ACIT Cuddalore Circle, Cuddalore V. The Cuddalore District Central Co-op Bank Ltd., Cuddalore

ITA 1921/CHNY/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2529 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K RAVI
• Keywords: Question of law; Bad and doubtful debts; Set aside
• Section: 143(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ ITA NO.1921/CHNY/2018 /ASSESSMENT YEAR: 2014-15 THE ASST. COMMISSIONER OF INCOME TAX, CUDDALORE CIRCLE, CUDDALORE. VS. M/S. THE CUDDALORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD., NO.1, BEACH ROAD, CUDDALORE 607 001. [PAN: AAAAT 7716R] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SURESH PERIASAMY, JCIT /RESPONDENT BY : MR. K. RAVI, ADVOCATE /DATE OF HEARING : 22.03.2021 / DATE OF PRONOUNCEMENT : 09.04.2021 / O R D E R PER SHRI V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), P UDUCHERRY IN I.T.A NO.200/CIT(A)-PDY/2016-17 DATED 19.03.2018 RE LEVANT TO THE ASSESSMENT YEAR 2014-15. I.T.A NO.1921/CHNY/2018 :- 2 -: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS M/S. THE CUDDALORE DISTRICT CENTRAL CO-OPERATIVE BANK LTD. F ILED ITS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF RS. 11,36,78,39 6/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 ( FOR SHORT THE ACT). THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND AFTER FOLLOWING THE DUE PROCEDURE ASSESSMENT WAS COMPLETED U/S. 143 (3) OF THE ACT. IN THE ASSESSMENT ORDER, THE AO HAS NOTED THAT FROM THE BALANCE SHEET IT IS SEEN THAT THE ASSESSEE HAS CREATED RESERVE FO R NPA TO THE EXTENT OF RS. 17,52,92,029/- ONLY. HENCE, TOTAL DEDUCTIONS ALLOWED U/S. 36(1)(VIIA) OF THE ACT HAS TO BE RESTRICTED ONLY TO THE EXTENT OF RESERVE CREATED FOR NPA I.E., TO THE EXTENT OF RS. 17,52,92 ,029/-. ACCORDINGLY, HE HAS DISALLOWED THE EXCESS CLAIM MADE BY THE ASSE SSEE OF RS. 3,21,07,404/- (20,73,99,433 - 17,52,92,029/-). 3. ON APPEAL, THE LD. CIT(A) DELETED THE DISALLOWA NCE MADE BY THE ASSESSEE BY OBSERVING AS UNDER: 5.3.2 AS PER SECTION 36(1) (VIIA)(A) OF INCOME TAX ACT 1961, THE DEDUCTION ,R DOUBTFUL DEBTS IN THE CASE OF BANKS IS TO BE AN AMOUNT NOT EXCEEDING 7.5% OF THE GROSS TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND C HAPTER VT-A) AND AN AMOUNT NOT EXCEEDING 10% THE AGGREGATE AVERA GE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK CO MPUTED IN THE PRESCRIBED MANNER 5.3.3 THE AFORESAID RESERVE FOR NPA IS A REQUIREMEN T UNDER VARIOUS STATUTORY PROVISIONS LIKE RBI GUIDELINES, C OOPERATIVE SOCIETIES ACT ETC., AND THE BANK HAS TO PREPARE ACC OUNTS ACCORDING TO THE STATUTORY REQUIREMENTS. THESE RESE RVES ARE TO BE I.T.A NO.1921/CHNY/2018 :- 3 -: ADJUSTED IN ARRIVING AT THE GROSS TOTAL INCOME FOR COMPUTATION PURPOSE TO COMPUTE THE