M/s. National Co-operative Bank Ltd, Bangalore V. JCIT, Bangalore

ITA 1090/BANG/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60724 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SARAVANAN
• Keywords: Depreciation; Bad and doubtful debts; Revenue expenditure
• Section: 234B

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE, K JUDICIAL MEMBER I .T.A. NOS.1090(BANG.)/2010 & 7(BANG.)/2011 (ASSESSMENT YEARS : 2007-08 & 2008- 09) M/S NATIONAL COP-OPERATIVE BANK LTD., NO.73/1, GANDHI BAZAAR MAIN ROAD, BANGALORE-560 004 PAN NO.AAABT0126C APPELLANT VS THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-3, BANGALORE RESPONDENT ASSESSEE BY : SMT. SHEETAL BORKAR, ADVOCATE REVENUE BY : SHRI B. SARAVANAN, JCIT DATE OF HEARING : 01-05-2012 DATE OF PRONOUNCEMENT : -05-2012 O R D E R PER SHRI GEORGE GEORGE, K. JM THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE ORDERS OF THE LEARNED CIT (A)-II, BANGALORE DATED 2 9.3.2010 AND 14.10.2010 RESPECTIVELY. THE RELEVANT ASSESSMENT Y EARS ARE 2007-08 AND 2008-09. 2. FOR THE AY 2007-08, THE ASSESSEE HAD INITIALLY R AISED ELEVEN GROUNDS AND SUBSEQUENTLY CAME UP WITH REVISE D ITA NOS.1090 & 07(B)/2011 2 GROUNDS NUMBERING IDENTICAL GROUNDS. THE GROUNDS RA ISED ARE REFORMULATED, FOR THE SAKE OF CONVENIENCE AND CLARI TY, AS BELOW: ITA NO.1090(B)/2010 (AY : 2007-08) 2.1 IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL; A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE ACCEPTED THE SUBMISSIONS OF THE APPELLANT AND ALLOWED THE DEDUCTION UNDER THE HEAD AMORTISATION OF PREMIUM AS CLAIMED BY THE APPELLANT. B) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE INVESTMENT THOUGH CLASSIFIED AS HELD TO MATURITY FOR RBI PURPOSES IT WAS A PART OF BUSINESS ASSETS OF THE APPELLANT BANK AND DECLARED AS SUCH FOR INCOME-TAX PURPOSES AND THE INCOME THEREFROM WAS ALSO ASSESSED ONLY UNDER THE HEAD INCOME FROM BANKING BUSINESS. C) ACCORDINGLY, THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE LOSS ON ACCOUNT OF INVESTMENT BY WAY OF PREMIUM WAS REQUIRED O BE ALLOWED AS CLAIMED BY THE APPELLANT. D) IN THE ALTERNATIVE THE LD. CIT(A) OUGHT TO HAVE DIRECTED THE ASSESSING AUTHORITY TO ALLOW THE DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF SECURITIES FOR THE RELEVANT ASSESSMENT YEAR. E)THE LD. CIT(A) OUGHT TO HAVE APPRECIATE THAT THE UNREALIZED INTEREST IN RESPECT OF NON- PERFORMING ASSETS WAS LIABLE TO BE ALLOWED AS CLAIMED BY THE APPELLANT AS THE SAME HAD BEEN WRITTEN OFF IN THE ACCOUNTS OF THE APPELLANT BY DEBITING THE SAME TO THE PROFIT AND LOSS ACCOUNT. F) THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AMOUNT WAS CLAIMED AS BAD DEBT AND CONSEQUENTLY THE SAME WAS ALLOWABLE IN FULL. ITA