M/S. JILA SAHAKARI KENDRIYA BANK MARYADIT, Mandsaur V. THE DCIT, Ratlam

ITA 182/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5701 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DECISION OF THIS BENCH
• Keywords: Business expenditure; Search and seizure; Bad and doubtful debts
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 254(2); 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER 1. JILA SAHAKARI KENDRIYA BANK MARYADIT, NEEMUCH 2. DCIT- RATLAM V. 1. DCIT-RATLAM 2. JILA SAHAKARI KENDRIYA BANK MARYADIT, NEEMUCH & / APPELLANT ()& / RESPONDENT . . ./ PAN:AAATJ-2383F & * / APPELLANT BY SHRI S.S. DESHPANDE, C.A. ()& * / RESPONDENT BY SHRI LAL CHAND, CIT D.R. * / DATE OF HEARING 14.03.2017 / * / DATE OF PRONOUNCEMENT 22.03.2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS), UJJAIN (IN SHORT, CIT (A) DATED 02.11.2015 FOR THE A.Y.201 1-12. THE 1. . . ./ I.T.A. NO. 182/IND/2016 2. I.T.A. NO. 99/IND/2016 / ASSESSMENT YEAR:2011-12 JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 2 OF 19 ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL IN I .T.A. NO. 182/IND/2016. 1. THE LD. CIT(A) HAS ERRED MAINTAINING THE DISALLOWAN CE OF RS. 1,24,25,000/- ON THE GROUND THAT THE SAID PROVI SION CANNOT BE TREATED U/S 36(1)(VIIA). 1.1 IT WAS PROVED BEFORE THE LD. CIT(A) THAT THE ASSESS EE WAS ENTITLED TO A TOTAL DEDUCTION OF RS. 15,31,00,0 00/- U/S 36(1)(VIIA) AND AS SUCH THE PROVISION OF RS. 1,24,2 5,000/- SHOULD HAVE BEEN TREATED AS PROVISION U/S 36(1)(VII A) AND SHOULD HAVE BEEN ALLOWED AS DEDUCTION. 2. THE LD. CIT (A) HAS ERRED IN DISALLOWING THE CLAIM OF RS. 52,00,852/- BEING THE SHORT PROVISION FOR THE INTER EST SUBSIDY ACCRUED DURING THE YEAR. 2.1. IT WAS PROVED BEFORE THE LD. CIT (A) THAT THE ASSESSEE HAS ACTUALLY MADE THE PAYMENT IS NEXT YEAR OF RS. 52,00,852/- IN RESPECT OF INTEREST SUBSIDY ACCR UED DURING THE YEAR. THE SAME OUGHT TO HAVE BEEN CONSID ERED AND ALLOWED AS DEDUCTION. IN THE ALTERNATIVE, THE L D. AO MAY BE DIRECTED TO ALLOW THE SAME IN THE SUBSEQUENT YEAR WHEN THE PAYMENT IS ACTUALLY MADE. 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE ALLOWA BLE PROVISION OF RS. 15,31,00,000/- U/S 36(1)(VIIA) EVE N WHEN NO SUCH PROVISION WAS MADE IN THE BOOKS. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA99/IND/2016 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 17,29,426/- M ADE BY AO JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 3 OF 19 FOR PROVISION OF SUBSIDY ON INTEREST TO FARMERS AS SAID RELIEF IS NOT AS PER I.T. ACT, 1961. 2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CI T(A) HAS ERRED IN DELETING ADDITION OF RS. 2,05,14,510/- MAD E FOR PROVISION OF SUBSIDY ON INTEREST AS SAID RELIEF IS NOT AS PER IT ACT, 1961. NOW WE WILL TAKE UP I.T.A.NO. 182/IND/2016. 3. GROUND NO. 1 OF THE ASSESSEES APPEAL RELATES TO MAINTAINING DISALLOWANCE OF RS. 1,24,25,000/- ON TH E GROUND THAT THE SAID PROVISION CANNOT BE TREATED U/S 36(1) (VIIA) WHEREAS THE ASSESSEE WAS ENTITLED TO A TOTAL DEDUCT ION OF RS. 15,31,00,000/- U/S 36(1)(VIIA)OF THE ACT. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS A CO-OPERATIVE BANK ENGAGED IN THE BUSINESS OF BANKIN G. THE ASSESSEE HAS CLAIMED THE DEDUCTION OF RS. 6,74,25,0 00/- U/S 36(1)(VIIA) AND 36(1)(VIII) AS PER THE DETAILS WAS SUBMITTED VIDE LETTER DATED 08.11.2013. ONGOING THROUGH THESE DET AILS, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION AT RS. 15,31,00,000/- UNDER SECTION 36(1)(VIIA) AND RS. 2 ,38,00,000/- U/S. 36(1)(VIII)OF THE ACT. THEREFORE, THE ASSESSEE WAS ASKED TO SUBMIT PROPER AND COMPLETE DETAILS OF CLAIM MADE U/ S 36(1) (VIIA) AND 36(1) (VIII). ACCORDINGLY, A REVISED COMPUTATIO N WAS FILED VIDE LETTER DATED 20.01.2014. THIS SHOWED THE DEDUCTION ALLOWABLE JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 4 OF 19 U/S 36(1)(VIIA) AT RS.3,75,00,000 AS AGAINST THE CL AIM MADE FOR RS. 15,31,00,000/- AND RS.1,38,64,000/- U/S 36(1)(V III) AS AGAINST RS. 2,38,00,000/- CLAIMED VIDE LETTER DATED 08.11.2013. THE AO ALSO NOTED THAT IN THE REVISED WORKING SUBMI TTED ON 20.01.2014, THE PROVISIONS OF RS. 6,74,25,000/- ALS O INCLUDED A PROVISION OF RS. 1,24,25,000/- A PROVISION FOR A R ECOVERABLE INTEREST. THE AO WAS OF THE VIEW THAT THIS CLAIM OF PROVISION AMOUNTING TO RS. 1,24,25,000/-CANNOT BE TREATED AS AN EXPENDITURE INCURRED UNDER THE NORMAL COURSE OF BUS INESS AND SAME CANNOT BE ALLOWED UNDER ANY OF OTHER THE PROVI SIONS OF SECTION 36 OR SECTION 37 OF THE ACT. ONGOING, THROU GH THE BOOKS OF ACCOUNTS, THE AO FURTHER NOTICED THAT THE AMOUNT OF RS. 1,24,25,000/- IS NOT WRITTEN OFF AS BAD DEBT IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO DISALLOWED THE AMOUNT OF RS. 1,24,25,000/- (INCLUDED IN RS. 6,74,25,000/- DEBITE D IN PROFIT AND LOSS ACCOUNTS AND SHOWN AS PRAVDHAN KALATIT BY AJ HETU. 5. AGGRIEVED, WITH THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE CIT (A). THE ASSESSEE HAS MADE A DETAILED SUBMISSION DURING THE APPELLATE PROCEEDINGS WHICH H AVE BEEN REPRODUCED BY THE CIT (A) AT PARA 3 OF THE APPELLAT E ORDER. THE CIT(A) NOTED THAT THE ASSESSEE HAS CLAIMED PROVISIO N FOR OVERDUE JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 5 OF 19 INTEREST AMOUNTING TO RS. 1,24,25,000/- MADE FOR A IRRECOVERABLE INTEREST THE CLAIM OF THE PROVISION CANNOT BE TREAT ED AS EXPENDITURE IN THE NORMAL COURSE OF THE BUSINESS. T HERE IS NO PROVISION OF ALLOWABILITY U/S. 36 OR U/S. 37 OF THE ACT. THE ASSESSEE HAS NOT WRITTEN OFF ABOVE SUM AS BAD DEBT IN THE BOOKS OF ACCOUNTS. THE PROVISIONS AND EXPENSES IN THE PRO FIT AND LOSS ACCOUNT, AS PER RBI NORMS CANNOT BE TREATED AS DEDU CTIBLE EXPENDITURE U/S. 36(1) (VII) AND U/S. 36(1) (VIIA). ACCORDINGLY, THE SAID ADDITION WAS CONFIRMED. 6. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THIS TRIBUNAL. THE LD. AR SUBMITTED THAT THE ASSESSEE HA S MADE PROVISION OF RS. 3,75,00,000/- FOR BAD AND DOUBTFUL DEBT U/S 36(1)(VIIA). SIMILARLY, THE ASSESSEE HAS CLAIMED DE DUCTION OF RS. 1,24,25,000/- BEING THE PROVISION MADE FOR OVERDUE INTEREST ON NPA, NOT RECOVERED. THE INTEREST LEVIABLE ON THE NP A IS CREDITED IN PROFIT AND LOSS ACCOUNT. SINCE THIS IS INTEREST ON DOUBTFUL DEBTS, A CORRESPONDING PROVISION IS MADE ON THE BASIS OF RBI GUIDELINES. THIS CLAIM WAS MADE IN THE RETURN OF INCOME ITSELF, AND THE RETURN WAS FILED DECLARING THE INCOME OF RS. 5,18,3 52/- AFTER CONSIDERING THE DEDUCTION FOR OVERDUE INTEREST. WHI LE FRAMING ASSESSMENT, THE AO ALLOWED DEDUCTION U/S 36(1)(VIIA ) OF RS. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 6 OF 19 3,75,00,000/-BEING PROVISION FOR BAD AND DOUBTFUL D EBT. HOWEVER, HE DISALLOWED THE PROVISION FOR INTEREST O N NPA AT RS. 1,24,25,000/-. THE AO DISALLOWED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THE SAME IS NOT WRITTEN OFF AS BAD DEBT AND THE PROVISION OF RS. 3,75,00,000/- IS ALREADY MADE U/S 36(1)(VIIA). THE AR CONTENDED THAT THE CLAIM OF RS. 1,24,25,000/ - IS MADE U/S. 36(1)(VIIA) OF WHICH THE NOMENCLATURE ITSELF S HOWS THAT IT IS A PROVISION FOR OVERDUE IRRECOVERABLE INTEREST WHICH IS NOT RECEIVED DURING THE YEAR. THE ASSESSEE IS REQUIRING MAKING P ROVISION FOR BAD AND DOUBTFUL DEBT AND AS SUCH, THE PROVISION IS MADE ACCORDING TO THE INSTRUCTIONS OF RESERVE BANK OF IN DIA (COPY PLACED PAGE NO 3 & 4 OF WRITTEN SUBMISSIONS). THIS INSTRUCTION CLEARLY STATES THAT THE STATE CO-OPERATIVES TO MAKE FULL PROVISIONING FOR EQUIVALENT AMOUNT BY CHARGING PROF IT & LOSS ACCOUNT AND INTEREST ON OVERDUE LOANS AND IF SUCH I NTEREST REMAINS UNREALIZED THE SAME MAY BE TAKEN TO INCOME ACCOUNT PROVIDED MATCHING PROVISIONS IS FULLY MADE FOR CHAR GING SAME TO PROFIT & LOSS ACCOUNT. THE AR FURTHER SUBMITTED THA T THE RULE 6ABA OF I.T. RULES CLEARLY PRESCRIBED THE WORKING O F THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES. THE PO INT IN THIS CASE IS NOT REGARDING THE QUANTIFICATION ONLY IN RE SPECT OF JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 7 OF 19 ALLOWABLE OF THE PROVISION MADE FOR IRRECOVERABLE O VERDUE INTEREST. SINCE THIS PROVISION IS ALSO MADE AS A DOUBTFUL DEB T, THE SAME IS COVERED U/S 36(1) (VIIA). THEREFORE, IT WAS REQUEST ED THAT THE ASSESSEES CLAIM MIGHT BE ALLOWED. 7. ON THE OTHER HAND, THE LD. CIT (DR) SUBMITTED THAT THE ASSESSEE HAS MADE PROVISION OF RS. 1,24,25,000/- AG AINST OVERDUE IRRECOVERABLE INTEREST WHEREAS PROVISION OF SECTION 36(1)(VIIA) IS ALLOWABLE IN RESPECT OF ANY PROVISIO N OF BAD AND DOUBTFUL DEBT AGAINST AGGREGATE AVERAGE ADVANCES MA DE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRI BED MANNER. HENCE, THIS CANNOT BE TREATED AS BUSINESS EXPENDIT URE INCURRED IN NORMAL COURSE OF BUSINESS, NOR THE ASSESSEE HAS WRITTEN OFF THIS IN BOOKS OF ACCOUNTS, AND THEREFORE, NOT ALLOW ABLE UNDER SECTION 36 (1) (VIIA) OR UNDER SECTION 36 (1) (VIII ) OF THE ACT. THEREFORE, ACCORDING TO THE LD. DR WHEN THE ASSESSE E WRITTEN OFF THE AMOUNT OF THE BOOKS OF ACCOUNTS THE PROVISIONS FOR BAD DEBT IS ALLOWABLE SUBJECT TO SATISFACTION OF THE AO BUT THE PROVISIONS ABOUT