUNT OF RS.100.00 LAKHS WAS TRANSFERRED TO PROFIT AND LOSS ACCOUNT FROM GENERAL RESERVE ACCOUNT. THE ASSESSEE, AS STATED E ARLIER, REDUCED ITA NOS.01 TO 04/BANG/2019 PAGE 29 OF 32 THIS AMOUNT FROM NET PROFIT WHILE COMPUTING TOTAL I NCOME. THE AO TOOK THE VIEW THAT THIS AMOUNT IS TAXABLE DURING TH E YEAR UNDER CONSIDERATION, SINCE THE INCOME OF THE ASSESSEE WAS EXEMPT IN FY 2005-06. THE LD CIT(A) ALSO CONFIRMED THE SAME. 55. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. IN THE EARLIER PARAGRAPHS, WHILE DEALING WITH THE T AXABILITY OF REVERSAL OF NPA PROVISIONS, WE HAVE HELD THAT THE ASSESSEE WAS NOT LIABLE TO TAX IN VIEW OF AVAILABILITY OF DEDUCT ION U/S 80P OF THE ACT UPTO AY 2006-07. OTHERWISE THE PROFIT OF THE AS SESSEE HAS ENTERED GROSS TOTAL INCOME, MEANING THEREBY, THE AS SESSEES INCOME SHOULD BE CONSIDERED AS HAVING BEEN COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT UPTO AY 2 006-07. FURTHER THERE IS DIFFERENCE BETWEEN DEDUCTION PROVI SIONS, I.E., DEDUCTION ALLOWED UNDER CHAPTER VIA (WHICH INCLUDES SEC.80P) AND THE EXEMPT ION PROVISIONS. HENCE THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS EXEMPT IN FY 2005-06. THE ASSESSEE CL AIMS THAT THE AMOUNT OF RS.100.00 LAKHS WAS APPROPRIATED BY IT FR OM PROFITS TOWARDS BRANCH COMPUTERISATION FUND. IF IT IS AN A PPROPRIATION MADE OUT OF PROFITS ALREADY SUBJECTED TO TAX, THEN THE TRANSFER OF THE SAME TO P & L ACCOUNT VIA GENERAL RESERVE IS NOT LI ABLE TO TAX. ON THE CONTRARY, IF THE ASSESSEE HAS CLAIMED THE SAME AS DEDUCTION WHILE ARRIVING AT THE NET PROFIT, THEN THE REVERSAL OF THE SAME IS LIABLE TO BE TAXED. SINCE THE RELEVANT DETAILS ARE NOT AVAILABLE ON RECORD, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR EXAMINING IT IN THE LIGHT OF DISCUSSIONS MADE SUPRA. ITA NOS.01 TO 04/BANG/2019 PAGE 30 OF 32 56. THE NEXT ITEM RELATES TO THE ASSESSMENT OF SALE OF VALUE OF JEEP. THE ASSESSEE TRANSFERRED A SUM OF RS.6,60,00 0/- FROM GENERAL RESERVE. IT CLAIMED THAT IT RECEIVED FINAN CIAL ASSISTANCE OF RS.9,92,685/- FROM THE APEX BANK FOR PURCHASE OF VE HICLE. THE SAID VEHICLE MET WITH AN ACCIDENT AND HENCE THE ASS ESSEE RECEIVED COMPENSATION FROM INSURANCE COMPANY AND LATER THE V EHICLE (JEEP) WAS ALSO SOLD. ACCORDINGLY A SUM OF RS.6,60,000/- REPRESENTING ABOVE SAID RECEIPTS WAS SHOWN AS JEEP INCOME. HOWE VER, THE ASSESSEE COULD NOT FURNISH ANY DETAIL RELATING THER ETO. THE AO NOTICED THAT THE VEHICLE WAS REMOVED FROM FIXED ASS ETS DURING THE YEAR ENDING 31.3.2010. IN THE ABSENCE OF RELEVANT D ETAILS, THE AO EXPRESSED THE VIEW THAT THE EXPLANATIONS OF THE ASS ESSEE COULD NOT BE ACCEPTED. ACCORDINGLY HE HELD THAT THE AMOUNT O F RS.6,60,000/- SHOULD BE ASSESSED TO TAX AND ACCORDINGLY ASSESSED THE SAME. THE LD CIT(A) ALSO CONFIRMED THE SAME. 57. WE HEARD THE PARTIES AND PERUSED THE RECORD . FROM THE DETAILS DISCUSSED BY THE AO, WE NOTICE THAT THESE T RANSACTIONS PERTAIN TO THE FINANCIAL YEAR ENDING 31.3.2010. BO TH THE PARTIES ARE NOT SURE AS TO WHETHER THE FINANCIAL ASSISTANCE REC EIVED WAS REDUCED FROM THE COST OF ASSET AND WHETHER THE SALE PROCEEDS WERE REDUCED FROM THE WDV ETC. SINCE IT IS CLEAR THAT T HESE TRANSACTIONS PERTAIN TO THE FINANCIAL YEAR ENDING 31.3.2010 AND SINCE THE AMOUNT REPRESENTS INSURANCE CLAIM & SALE PROCEEDS, WE ARE OF THE VIEW THAT THE SAME MAY NOT BE PROPER TO SUBJECT THE SAME TO TAX DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY W E SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. ITA NOS.01 TO 04/BANG/2019 PAGE 31 OF 32 58. IN THE RESULT, THE APPEALS FILED BY THE ASSE SSEE FOR ASSESSMENT YEARS 2012-13 TO 2014-15 ARE DISMISSED AND THE APPE AL FILED FOR AY 2015-16 IS TREATED AS PARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2019. SD/ - (P.K GADALE) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 12 TH JULY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NOS.01 TO 04/BANG/2019 PAGE 32 OF 32 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..