NOS.1090 & 07(B)/2011 3 G)THE LD. CIT(A) OUGHT TO HAVE ALLOWED THE CLAIM OF BAD DEBT AND DOUBTFUL DEBT AS CLAIMED BY THE APPELLANT. H) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AMOUNT CLAIMED HAS BEEN CHARGED OF IN THE PROFIT AND LOSS ACCOUNT AS NON-PERFORMING ASSET AND THUS THE CONDITIONS REQUIRED U/S 36(1)(VII) AND SEC.36(1)(VII)(A) HAD BEEN SATISFIE D AND THE APPELLANT WAS ENTITLED TO THE DEDUCTION AS CLAIMED IN FULL. I) WITHOUT PREJUDICE, THE DISALLOWANCE ARE EXCESSIVE, ARBITRARY AND UNREASONABLE AND OUGHT TO BE REDUCED SUBSTANTIALLY. J) THE LD. CIT(A) ERRED IN CONFIRMING THE INTEREST LEVIED U/S 234A, 234B & 234C OF THE IT ACT. ITA NO.07(B)/2010 (AY : 2008-09) IN THIS APPEAL, THE ASSESSEE HAS RAISED AS MANY AS SEVEN GROUNDS OF APPEAL, THEY AS UNDER; A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) GROSSLY ERRED IN UPHOLDING THE ASSESSMENT ORDER IN THE MANNER IN WHICH HE DID. B) THE LD. CIT(A) OUGHT TO HAVE ACCEPTED THE SUBMISSIONS OF THE APPELLANT AND ALLOWED THE DEDUCTION UNDER THE HEAD AMORTISATION OF PREMIUM OF RS.26,63,700/- AS CLAIMED BY THE APPELLANT. C) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE INVESTMENT THOUGH CLASSIFIED AS HELD TO MATURITY FOR RBI PURPOSES, IT WAS A PART OF BUSINESS ASSETS OF THE APPELLANT BANK AND DECLARED AS SUCH FOR INCOME-TAX PURPOSES, AND THE INCOME THEREFROM WAS ALSO ASSESSED ONLY UNDER THE HEAD INCOME FROM BANKING BUSINESS. CONSEQUENTLY, HE OUGHT TO HAVE HELD THAT THE LOSS ON ACCOUNT OF INVESTMENT BY WAY OF ITA NOS.1090 & 07(B)/2011 4 PREMIUM AS REQUIRED TO BE ALLOWED AS CLAIMED BY THE APPELLANT. D) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE UNREALIZED INTEREST IN RESPECT OF NON- PERFORMING ASSETS WAS LIABLE TO BE ALLOWED AS CLAIMED BY THE APPELLANT, AS THE SAME HAD BEEN WRITTEN OFF AS BAD DEBT IN THE ACCOUNTS OF THE APPELLANT BY DEBITING THE SAME IN THE PROFIT & LOSS ACCOUNT AND THUS THE CONDITIONS REQUIRED U/S 36(1)(VII) HAD BEEN SATISFIED. E) THE LD.CIT(A) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION ON DEPRECIATION IN RESPECT OF SECURITIES FOR THE RELEVANT ASSESSMENT YEAR. F) WITHOUT PREJUDICE THE DISALLOWANCES ARE ARBITRARY, EXCESSIVE AND OUGHT TO BE REDUCED SUBSTANTIALLY. G) THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234A,234B & 234C OF THE IT ACT. 2. GROUNDS NOS.1,6 & 8, BEING GENERAL AND NO SPECI FIC ISSUE INVOLVED, THEY DO NOT SURVIVE FOR ADJUDICATIO N. GROUND NOS.2 & 3 RELATE TO DEDUCTION UNDER THE HEAD AMORT ISATION OF PREMIUMS AS IN THE LAST ASSESSMENT YEAR I.E 2007-0 8. 3. GROUND NO.4, WITH RESPECT TO UNREALIZED INTERES T ON NON-PERFORMING ASSETS MADE ON THE DIRECTIONS OF THE RESERVE BANK OF INDIA. 