IRRECOVERABLE BAD DEBT FOR WHICH IS NOT WRITT EN OFF IN THE BOOKS OF ACCOUNTS IS NOT ALLOWABLE. ACCORDING TO TH E LD. CIT (DR) THE PROVISIONS WERE MADE AGAINST IRRECOVERABLE INTE REST AND NOT AGAINST ADVANCES THEREFORE, SUCH A CLAIM IS NOT COV ERED BY THE JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 8 OF 19 PROVISION OF SECTION 36(1) (VII) OR 36(1) (VIIA). T HE LD. CIT (DR) RELYING ON THE DECISION IN THE CASE OF CIT V. N.C. BUDHARAJA & CO. [1993] 204 ITR 412 (SC) / [1993] 70 TAXMAN 312(SC), PANDIAN CHEMICALS LTD. V. CIT [2003] 262 ITR 278 (SC) / 129 TAXMAN 539 (SC) AND CIT V. IPCA LABORATORY LTD. [2004] 266 IT R 521 (SC) / [2004] 135 TAXMAN 594 (SC) SUBMITTED THAT WHERE THE EXPRESS PROVISIONS ARE CONTAINED IN THE STATUTE BOOK, THEN THE COURT SHOULD GIVE A LIBERAL INTERPRETATION OF THE WORDS I N A MANNER SO AS TO ALLOW SUCH OBJECT TO BE FULFILLED, AND THE RU LE OF INTERPRETATION, COULD COME INTO PLAY, ONLY IF; THER E IS ANY AMBIGUITY IN THE EXPRESS LANGUAGE USED IN THE STATU TE. WHERE THE WORDS ARE UNEQUIVOCAL THERE IS NO SCOPE OF ANY RULE OF INTERPRETATION AND ACCORDING TO THE LD. CIT (DR) TH E PROVISIONS MADE U/S 36(1)(VIIA) IS WRITTEN IN EXPRESS LANGUAG E AS AGAINST ADVANCES HENCE, SAME CANNOT BE TREATED AS PROVISI ON AGAINST THE OVERDUE INTEREST ON NPA. THEREFORE, THE CLAIM O F THE ASSESSEE IS NOT ALLOWABLE AS DEDUCTION UNDER THE ANY PROVISI ONS OF INCOME TAX ACT,1961. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD AND FINDINGS OF THE LO WER AUTHORITIES. WE FIND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF AN AMOUNT OF JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 9 OF 19 RS. 6.74 CRORE U/S. 36(1) (VIIA) AND U/S. 36(1) (VI II) AS PER WORKING FILED VIDE REPLY DATED 8.11.2013. HOWEVER, THE SAID CALCULATION WAS REVISED VIDE LETTER DATED 20.1.2014, ACCORDING TO WHICH PROVISION OF RS. 6.74 CRORE DEBITED IN THE PROFIT A ND LOSS ACCOUNT RELATES U/S 36(1)(VIIA) WHICH INTER-ALIA INCLUDED A PROVISION FOR OVERDUE INTEREST AMOUNTING TO RS.1,24,25,000/-. THE AO DISALLOWED THE SAME BY TREATING THAT PROVISION FOR IRRECOVERABLE INTEREST, BY HOLDING THAT SUCH PROVISION CANNOT BE TREATED AS EXPENDITURE INCURRED UNDER THE NORMAL COURSE OF BUS INESS. WE FIND THAT AS PER THE WORKING FILED BY THE ASSESSEE ON 20.1.2014, THE ALLOWABLE PROVISION U/S. 36(1)(VIIA)IS WORKED O UT TO RS. 3,75,00,000/- WHICH HAS BEEN ALLOWED AS DEDUCTION B Y THE AO. WE FIND THAT THE DEDUCTION OF RS. 1,24,25,000/- HAS BEEN CLAIMED AS PROVISION AGAINST THE OVERDUE INTEREST ON IRRECO VERABLE NPA ADVANCES, WHEREAS THE WORDINGS USED IN SECTION 36 ( 1) (VIIA) IS THE PROVISION MADE AGAINST ADVANCES HENCE, THE PROVISION MADE AGAINST OVERDUE INTEREST ON IRRECOVERABLE ADVA NCES IS NOT ALLOWABLE U/S 36(1)(VIIA) OF THE ACT. WITH A VIEW T O APPRECIATE; THE PROVISIONS IN PROPER PERSPECTIVE, IT WOULD BE RELE VANT, TO REPRODUCE THE PROVISION OF SECTION 36(1)(VIIA): WHI CH READS AS UNDER :- JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 10 OF 19 (A) A SCHEDULED BANK [NOT BEING A BANK INCORPORATE D BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A NO N- SCHEDULED BANK [OR A CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK], AN AMOUNT [NOT EXCEEDING SEVEN AND ONE-HALF PER CENT] OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CL AUSE AND CHAPTER VIA) AND AMOUNT NOT EXCEEDING [TEN] PER CENT OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER. 9. WE FIND THAT THE PROVISION OF RS. 1,24,25,000/- IS FOR OVERDUE INTEREST WHICH IS NOT RECEIVED. THEREFORE, THIS AMOUNT IS NOT COVERED AS ADVANCES. THE GUIDELINES ISSUED BY T HE RBI MAY BE RELEVANT TO MAINTAIN BOOKS OF ACCOUNT OF A CO-OP ERATIVE BANK IN ACCORDANCE AS PER THE SAID GUIDELINES. THEREFORE , DEDUCTION IS ALLOWABLE AS PER EXPLICIT PROVISIONS OF INCOME TAX ACT, 1961. THE LD. CIT (DR) HAS RELIED IN THE CASE OF CIT V. N.C. BUDHARAJA & CO. [1993] 204 ITR 412 (SC)/ [1993] 70 TAXMAN 312(SC), PANDIAN CHEMICALS LTD. V. CIT [2003] 262 ITR 278 (SC) : 129 TAXMAN 539 (SC) AND CIT V. IPCA LABORATORY LTD. [2004] 266 ITR 521 (SC) / [2004] 135 TAXMAN 594 (SC) WHEREIN IT HAS BEEN CLE ARLY LAID JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 11 OF 19 DOWN THAT WHERE PROVISIONS OF STATUTE ARE EXPRESS I N THE STATUTE ITSELF, THEN THE COURT ARE NOT REQUIRED TO LOOK OT HER PROVISIONS FOR INTERPRETATION OF THE EXPRESS PROVISIONS CONTAINED THEREIN. NOR ANY WORDS ARE TO BE IMPORTED TO INTERPRET THE PROVI SIONS OF CONTAINED IN THE STATUTE. THIS VIEW IS ALSO ACCEPTE D BY THE LD. A.R. IN HIS REJOINDER, AND SUBMITTED THAT WHEN PROV ISIONS ARE EXPRESS NO OTHER WORDS CAN BE IMPORTED FOR INTERPRE TATION, BUT SUBMITTED THAT SECTION 36 (1) (VIIA) BEGINS WITH WO RD IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY MEANING THEREBY THAT PROVISION FOR BAD AND DOUBTFUL DEBTS I NCLUDES PROVISIONS AGAINST OVERDUE INTEREST ALSO. HOWEVER, WE ARE AFRAID TO ACCEPT THIS PROPOSITION, AS ACCORDING TO US SECT ION 36 (1) (VIIA) CLEARLY PROVIDES THE TERM OF PROVISION AGAINST ADVANCES AND THE WORD ADVANCES DOES NOT INCLUDE OVERDUE INTEREST ON SUCH ADVANCES. IN VIEW OF THESE FACTS, AND CIRCUMSTANCES , WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LOWE R AUTHORITIES. ACCORDINGLY, THIS GROUNDS OF APPEAL IS DISMISSED 10. GROUND NO. 2 RELATES TO DISALLOWANCE OF RS. 52,00,852/- BEING SHORT PROVISION FOR THE INTEREST SUBSIDY ACCRUED DURING THE YEAR. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 12 OF 19 11. DURING THE COURSE OF HEARING BEFORE US, THE LD. AU THORIZED REPRESENTATIVE OF THE ASSESSEE HAS NOT PRESSED THIS GROUND AND, HENCE, THE SAME IS TREATED AS DISMISSED AS NOT PRES SED. 12. GROUND NO. 3 RELATES TO NOT ALLOWING THE ALLOWABLE PROVISION OF RS. 15,31,00,000/- UNDER SECTION 36(1) (VIIA) EVEN WHEN NO SUCH PROVISION WAS EVER MADE IN THE BOOKS O F ACCOUNTS. 