PROVISION FOR BAD AND DOUBTF UL DEBTS AS PER THE PROVISIONS OF SECTION 36(1) (VIIA)(A) OF IN COME TAX ACT 1961. HENCE DEDUCTION CLAIMED UNDER SECTION 36(1) ( VIIA)(A) OF THE INCOME TAX ACT 1961 WHICH BY ITSELF HAS MAXIMUM LIM IT FOR DEDUCTION, CANNOT BE RESTRICTED TO THE RESERVES MAD E BY THE BANKS WHICH ARE STATUTORY REQUIREMENT UNDER OTHER LAWS EX CEPT TO THE ADJUSTMENTS TO BE MADE TO ARRIVE AT GROSS TOTAL INC OME FOR COMPUTATION PURPOSE. 5.3.4 IN THE LIGHT OF THE ABOVE EXPLANATION TO THE PROVISIONS OF SECTION SECTION 36(1) (VIIA) (A) OF INCOME TAX ACT 1961, THE A. 0. IS NOT CORRECT IN DISALLOWING THE CLAIM AS EXCESS DEDU CTION OF RS.3,21,07,404/- 5.3.5 THEREFORE, THE ABOVE ADDITION IS DELETED. 4. ON BEING AGGRIEVED, THE REVENUE RAISED THE FOLLO WING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE TOWARDS EXCESS CLAIM OF DEDUCTION U/S.36(L )(VIIA). 2.1 THE LEARNED CIT(A) FAILED TO NOTE THAT THE STAT UTE MANDATES CREATION OF A RESERVE IN ORDER TO CLAIM DE DUCTION U/S.36(1)(VIIA). 2.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E FACT RBI NORMS FOR BANKING ENTITIES ARE NOT BINDING ON R EVENUE AS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN TH E CASE OF SOUTHERN TECHNOLOGIES LTD. (2010) 320 ITR 577(SC ). 2.3 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DE DUCTION U/S.36(1)(VIIA) NEED NOT BE RESTRICTED TO THE RESER VES CREATED. 2.4 THE LEARNED CIT(A) ERRED IN NOT TAKING COGNIZAN CE OF THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF STATE BANK OF P ATIALA (2005) ITR 54 WHICH IS DIRECTLY ON THE ISSUE AND WH ERE IT HAS BEEN HELD THAT THE DEDUCTION CANNOT EXCEED THE RESERVES CREATED. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED I.T.A NO.1921/CHNY/2018 :- 4 -: CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 5. THE LD. DR HAS SUBMITTED BEFORE US THAT THE ASSE SSEE HAS ONLY CREATED A PROVISION FOR NPA AT RS. 17,52,92,029/- A ND HE HAS CLAIMED IN THE RETURN OF INCOME U/S. 36(1)(VIIA) OF THE ACT FOR RS. 20,73,99,433/- AND SUBMITTED THAT THE ASSESSEE IS ONLY ELIGIBLE FO R THE PROVISION MADE FOR NPA FOR RS. 17,52,92,029/-. FOR THE ABOVE CONT ENTION, HE HAS RELIED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA VS. CIT [2005] 143 TAXMAN 196 (PUNJ. & HAR) AND ALSO THE DECISION OF THE CO-ORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF M/S. NAZARETH URBAN CO-OPERATIVE BANK LTD., VS. DCI T IN ITA NOS. 513 & 514/CHNY/2018 FOR AYS 2013-14 & 2014-15 DATED 24.06.2019 AND ALSO RELIED ON THE DECISION OF THE ANOTHER CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. THE SALEM DT. CENTRAL CO-OP. BANK LTD. VS. DCIT IN ITA NO.1168/MDS/2016 DATED 07 .06.2017 . FURTHER, THE LD. DR ALSO RELIED ON CBDT INSTRUCTION NO.17/2008 AND SUBMITTED THAT THE ASSESSEE IS ONLY ELIGIBLE TO CLA IM DEDUCTIONS U/S. 36(1)(VIIA) OF THE ACT TO THE EXTENT PROVISION MADE FOR NPA AND STRONGLY SUPPORTED THE ORDER PASSED BY THE AO. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT AS PER S. 36(1)(VIIA) OF THE ACT, NO REFERENCE IS MADE TO I.T.A NO.1921/CHNY/2018 :- 5 -: BOOKS OF ACCOUNTS AND THE ASSESSEE NEED NOT MAKE AN Y PROVISION FOR NPA AND THE ASSESSEE IS ELIGIBLE FOR DEDUCTION AS P ER STATUTE SUBJECTED TO STATUTORY LIMITATIONS PROVIDED BY THE ACT. HE H AS ALSO RELIED ON THE DECISION OF THE HON'BLE ITAT, DELHI BENCHES IN THE C ASE OF DCIT VS. PRATHMA BANK IN ITA NO.2924/DEL/2015 FOR AY 2011-12 DATED 22/10/2019 AND HE HAS ALSO SUBMITTED THAT WHERE TWO VIEWS ARE POSSIBLE FOR THE VIEW WHICH IS IN FAVOUR OF THE ASS ESSEE HAS TO BE CONSIDERED. HE FURTHER SUBMITTED THAT S. 36(1)(VII ) OF THE ACT PROVIDES REFERENCE TO THE ACCOUNTS OF THE ASSESSEE. SECTION 36(1)(VIIA) OF THE ACT NO REFERENCE HAS MADE TO THE ACCOUNTS OF THE AS SESSEE. THEREFORE, EVEN IF THE ASSESSEE HAS NOT MADE ANY PR OVISION FOR NPA ACCORDING TO THE LIMITATIONS PROVIDED BY THE STATUT E, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERI ALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. 8. IN THIS CASE, THE ASSESSEE HAS MADE A PROVISION FOR NPA FOR RS.17,52,92,029/-. HE HAS ACTUALLY CLAIMED IN THE R ETURN OF INCOME AT RS. 20,73,99,433/-. THE CASE OF THE AO IS THAT THE ASSESSEE IS ONLY ELIGIBLE TO THE EXTENT OF PROVISION MADE FOR NPA NO T FOR ENTIRE CLAIM CLAIMED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) ALLOWED THE ENTIRE I.T.A NO.1921/CHNY/2018 :- 6 -: AMOUNT CLAIMED BY THE ASSESSEE. THE SIMILAR ISSUE H AS BEEN CONSIDERED BY THE HON'BLE PUNJAB & HARYANA HIGH COU RT (SUPRA) AND HAS HELD THAT MAKING OF PROVISION FOR BAD AND DOUBT FUL DEBT EQUIVALENT TO AN AMOUNT CLAIMED AS A DEDUCTION IN ACCOUNT BOOK S IS NECESSARY FOR CLAIMING DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE JUDGMENT I S EXTRACTED AS UNDER: 5. SECTION 36(1)(VZZA) OF THE ACT AS APPLICABLE TO THE ASSESSMENT YEAR 1985 86 READS AS UNDER: IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL D EBTS MADE BY A SCHEDULED BANK [NOT BEING A BANK APPROVED BY T HE CENTRAL GOVERNMENT FOR THE PURPOSES OF CLAUSE (VII) OR A BANK INCORPORATED BY OR UNDER THE LAWS OF A COUNTRY OUTSIDE INDIA] OR A NON SCHEDULED BANK AN AMOUNT NOT EXCEED ING TEN PER CENT OF THE TOTAL INCOME (COMPUTED BEFORE MAKIN G ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VI A) OR AN AMOUNT NOT EXCEEDING TWO PER CENT OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER WHICHEVER IS HIGH ER 6. A BARE PERUSAL OF THE ABOVE SHOWS THAT THE DEDUC TION ALLOWABLE UNDER THE ABOVE PROVISIONS IS IN RESPECT OF THE PRO VISION MADE THEREFORE