3.1 GROUND NO.5, WITH REGARD TO ALLOWANCE OF DEPREC IATION. SINCE THE ISSUE HAS NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR ITA NOS.1090 & 07(B)/2011 5 THE ASSESSEE, THIS GROUND OF APPEAL IS TREATED AS NOT PRESSED HENCE, DISMISSED. 3.2 AS THE ISSUES RAISED IN THESE APPEALS BEING ID ENTICAL FOR BOTH THE ASSESSMENT YEARS UNDER DISPUTE, THEY W ERE HEARD, CONSIDERED TOGETHER AND DISPOSED OFF, FOR THE SAKE OF BREVITY AND CONVENIENCE, IN THIS COMMON ORDER. FURTHER, THE ISS UES RAISED BY THE ASSESSEE FOR THE AY 2007-08 ARE TAKEN UP FOR ADJUDICATION AND THE FINDINGS RECORDED HERE-UNDER S HALL HOLD GOOD FOR THE AY 2008-09 AS WELL. 3.3 THE GROUNDS RAISED ARE DEALT WITH CHRONOLOGICA LLY AS BELOW: 4. GROUND NOS. 1, 2 & 3: THE ASSESSEE BANK HAD DEBITED IN ITS P & L ACCOUNT OF RS.29.02 LAKHS TOWA RDS AMORTIZATION OF PREMIUM DURING THE ASSESSMENT YEA R UNDER CONSIDERATION. THE AO HELD THAT THE AMORTIZATION OF PREMIUM ARRIVED AT BY CALCULATING THE PREMIUM PAID ON CERTA IN INVESTMENT CLASSIFIED AS HELD ON MATURITY BY THE ASSESSEE IS NOT ALLOWABLE AS DEDUCTION. IT WAS, FURTHER, STATE D THAT THESE SECURITIES CLASSIFIED AS HELD TO MATURITY ARE PER MANENT LONG TERM INVESTMENT MADE BY THE ASSESSEE AND THEY CANNO T BE TREATED AS STOCK-IN-TRADE OF THE ASSESSEE LIKE A VAILABLE FOR SALE ITA NOS.1090 & 07(B)/2011 6 AND HELD FOR TRADING. HENCE, ONCE IT WAS ESTABLI SHED THAT THESE WERE NOT STOCK-IN-TRADE, NO CHARGE CAN BE MADE ON R EVENUE. HOWEVER, AT THE TIME OF DISPOSING OF ALL THESE ASSE TS, THEY WERE ACCOUNTED AS CAPITAL GAINS OR LOSS. 4.1. PLACING RELIANCE ON THE RULING OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF T.N. POWER FINANCE AND IN FRASTRUCTURE DEVELOPMENT CORPORATION LIMITED V. JCIT (2006) 280 ITR 491 (MAD), THE AO TOOK A STAND THAT THE AMORTIZATION CL AIMED BY THE ASSESSEE ON INVESTMENT HELD IN THE PERMANENT CATEGO RY OF HELD TO MATURITY CANNOT BE ALLOWED TO BE DEDUCTED AS PE R THE MANDATORY PROVISIONS OF SEC.145 OF THE ACT. 4.2. ON APPEAL, THE CIT (A), AFTER CONSIDERING THE ASSESEES SUBMISSION AND ALSO EXTENSIVELY QUOTING THE RULING OF THE HONBLE MADRAS HIGH COURT CITED SUPRA, FINDINGS OF THE HONBLE ITAT, DELHI BENCH REPORTED IN 112 TTJ 917 AND ALSO DISTINGUISHING THE FINDINGS OF THE EARLIER BENCH IN THE CASE OF CORPORATION BANK V. ACIT IN ITA NO.112/BANG/2008 DA TED 3.12.2008, THE CIT (A) HAS HELD THUS: 4.10. IN THE INSTANT CASE, THE SECURITIES CLASSIF IED AS HELD TO MATURITY RE PERMANENT LONG-TERM INVESTMEN T MADE BY THE APPELLANT BANK, WHICH ARE PREDOMINANTLY CAPITAL IN NATURE. APPLYING THE RATIO OF THE DECIS IONS OF THE HONBLE HIGH COURT OF MADRAS AND THE SPECIAL BENCH OF THE ITAT, DELHI (SUPRA), SO LONG AS THE IN COME ITA NOS.1090 & 07(B)/2011 7 IS COMPUTED AS PER THE PROVISIONS