13. FACTS APROPOS OF THIS GROUND ARE THAT THE ASSESSEE HAS CLAIMED ALLOWABLE DEDUCTION U/S 36(1) (VIIA) OF RS. 15,31,00,000/-WITHOUT MAKING ANY PROVISION IN THE B OOKS OF ACCOUNTS. HOWEVER, FROM THE DETAILS FILED ON 20.1.2 014, THE AO NOTICED THAT THE DEDUCTION ALLOWABLE U/S 36(1)(VIIA ) WORKS OUT TO RS. 3, 75,00,000 AS AGAINST RS. 15,31,00,000/- CALC ULATED IN THE WORKING DATED 8.11.2013. ACCORDINGLY, DEDUCTION U/S 36(1)(VIIA) WAS RESTRICTED TO RS. 3,75,00,000/- TO THE EXTENT O F PROVISION MADE IN THE BOOKS OF ACCOUNTS. 14. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A) BUT NOT TO AVAIL. 15. AGGRIEVED WITH THE ORDER CIT(A), THE ASSESSEE HAD F ILED THIS APPEAL BEFORE US. DURING THE COURSE OF HEARING BEFO RE US, THE LD. AR OF THE ASSESSEE, HAS FAIRLY SUBMITTED THAT THIS GROUND OF JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 13 OF 19 APPEAL IS COVERED AGAINST THE ASSESSEE BY DECISION OF THIS BENCH TRIBUNAL THE CASE OF M/S NARMADA MALWA GRAMIN BANK V/S ACIT-2(1) INDORE, I.T.A. NO. 162 AND 152/IND/2011(A .Y. 2007-08) DATED 29.03.2012 (COPY PLACED AT PAGE NO. 78). HOWE VER, THE LD. A.R. DID NOT FORGET TO ADD THAT THE SAID DECISION H AS BEEN CHALLENGED BEFORE THE HON`BLE HIGH COURT. 16. THE LD. CIT (DR) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT ONLY PROVISIONS MADE ARE ALLOWAB LE AND NOT THE ALLOWABLE PROVISIONS. HENCE, THE LOWER AUTHORIT IES HAVE CORRECTLY ADJUDICATED THE ISSUE. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE THIS TRIBUNAL HAS HELD IN THE CASE OF M/S NARMADA MALWA GRAMIN BANK V/S ACIT 2(1) INDORE, I.T.A. NO. 162 &152/IND/2011(A.Y.2007-08) DATED 29. 03.2012 AND IN M.A. NO. 104/IND/2012 DATED 16.4.2013 AS UND ER IN PARA 3 WHICH IS REPRODUCED AS UNDER :- WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL DAT ED 29.03.2013 WHEREIN THE ISSUE WITH REGARD TO ALLOWAB ILITY OF CLAIM OF DEDUCTION U/S 36(1)(VIIA) OF THE ACT WAS D ECIDED AFTER DISCUSSING VARIOUS DECISIONS OF HON'BLE SUPREME COU RT AS WELL AS HIGH COURT IN PARA 11 TO 16, THE ISSUE WITH REGARD TO JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 14 OF 19 QUANTIFICATION OF DEDUCTION U/S 36(1)(VIIA) WAS RES TORED TO THE FILE OF THE ASSESSING OFFICER FOR RECOMPUTING THE C LAIM OF DEDUCTION TO THE EXTENT OF AMOUNT WRITTEN OFF IN TH E BOOKS OF ACCOUNTS, EVEN THOUGH SUCH WRITE OFF WAS NOT PARTY- WISE. THE CONTENTION OF LD. AR WAS THAT FULL AMOUNT OF PR OVISION FOR BAD AND DOUBTFUL DEBT SHOULD BE ALLOWED IRRESPECTIV E OF ENTRY MADE IN THE BOOKS OF ACCOUNT. WE ARE NOT IN AGREEME NT WITH THE ASSESSEES CONTENTION IS SO FAR AS PROVISION CO NTAINED IN CLAUSE (VIIA) OF SECTION 36 CLEARLY STARTS WITH THE WORDS IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBT MADE BY SCHEDULE BANK. THUS, TO THE EXTENT OF PROVISION MADE FOR BAD AND DOUBTFUL DEBTS IN THE BOOKS OF ACCOUNT, CAN BE ALLOWED. WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THE TRIBUNAL, WHICH CAN BE RECTIFIED U/S 254(2) OF THE ACT. ON THE CONTRARY, THE TRIBUNAL HAS GIVEN A FAVOURABLE FINDI NG AND DIRECTION TO THE ASSESSING OFFICER TO ALLOW THE CLA IM OF DEDUCTION TO THE EXTENT OF AMOUNT WRITTEN OFF IN TH E BOOKS OF ACCOUNT NOTWITHSTANDING THE FACT THAT SUCH WRITE OF F WAS NOT PARTYWISE. THIS OBSERVATION WAS MADE KEEPING IN VIE W THE VERDICT OF HON'BLE SUPREME COURT IN THE CASE OF VIJ AYA BANK 323 ITR 166. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 15 OF 19 18. IN THE LIGHT OF ABOVE FINDINGS, WE ARE ALSO OF THE OPINION THAT DEDUCTION U/S 36(1)(VIIA) IS ALLOWABLE TO THE EXTEN T OF PROVISION MADE IN BOOKS OF ACCOUNTS AND NOT ON ALLOWABLE PROV ISION WHICH ARE NOT ENTERED IN THE BOOKS OF ACCOUNTS. THEREFORE , FOLLOWING THE ABOVE DECISION, THIS GROUND OF APPEAL IS DISMISSED. I.T.A. NO. 99/IND/2016 REVENUES APPEAL.: 19. GROUND NO. 1 RELATES TO DELETION AND ADDITION OF RS . 17,29,426/- BEING REBATE PROVIDED TO THE RURAL SOCI ETIES. 20. BRIEFLY, FACTS ARE THAT, THE ASSESSEE PROVIDED LOAN TO RURAL SOCIETIES FROM ITS OWN FUND @ 9% OF INTEREST. HOWEV ER, BECAUSE OF NON-RECOVERY OF LOANS, THE SOCIETIES ARE UNABLE TO PAY THE ADVANCES, AND THEREFORE, A SETTLEMENT IS REACHED TH ROUGH THE LOK ADALATS IN RESPECT OF INTEREST REBATE. ACCORDINGLY, THE ASSESSEE HAS PROVIDED A SUM OF RS. 17,29,426/- ON ACCOUNT OF REBATE. HOWEVER, THE AO DISALLOWED THE SAME BY TREATING IT AS A PROVISION AND NOT AS AN EXPENDITURE INCURRED. 21. BEING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT (A) HAS ALLOWED THE DEDUCTION OF T HIS AMOUNT BY HOLDING THAT IT IS A REBATE ALLOWED FOR INTEREST ON THE BASIS OF COMPROMISE MADE WITH THE RURAL SOCIETIES AND SETTLE D THROUGH LOK ADALATS. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 16 OF 19 22. THE LD. CIT (DR) VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 23. THE LD. A.R. SUBMITTED THAT THIS IS A REBATE OF INT EREST TO THE SOCIETIES, WHICH HAS ARRIVED AT AS PER THE DECISION REACHED BETWEEN THE DEBTORS AND BANK BEFORE THE LOK ADALAT. THE LD. AR DREW OUR ATTENTION, TO THE PAPER BOOK PAGE NO. 51 A ND 52, BEING A RESOLUTION PASSED BY THE ASSESSEE AND COPY OF COM PROMISE LETTER IN RESPECT OF LOK ADALAT`S SETTLEMENT BY WHI CH THE ASSESSEE SOCIETY DECIDED TO WRITE OFF A SUM OF RS. 17,29,426 /- IN THE PROFIT & LOSS ACCOUNT WHICH IS APPEARING AT PAPER BOOK PAG E NO. 22. THE COPY OF LEDGER ACCOUNT IN RESPECT OF ABOVE AMOU NT AS WRITTEN OFF IS ALSO APPEARING AT PAPER BOOK PAGE 53 AND 53. ACCORDINGLY, THE LD. AR CONTENDED THAT THIS AMOUNT IS NOT A PROV ISION BUT REBATE, WHICH HAS BEEN DEBITED TO THE PROFIT AND LO SS ACCOUNT AND CREDITED TO THE ACCOUNTS OF THE VARIOUS SOCIETIES, HENCE, THE LD. CIT(A) HAS RIGHTLY ALLOWED THIS DEDUCTION. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT AN AMOUNT OF RS. 17,29,426/- HAS BEEN DEBITED IN PROF IT & LOSS ACCOUNT AS AMOUNT WRITTEN OFF (PAPER BOOK PAGE 22). THIS IS FURTHER SUPPORTED BY THE COPY OF THE LEDGER ACCOUNT APPEARING AT PAPER BOOK PAGE NO 53 AND 54 AND COPY OF RESOLUTION (PAPER BOOK PAGE NO. 51) AND COMPROMISED LETTER (PAPER BOO K PAGE NO. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 17 OF 19 52). THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT (A) WAS RIGHT IN ALLOWING THIS AS BUSINESS EXPENDITURE, HENCE, WE AR E NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). ACCOR DINGLY, THIS GROUND OF APPEAL IS DISMISSED. 25. GROUND NO. 2 RELATES TO DELETION OF RS. 2,05,14,510 /- BEING INTEREST SUBSIDY TO BE PAID TO AGRICULTURAL F INANCE SOCIETIES. 26. FACTS APROPOS OF THIS GROUND ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.2,05,14,510/- BEING PROVISI ON FOR INTEREST SUBSIDY. THE AO DISALLOWED THE SAME BY OBS ERVING THAT SUCH PROVISION MIGHT HAVE BEEN ALLOWABLE AS PER THE NORMS OF RESERVE BANK OF INDIA AND NABARD BUT THE SAME IS NO T ALLOWABLE UNDER ANY OF THE PROVISIONS OF THE INCOME -TAX ACT, 1961 NOR THE ASSESSEE HAS QUOTED ANY SECTIONS OF INCOME- TAX ACT,1961 IN SUPPORT OF HIS CLAIM. 27. BEING, AGGRIEVED THE ASSESSEE CARRIED THE MATTER BE FORE THE CIT(A).THE LD. CIT(A) HAS ALLOWED THE DEDUCTION OF RS. 2,05,14,510/- BY HOLDING THAT IT IS A BUSINESS EXPE NDITURE AND IS REQUIRED TO BE BORNE BY THE ASSESSEE DURING THE COU RSE OF BUSINESS. JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 18 OF 19 28. BEING, AGGRIEVED THE REVENUE FILED THIS APPEAL BEFO RE THE TRIBUNAL. THE LD. CIT (DR) SUBMITTED THAT IT IS A P ROVISION, WHICH IS NOT ALLOWABLE AS DEDUCTION AND SUPPORTED THE ORD ER OF THE AO. 29. THE LD. AR SUBMITTED THAT THE AMOUNT OF RS. 2,05,14 ,510/- IS NOT A RESERVE CREATED BY BANK, BUT IT IS A LIAB ILITY FOR THE SUBSIDY GIVEN BY THE FINANCE SOCIETIES. IT WAS SUBM ITTED THAT THE APEX BANK (NABARD) FINANCES THE ASSESSEE @5.5% FOR THE AMOUNT RECEIVED FROM (NABARD). THIS AMOUNT IS FINAN CED BY THE ASSESSEE TO THE RURAL CO-OPERATIVE SOCIETIES @9% IN TEREST, WHO IN TURN GRANTS LOAN TO THE AGRICULTURIST @5%, ACCORDIN G TO THE POLICY OF THE CENTRAL AND STATE GOVERNMENT. THE NORMAL RAT E OF INTEREST TO BE CHARGED FROM FARMERS IS @11%. HOWEVER, THESE SOCIETIES ARE CHARGING THE INTEREST ON AGRICULTURAL FINANCE @5% A ND ACCORDINGLY, THERE IS A DEFICIT OF 6% ON ACCOUNT OF INTEREST. THE STATE GOVERNMENT GRANTS THE SUBSIDY OF @4.5%, WHICH IS PASSED THROUGH THE ASSESSEE TO THESE SOCIETIES ON THE ADVA NCES GIVEN BY THE NABARD. THE ASSESSEE REQUIRED TO GIVE THE SUBSI DY @1.5% FROM ITS OWN FUNDS AS INTEREST SUBSIDY TO BE GIVEN TO RURAL SOCIETIES. THIS AMOUNT IS PROVIDED AS EXPENDITURE I N THE BOOKS OF ACCOUNTS, HENCE, THE SAME IS NOT A PROVISION BUT AN ASCERTAINED LIABILITY THOUGH ON ESTIMATION BASIS WHICH IS PAID IN THE JILLA SAHAKARI KENDRIYA BANK, MARYADIT, MANDSAUR I. T.A. NO.182& 99 /IND/2016/A.Y.: 11-12 PAGE 19 OF 19 SUBSEQUENT YEAR ON THE BASIS OF ACTUAL LIABILITIES. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THIS CASE, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER LD. CIT (A). ACCORDINGLY, THE SAME IS UPHELD THEREFORE, THIS GROUND OF APPEAL OF REVENUE IS DISM ISSED. 30. IN THE RESULT, APPEALS OF THE ASSESSEE AS WELL AS R EVENUE STANDS DISMISSED. 31. THE ORDER PRONOUNCED IN THE OPEN COURT ON 22. 03. 2 017. SD/- SD/- ( .. ) /(C.M. GARG) (..) /(O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DTD.