MAKING OF A PROVISION FOR BAD AND DOUBTFU L DEBT EQUAL TO THE AMOUNT MENTIONED IN THIS SECTION IS A MUST FOR CLAIMING SUCH DEDUCTION THE TRIBUNAL HAS RIGHTLY POINTED OUT THAT THIS ISSUE STANDS FURTHER CLARIFIED FROM THE PROVISO TO CLAUSE (VU) O F SECTION 36(1) OF THE ACT WHICH READS AS UNDER: PROVIDED THAT IN THE CASE OF AN ASSESSEE TO WHICH CLAUSE (VIIA) APPLIES THE AMOUNT OF THE DEDUCTION RELATIN G TO ANY SUCH DEBT OR PART THEREOF SHALL BE LIMITED TO THE A MOUNT BY WHICH SUCH DEBT OR PRT THEREOF EXCEEDS THE CREDIT B ALANCE M THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MA DE UNDER THAT CLAUSE 7. THIS ALSO CLEARLY SHOWS THAT MAKING OF PROVISION EQUAL TO THE AMOUNT CLAIMED AS DEDUCTION IN THE ACCOUNT BOOKS IS NECESSARY FOR CLAIMING DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. THE TRIBUNAL HAS DISTINGUISHED VARIOUS AUTHORITIES RELI ED UPON BY THE ASSESSEE WHEREIN DEDUCTIONS HAD BEEN ALLOWED UNDER VARIOUS PROVISIONS WHICH ALSO REQUIRED CREATION OF RESERVE AFTER THE ASSESSEE HAD CREATED SUCH RESERVE IN THE ACCOUNT BO OKS BEFORE I.T.A NO.1921/CHNY/2018 :- 7 -: THE COMPLETION OF THE ASSESSMENT. IT HAS BEEN CORRE CTLY POINTED OUT THAT IN ALL THOSE CASES, RESERVES/PROVISIONS HAD BE EN MADE IN THE BOOKS OF ACCOUNT OF THE SAME ASSESSMENT YEAR AND NO T OF THE SUBSEQUENT ASSESSMENT YEAR. 8. IN THE PRESENT CASE, THE ASSESSEE HAS NOT MADE A NY PROVISION IN THE BOOKS OF ACCOUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E 1985 86 BY MAKING SUPPLEMENTARY ENTRIES AND BY REVISING ITS BALANCE SHEET. THE PROVISION HAS BEEN MADE IN THE B OOKS OF ACCOUNT OF THE SUBSEQUENT YEAR. 9. WE ARE, THEREFORE, SATISFIED THAT THE TRIBUNAL W AS RIGHT IN HOLDING THAT SINCE THE ASSESSEE HAD MADE A PROVISION OF RS. 1,19,36,000 FOR BAD AND DOUBTFUL DEBTS, ITS CLAIM FOR DEDUCTION UNDER SECTION 36(L)(VIIA) OF THE ACT HAD TO BE RESTRICTED TO THAT AMOUNT ONLY. SINCE .THE LANGUAGE OF THE STATUTE IS CLEAR AND IS NOT CA PABLE OF ANY OTHER INTERPRETATION, WE ARE SATISFIED THAT NO SUBSTANTIA L QUESTION OF LAW ARISES IN THIS APPEAL FOR CONSIDERATION BY THIS COU RT. 10. THE APPEAL IS, ACCORDINGLY, DISMISSED. NO COSTS . 9. THE DECISION OF THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF M/S. NAZARETH URBAN CO-OPERATIVE BANK LTD. (SUPR A) HAS CONSIDERED THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH CO URT (SUPRA) AND HELD AS UNDER: 6. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT MATERIAL. IT S CLEAR FROM THE DECISION OF THE HONB LE HIGH COURT OF PUNJAB & HARYANA, SUPRA, THAT MAKING OF PROVISION E QUAL TO THE AMOUNT CLAIMED AS DEDUCTION, IN THE ACCOUNT BOOKS I S NECESSARY FOR CLAIMING DEDUCTION U/S.36(1)(VIIA). SINCE THE A SSESSEE HAS NOT MADE ANY PROVISION IN THE BOOKS OF ACCOUNTS, AS ADM ITTED BY THE ASSESSEE BEFORE THE AO BY ITS LETTERS DATED 21.12.2 016, IN THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE IS NOT EN TITLED FOR THE IMPUGNED DEDUCTIONS FOR THE RESPECTIVE ASSESSMENT Y EARS. FURTHER, THE RELEVANT PORTION OF THE ORDER OF THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.THE SALEM DT. CENTRAL C O.OP BANK LTD., SALEM VS. THE DCIT, SALEM IN ITA NO.1168/CHNY/MDS/2 016 FOR THE AY 2008-09 DATED 07.06.2017, IS EXTRACTED AS UNDER: 7.1 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAS DEBITED A SUM OF RS.7,7 2,84,858/- UNDER THE HEAD NPA DURING THE PREVIOUS YEAR RELEVANT TO T HE AY 2008-09 AND CLAIMED THE DEDUCTION U/S.36(I)(VII)(A) FOR AN AMOUNT OF RS.19,49,25,398/-. THE LD.COUNSEL ARGUED THAT THE A SSESSEE HAS ALREADY CREATED THE PROVISION FOR NPA IN THE EARLIE R YEARS WHICH I.T.A NO.1921/CHNY/2018 :- 8 -: REMAINED UNADJUSTED. THEREFORE, THERE IS NO NEED TO CREATE ANY FRESH PROVISION DURING THE PREVIOUS YEAR RELEVANT TO THE AY 2008-09. 8.0 IN INCOME TAX, EACH YEAR IS AN INDEPENDENT AND THE INCOME HAS TO BE COMPUTED AS PER THE SYSTEM OF ACCOUNTING REGU LARLY FOLLOWED BY THE ASSESSEE. THEREFORE, THE DEDUCTION CAN BE MADE BY THE ASSESSEE ONLY ON THE BASIS OF THE EXPENDITURE DEBITED TO THE PROFIT & LOSS A/C FROM THE PREVIOUS YEAR RELEVANT TO THE AY UNDER CON SIDERATION. NO EXPENDITURE WHICH IS NOT DEBITED TO THE PROFIT & LO SS A/C IN THE YEAR UNDER CONSIDERATION IS PERMISSIBLE FOR DEDUCTION. I N THE INSTANT CASE, THE ASSESSEE HAS NOT DEBITED THE EXPENDITURE RELATI NG TO THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS. THEREFORE, T HE DEDUCTION U/S.36(1)(VIIA) IS PERMISSIBLE TO THE EXTENT OF THE AMOUNT DEBITED TO THE PROFIT & LOSS A/C OR AS PER THE PERMISSIBLE LIMITS SPECIFIED U/S.36(1)(VIIA) WHICHEVER IS LESS. THE CONTENTION O F THE ASSESSEE THAT THE RESERVES ALREADY CREATED IN THE EARLIER YEARS I S AVAILABLE IN THE BOOKS OF ACCOUNTS WHICH REMAINED UNADJUSTED IS NOT AN ACCEPTABLE PROPOSITION AND NOT AS PER THE INCOME TAX ACT. THIS VIEW IS CLARIFIED BY THE CBDT IN CIRCULAR NO.17/2008 WHICH WAS RELIED UPON BY THE LD.CIT(A) IN PARA NO.4.2 WHICH IS RE-PRODUCED HEREU NDER: 4.2. THE ASSESSING OFFICER HAS RESTRICTED THE CLAIM OF THE ASSESSEE BANK TO THE AMOUNT OF PROVISION MADE FOR THE RELEVA NT ASSESSMENT YEAR. THIS RESTRICTION SHOULD BE CONSIDERED IN LIGH T OF THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE IT ACT READ WITH THE CBD T INSTRUCTION NO.17/2008 DATED 26.11.2006. IN THIS INSTRUCTION IT IS CLEARLY STATED AS FOLLOWS: QUOTE: (B) THE DEDUCTION FOR PROVISION FOR BAD AND DOUBTFU L DEBTS SHOULD BE RESTRICTED TO THE AMOUNT OF SUCH PROVISION ACTUALLY , CREATED IN THE BOOKS OF THE ASSESSEE IN THE RELEVANT YEAR OR THE A MOUNT CALCULATED AS PER PROVISIONS OF SECTION 36(1)(VIIA), WHICHEVER IS LESS. UNQUOTE. 