OF THE INCOME-TAX ACT THE INCOME IS COMPUTED AS PER THE PROVISIONS OF THE INCOME-TAX ACT IS CONCERNED, THE INCOME-TAX ACT IS A SPECIAL ACT AND THE PROVISIONS CONTAINED THEREIN NEED TO BE COMPLIED WITH IF DEDUCTION PERMISSIBLE I S CLAIMED AS ALLOWABLE AND NOT UNDER THE PROVISIONS O F RBI ACT OR ANY DIRECTION ISSUED THERE UNDER. IN VI EW OF THIS MATTER, THE AO HAS RIGHTLY HELD THAT THE SECUR ITIES ARE CLASSIFIED ARE LONG TERM INVESTMENT AND THESE CANNOT BE TREATED AS STOCK-IN-TRADE, AVAILABLE F OR SALE AND HELD FOR TRADING CATEGORY. HOWEVER, WHI LE DISPOSING OF SUCH SECURITIES, THEY ARE EXIGIBLE FOR CAPITAL GAINS FOR LOSS. IN MY CONSIDERED VIEW, I D O NOT FIND INFIRMITIES IN THE AOS OBSERVATION.. 4.3 AGGRIEVED, THE ASSESSEE BANK IS IN APPEAL BEFOR E US. THE LEARNED AR SUBMITTED THAT THE CIT (A) HAD FAILE D TO SEE THE REASON THAT A SIMILAR ISSUE TO THAT OF THE PRESENT ONE HAS BEEN ALLOWED BY VARIOUS BENCHES OF THE HONBLE TRIBUNALS NAMELY. I) ITAT COCHIN BENCH (2010) 38 SOT 553 (COCHIN) IN THE CASE OF CATHOLIC SYRIAN BANK LTD., VS ACIT (PAGE NO.4 OF 16(PARA-15) II) ITAT PANAJI BENCH, PANAJI IN THE CASE OF KHANA PUR CO- OPERATIVE BANK LTD., VS ITO IN ITA NO.141/PNJ/2011- AY: 2007- 08 PRA-6 PAGE NO.3. III) ITAT BANGALORE BENCH IN ITA NO.112(BANG.)/2008 AY:2004-05 IN THE CASE OF CORPORATION BANK VS ACIT , MANGALORE, PARA-10, PAGE NO.6 & PARA-26, PAGE NOS.8 & 9. 4.4 SHE ALSO PLACED RELIANCE ON THE BOARDS INSTRUCTION NO.17 OF 2008(VII) AND PLEADED THAT THE CLAIM OF TH E ASSESSEE BE ALLOWED AS THE ASSESSEE WAS WITHIN ITS REALM TO DEB IT IN ITS P & L ACCOUNT A SUM OF RS.29.02 LAKHS OF AMORTIZATION O F PREMIUM. ITA NOS.1090 & 07(B)/2011 8 4.5 THE LEARNED D R WAS UNABLE TO CONTROVERT THE SUBMISSIONS OF THE LEARNED AR. 4.6 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND DILIGENTLY PERUSED THE RELEVANT CASE RECORDS. WE HAVE ALSO DULY PERUSED THE FINDINGS OF VARIOUS BENCHES OF THE TRIBUNALS WHICH ARE CONSIDERED AS UNDER: (I) CATHOLIC SYRIAN BANK LTD V. ACIT (2010) 38 SO T 553 (COCH): AN IDENTICAL ISSUE TO THAT OF THE SUBJECT MATTER UN DER CONSIDERATION HAD ARISEN BEFORE THE COCHIN BENCH. AFTER ANALYZING THE ISSUE IN DEPTH, THE BENCH HAS OBSERVE D THAT WITH REGARD TO AMORTIZATION OF PREMIUM ON PURCHASE OF GOVERNMENT SECURITIES, IT WAS CLARIFIED THAT THIS WAS MADE AS PER THE PRUDENTIAL NORMS OF THE RBI. FOLLOWING THE TRIBUNA L DECISION (IN ASSESSEES OWN CASE) AND CONSIDERING THAT THE ASSES SEE BANK IS FOLLOWING CONSISTENT AND REGULAR METHOD OF ACCOUNTI NG SYSTEM, THERE IS NO JUSTIFICATION IN INTERFERING WITH THE O RDER OF THE CIT (A) ON THIS ISSUE OF AMORTIZATION OF PREMIUM ON GOVERNM ENT SECURITIES. UNITED COMMERCIAL BANK V. CIT (1999) 1 56 CTR (SC) 380; (1999) 240 ITR 355 (SC) AND SOUTH INDIAN BANK LTD (ITA NO.126/COCH/2004 DT. 219 TH SEPT. 2005 FOLLOWED. ITA NOS.1090 & 07(B)/2011 9 (II) THE KHANAPUR CO-OP BANK LTD V. ITO ITA NO.141/PNJ/2011 DATED: 8.9.2011: THE HONBLE BENCH OF PANAJI TRIBUN AL HAD RECORDED ITS FINDINGS THAT 6. LIKEWISE, THE PREMIUM AMORTIZED AT RS.1,78,098/- IS CLAIMED TO BE IN RESPECT OF SECURI TIES HELD UNDER THE CATEGORY HELD TO MATURITY. THE ASSESSING OFF ICER HAS TAKEN THEM AS LONG TERM INVESTMENTS. IN OTHER WORDS, HE HAS ACCEPTED THE ASSESSEES CLAIM THAT THE SECURITIES ARE HELD TO MATURITY. THAT BEING SO AND HAVING REGARD TO THE CBDT INSTRUC TION NO.17 OF 2008 DATED 26.11.2008 AS REPRODUCED HEREIN ABOVE, T HE PREMIUM PAID ON SUCH GOVERNMENT SECURITIES IS REQUI RED TO BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY (III) IN THE CASE OF CORPORATION BANK V. ACIT IN I TA NO.112/BANG/2008 FOR THE ASSESSMENT YEAR 2004-05, T HE EARLIER BENCH HAD ALSO HELD A SIMILAR VIEW. 4.61 TAKING INTO ACCOUNT THE TOTALITY OF THE ISSUE AS DISCUSSED ABOVE AND IN CONFORMITY WITH THE FINDINGS OF THE HONBLE BENCHES OF THE TRIBUNALS CITED SUPRA, WE AR E OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO CL AIM DEDUCTION. IT IS ORDERED ACCORDINGLY. ITA NOS.1090 & 07(B)/2011 10 5. THE OTHER ISSUE (GROUND NO.5 ) WAS THAT THE AO NOTICED IN THE P & L ACCOUNT, A SUM OF RS.1,66,678/- WAS DE BITED ON ACCOUNT OF UNREALIZED INTEREST. IT WAS CONTENDED B EFORE THE AO THAT IN RESPECT OF NPAS, INTEREST DEBITED ON SUCH A DVANCES MAY NOT GET REALIZED. 5.1. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ASS ESSEES VERSION ON THE GROUND THAT MERELY BECAUSE PROVISION AGAINST UNREALIZED INTEREST WAS MADE AS PER THE DIRECTIVE O F THE RBI AND, ACCORDINGLY, HELD THAT THE PROVISION WAS A KIN D OF A RESERVE WHICH WAS MAINTAINED BY DIFFERENT BUSINESS ENTITIES TO SUSTAIN FUTURE LOSSES AND, THUS, THE PROVISION OF RS.1.66 L AKHS WAS CONTINGENT IN NATURE AND, THEREFORE, WAS NOT AVAILA BLE AS REVENUE EXPENDITURE. 5.2 AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH THE LEARNED CIT (A) FOR RELIEF. AFTER DUE CONSIDERATIO N OF THE ASSESSEES CONTENTION AND ALSO EXTENSIVELY QUOTING THE RULING OF THE HONBLE MADRAS HIGH COURT REPORTED IN 280 ITR 4 91, (MAD) AND FINDINGS OF THE SPL. BENCH OF DELHI TRIBUNAL 1 12 TTJ 917, THE CIT (A) HELD THAT THE PROVISION BEING UNREALIZA BLE INTEREST ON NPAS WAS NOT ALLOWABLE AS DEDUCTION. ITA NOS.1090 & 07(B)/2011 11 5.3 BEFORE US, IT WAS ARGUED BY THE LEARNED AR TH AT IN CASE, THE ACCRUED INTEREST ACCOUNT IN RESPECT OF THE BORR OWAL ACCOUNT IS NOT ACTUALLY REALIZED AND THE ACCOUNT HAS BECOME NPA AS AT THE END OF THE FINANCIAL YEAR, INTEREST ACCOUNTED O R ACCRUED AND CREDITED TO INCOME ACCOUNT SHOULD BE PROVIDED FOR ( REVERSED) TO OVERDUE INTEREST RESERVE A/C [OIR]. IT WAS, FURTHER , SUBMITTED THAT IN CASE THE ACCRUED INTEREST IN RESPECT OF THE BORROWAL ACCOUNT IS NOT ACTUALLY REALIZED AND THE ACCOUNT HA S BECOME NPA AS AT THE CLOSE OF SUBSEQUENT YEAR, INTEREST AC CRUED AND CREDIT TO INCOME ACCOUNT IN THE CORRESPONDING PREVI OUS YEAR SHOULD BE REVERSED OR PROVIDED FOR, IF THE SAME IS NOT REALIZED BY PASSING NECESSARY ENTRIES. TO DRIVE HOME HER POINT , THE LEARNED A R HAD PLACED STRONG RELIANCE ON THE FOLLOWING CAS E LAWS: (I) CIT V. VASISTH CHAY LTD. & TEDTO INVESTMENT & FINANCIAL SERVICES PVT. LTD 330 ITR 440; & (II) THE KHANAPUR CO-OP BANK LTD V. ITO ITA NO.141/PNJ/2011 (SUPRA). 5.4 THE LEARNED DR PRESENT WAS HEARD. 5.5. WE HAVE DULY CONSIDERED THE SUBMISSIONS OF EIT HER PARTY. WE HAVE ALSO CAREFULLY PERUSED THE CASE LAW S ON WHICH BOTH THE PARTIES HAVE PLACED RELIANCE ON. 5.5. AT THE OUTSET, WE WOULD LIKE TO REITERATE THAT THOUGH THE AR HAD VOUCHED THAT IN CASE THE ACCRUED INTEREST IN RESPECT OF ITA NOS.1090 & 07(B)/2011 12 THE BORROWAL ACCOUNT WAS NOT ACTUALLY REALIZED AND THE AMOUNT HAS BECOME NPA AS AT THE CLOSE OF SUBSEQUENT YEAR, INTEREST ACCRUED AND CREDITED TO INCOME ACCOUNT IN THE CORRE SPONDING PREVIOUS YEAR HAS BEEN REVERSED AND SO ON AND SO FO RTH. HOWEVER, NO DOCUMENTARY PROOF WAS FORTH-COMING FOR SUCH AN EXERCISE MADE BY THE ASSESSEE. 5.5.2. IN VIEW OF THE ABOVE, THIS ISSUE IS REMITT ED BACK TO THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOO K INTO THE VERACITY OF THE ASSESSEES ASSERTION AND TO TAKE AP PROPRIATE CORRECTIVE STEP, IF SO WARRANTS. THE AO SHALL, HOW EVER, KEEP IN VIEW THE CASE LAWS RELIED ON BY THE LEARNED AR WHIL E IMPLEMENTING THE ABOVE DIRECTION. IT IS ORDERED AC CORDINGLY. 6. WITH REGARD TO BAD DEBTS (GROUND NOS. 6 TO 8 ), THE LEARNED AR CONCEDED THAT THE ISSUE IS AGAINST THE ASSESSEE. FURTHER, AT THE GLIMPSE OF THE ASSESSMENT ORDER FOR THE AY UNDE R CONSIDERATION, IT HAS BEEN OBSERVED THAT THE AO HAD COMMENTED THAT THE ASSESSEE HAD NOT DEBITED PROFIT AND LOSS ACCOUNT TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBT S AT ALL. THE ASSESSEE HAD ALSO ADMITTED IN THEIR SUBMISSION DATE D 10.12.2009 THAT IN THE FINANCIAL YEAR 2006-07 RELEV ANT TO THE ITA NOS.1090 & 07(B)/2011 13 ASSESSMENT YEAR 2007-08, NO PROVISION TOWARDS BAD A ND DOUBTFUL DEBTS HAVE BEEN MADE. [SOURCE: PAGE 4 OF ASST. ORDER]. 6.1 IN ESSENCE, THIS ISSUE IS DECIDED AGAI NST THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH MAY, 2012. SD/- SD/- ( N.BARATHVAJA SANKAR) (GEORG E GEORGE K) VICE PRESIDENT JUDICIAL MEMBER PLACE: BANGALORE DATED: 11-05-2012 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR, ITAT, BANGALORE