9.0 THE CIRCULAR IS VERY CLEAR THAT THE DEDUCTION I S PERMISSIBLE ONLY TO THE EXTENT OF PROVISIONS ACTUALLY CREATED IN THE BOOKS OF ACCOUNTS FOR THE RELEVANT ASSESSMENT YEAR. THIS VIEW IS SUPP ORTED BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT CITED SUPRA. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD.CIT(A) AND THE SAME IS ALLOWED. GROUND NOS.6 12 OF THE A SSESSEE ARE DISMISSED. 7. SINCE THE CO-ORDINATE BENCH OF THIS T RIBUNAL HAS APPLIED THE DECISION OF THE HONBLE PUNJAB & HARYAN A HIGH COURT, CITED SUPRA, AND DISMISSED THE APPEAL IN THE ABOVE CASE, FOLLOWING THE SAME, THE APPEALS FILED BY THE ASSESSEE ARE ALS O DISMISSED. 10. IN THE CASE OF M/S. THE SALEM DT. CENTRAL CO.OP . BANK LTD. (SUPRA) HAS CONSIDERED THE CIRCULAR NO.17/2018 ISSU ED BY THE DEPARTMENT HELD AS UNDER: I.T.A NO.1921/CHNY/2018 :- 9 -: 9.0 THE CIRCULAR IS VERY CLEAR THAT THE DEDUCTION IS PERMISSIBLE ONLY TO THE EXTENT OF PROVISIONS ACTUALLY CREATED I N THE BOOKS OF ACCOUNTS FOR THE RELEVANT ASSESSMENT YEAR. THIS VIE W IS SUPPORTED BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIG H COURT CITED SUPRA. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE LD.CIT(A) AND THE SAME IS ALLOWED. GROUND NOS.6 1 2 OF THE ASSESSEE ARE DISMISSED. 11. IN SO FAR AS THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF DCIT VS. PRATHMA BANK (SUPRA) IS CONCERNED, BY FOLLOWING THE ASSESSEES OWN CASE, THE REVENUE A PPEAL WAS DISMISSED. WE FIND THAT THE HON'BLE PUNJAB & HARYA NA HIGH COURT (SUPRA) HAS LAID DOWN A CLEAR RATIO THAT TO CLAIM D EDUCTION MAKING OF PROVISION FOR BAD AND DOUBTFUL DEBT EQUIVALENT TO A N AMOUNT CLAIMED AS A DEDUCTION IN ACCOUNT BOOKS IS NECESSARY FOR CLAIM ING DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. RESPECTFULLY FOLLOWING THE PRINCIPLES OF PRECEDENT, WE REVERSE THE ORDER PASSED BY THE LD. CIT(A). APA RT FROM THAT THE TWO OTHER CO-ORDINATE BENCHES OF THE TRIBUNAL HAS FOLLO WED THE HON'BLE PUNJAB & HARYANA HIGH COURT (SUPRA) AND REJECTED TH E ARGUMENT MADE BY THE ASSESSEE. IN VIEW OF THE ABOVE, WE FIND THAT THE LD. CIT(A) NOT CORRECT IN ALLOWING THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE TO THE EXTENT OF THE AMOUNT CLAIMED IN THE RETURN OF INCOM E WITHOUT MAKING A PROVISIONS FOR NPA. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS ALLOWED. I.T.A NO.1921/CHNY/2018 :- 10 -: 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED ON 09 TH APRIL, 2021 IN CHENNAI. SD/ - SD/ - ( & ) (G. MANJUNATHA) + /ACCOUNTANT MEMBER ( - ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI, /DATED: 09 TH APRIL, 2021 . EDN, SR. P.S /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF