DCIT, Meerut V. M/s Sarva UP Gramin Bank, Meerut

ITA 2096/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3709 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Bad and doubtful debts
• Section: 80C; 143(3); 113; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. KULDIP SINGH, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2096/DEL/2017 : ASSTT. YEAR : 2013-14 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, MEERUT VS M/S SARVA UP GRAMIN BANK, C-39/5, JAGRITI VIHAR, MEERUT (APPELLANT) (RESPONDENT) PAN NO. AACAS9891G ASSESSEE BY : SH. VIVEK GUPTA, CA REVENUE BY : SH. SARAS KUMAR, SR. DR DATE OF HEARING: 16.01.2020 DATE OF PRONOUNCEMENT: 24.02.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. CIT (A), MEERUT DATED 31.01.2017. 2. FOLLOWING THE GROUNDS HAVE BEEN RAISED BY THE RE VENUE: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACT IN DELETING THE ADDITION OF RS. 31,99,62,000/- MADE BY THE AO ON A/C OF DISALLOWANCE OF EXCESS DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIIA) OF THE INCOME TAX ACT, 1961 ON A/C OF P ROVISION FOR BAD AND DOUBTFUL DEBTS DESPITE FAILURE OF ASSESSEE AS W ELL AS ITS STATUTORY AUDITOR IN JUSTIFYING THE NEED OF SAID PR OVISION AND BASIS THEREOF AND WHEREAS SEPARATE PROVISION TOWARDS NPA FOR RS. 52.13 LAC WAS ALREADY MADE BY THE ASSESSEE. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND FACT IN DELETING THE ADDITION OF RS. 31,99,62,000/- MADE BY THE AO ON A/C OF DISALLOWANCE OF EXCESS DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIIA) OF THE INCOME TAX ACT, 1961 ON A/C OF P ROVISION FOR BAD AND DOUBTFUL DEBTS DESPITE AOS OBSERVATION THAT TA XABLE PROFIT IS COMPUTED AS PER THE PROVISIONS OF INCOME TAX ACT AN D NOT AS PER ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 2 INCOME RECOGNITION NORMS OF RBI AND ALSO HIS WELL R EASONED CALCULATION OF ALLOWABLE DEDUCTION AT RS. 43,58,000 /- ONLY WITH PROPER JUSTIFICATION BEFORE MAKING DISALLOWANCE OF EXCESS DEDUCTION. 3. WITHOUT PREJUDICE TO THE ABOVE, WHETHER IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN NOT CONFIRM ING THE ADDITION OF RS. 26,72,00,000/- MADE BY THE A.O. ON A/C OF IT BEING UNJUSTIFIED AS IT WAS A PROVISION AGAINST TOTAL MON THLY AVERAGE ADVANCES OF RURAL BRANCHES OF THE BANK FOR BAD AND DOUBTFUL DEBT, OVER AND ABOVE THE PROVISION REQUIRED TO BE MADE IN ACCORDANCE WITH THE PRUDENTIAL NORMS SUGGESTED BY RBI FOR PREV IOUS YEAR, THOUGH SEPARATE ADDITION WAS NOT MADE ON THIS A/C A S THE SAME WAS INCLUDED IN TOTAL DISALLOWANCE OF RS. 31,99,62, 000/- ALREADY MADE. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE. COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASI DE AND THAT OF THE A.O. BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER HAS DISALLOWED AN AMOUNT OF RS.31,99,62,000/- CLAIMED BY THE ASSES SEE U/S 36(1)(VIIA) OF THE INCOME TAX ACT, 1961. THE REASONING GIVEN BY THE ASSESSING OFFICER FOR DISALLOWING THE CLAIM IS AS UNDER: (A) ASSESSEE FAILED TO GIVE CLARIFICATION AND JUSTI FICATION REGARDING THE PBDD MADE. (B) STATUTORY AUDITOR ALSO FAILED TO JUSTIFY THIS A MOUNT. (C) ASSESSEE FAILED TO PROVIDE EXACT MECHANISM OR P ROCEDURE BY WHICH THIS AMOUNT WAS CALCULATED. (D) EVEN FOR THE AMOUNT OF RS. 2672.20 LACS, STATUT ORY AUDITOR ALSO COMMENTED THAT THIS AMOUNT WAS CREATED BY THE BANK OVER AND ABOVE THE REQUIRED PROVISIONS MADE BY THE BANK AS PER PRUDENT IAL NORMS. (E) DURING THE YEAR, OVER AND ABOVE PROVISIONS FROM THE PRUDENTIAL NORMS WAS INCREASED EXPONENTIALLY FROM RS. 3.70 CRORES FO R PRECEDING YEAR TO 26.72 CRORES FOR CURRENT YEAR. FOR SUCH A HIGH INCR EASE, NO EXPLANATION OR JUSTIFICATION WAS OFFERED BY THE ASSESSEE. ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 3 (F) PROVISIONS WAS MADE BY RANDOM FIGURE WITHOUT AN Y JUSTIFICATION AND REQUIREMENT WHICH DIRECTLY AFFECT THE TAXABLE INCOM E OF THE ASSESSEE. 4. THE LD. CIT (A) DELETED THE ADDITION ON TWO GROU NDS VIZ. 1. FROM THE ASSESSMENT YEARS 2008-09 TO 2011-12, TH E CASE WAS ASSESSED U/S 143(3) AND U/S 148 ON THE SAME ISSUE AND NO DIS ALLOWANCE HAS BEEN RESORTED TO BY THE REVENUE. 2. RELIED ON THE ORDERS OF ITAT BANGALORE IN THE CA SE OF ING VYSYA BANK LTD. 62 SOT 26 (2014), ITAT CHENNAI IN THE CASE OF TNS ESTATE APEX COOPERATIVE LTD. 62 SOT 113 AND THE HONBLE SUPREME COURT IN THE CASE CATHOLIC SYRIAN BANK 206 TAXMAN 182 WHEREIN IT WAS HELD THAT THE ADDITIONAL PROVISION FOR BAD AND DOUBTFUL DEBTS IS ALLOWABLE AS A DEDUCTION. 5. THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13 HAS BEEN ADJUDICATED BY THE ITAT IN ITA NO. 1937/DEL/2016 IN ASSESSEES OWN CASE WHEREIN THE DEDUCTION WAS ALLOWED TAKING INTO CONSI DERATION, THE CBDT CIRCULAR NO. 421 DATED 12.06.1985, UCO BANK LTD. 23 7 ITR 889 (SC), CATHOLIC SYRIAN BANK 88 ITD 185, SOUTH INDIAN BANK 233 CTR 214. SINCE, THE FACTUAL MATTER REMAINS UNCHANGED, IN THE ABSENC E OF ANY OTHER JUDGMENT CONTRARY TO THE FACTS AVAILABLE ON RECORD, THE ADDITION MADE BY THE REVENUE IS HEREBY ORDERED TO BE DELETED. 6. FOR THE SAKE OF BREVITY, THE OPERATIVE PORTION O F THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13 IS REPRODUCED AS UNDER: 8. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE JUDG MENT DATED 21 ST MAY, 2004 PERTAINS TO AY 1985-86. THE BOARD HAS IS SUED DIRECTIONS VERIFYING THE BENEFIT OF DEDUCTION ALLOWABLE TO BAN KS VIDE CBDT CIRCULAR 421 DT. 12.06.1985 WHICH HAS BEEN MENTIONED ABOVE. AFTER CONSIDERING THE FACTS AND THE ENTIRE SUBMISSIONS OF BOTH THE PA RTIES, WE FIND THAT (II) U/S 119, THE CBDT IS ENTITLED TO ISSUE CIRCULA RS TO EXPLAIN OR TONE DOWN THE RIGOURS OF LAW AND TO ENSURE FAIR ENFORCEM ENT OF ITS PROVISIONS. THESE CIRCULARS HAVE THE FORCE OF LAW A ND ARE BINDING ON THE ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 4 INCOME TAX AUTHORITIES, THOUGH THEY CANNOT BE ENFOR CED ADVERSELY AGAINST THE ASSESSEE. NORMALLY, THESE CIRCULARS CAN NOT BE IGNORED. A CIRCULAR MAY NOT OVERRIDE OR DETRACT FROM THE PROVI SIONS OF THE ACT BUT IT CAN SEEK TO MITIGATE THE RIGOUR OF A PARTICULAR PRO VISION FOR THE BENEFIT OF THE ASSESSEE IN CERTAIN SPECIFIED CIRCUMSTANCES. SO LONG AS THE CIRCULAR IS IN FORCE, IT AIDS THE UNIFORM AND PROPE R ADMINISTRATION AND APPLICATION OF THE PROVISIONS OF THE ACT (UCO BANK VS. CIT 237 ITR 889 (SC) FOLLOWED) 9. WE HAVE ALSO GONE THROUGH THE GUIDELINES GIVEN B Y THE SUPREME COURT IN THE CASE OF DCIT VS. CATHOLIC SYRIAN BANK 88 ITD 185. IN THAT CASE, THE HONBLE COURT HAD TO CONSIDER WHETHER A B ANK WAS ELIGIBLE TO CLAIM A DEDUCTION FOR BAD DEBTS U/S 36(1)(VII) IN R ESPECT OF ITS (RURAL & URBAN) ADVANCES AND ALSO CLAIM A PROVISION FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VIIA) IN RESPECT OF ITS RURAL ADVANCES IN VIEW OF THE PROVISO TO S. 36(1)(VII) WHICH PROVIDES THAT ONLY THE EXCESS O VER THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE U/S 36(1)(VIIA) CAN BE CLAIMED. THE SPECIAL BENCH OF TH E TRIBUNAL IN DCIT VS. CATHOLIC SYRIAN BANK 88 ITD 185 HELD THAT AS S. 36(1)(VIIA) WAS CONFINED TO RURAL ADVANCES, A CLAIM FOR BAD DEBTS O F URBAN ADVANCES WAS NOT SUBJECT TO THE LIMITATION OF THE PROVISO TO S. 36(1)(VII). HOWEVER, THE FULL BENCH OF THE KERALA HIGH COURT TO OK A CONTRARY VIEW IN CIT VS. SOUTH INDIAN BANK 233 CTR 214 (KER) (FB) AND HELD THAT A BANK WAS ENTITLED TO CLAIM DEDUCTION OF BAD DEBTS U /S 36(1)(VII) ONLY TO EXTENT IT EXCEEDED THE PROVISION ALLOWED AS DEDUCTI ON UNDER S. 36(1)(VIIA). ON APPEAL TO THE SUPREME COURT, HELD R EVERSING THE FULL BENCH OF THE HIGH COURT: PER COURT: (I) THE CLEAR LEGISLATIVE INTENT OF S. 36(1)(VII) & 36(1)(VIIA) TOGETHER WITH THE CIRCULARS ISSUED BY THE CBDT DEMONSTRATE T HAT THE DEDUCTION ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VIIA) IS DISTINCT AND INDEPENDENT OF S. 36(1)(VII) RELATING TO ALLOWANCE OF BAD DEBTS. THE LEGISLATIVE INTENT WAS TO ENCOURAGE RURA L ADVANCES AND THE MAKING OF PROVISIONS FOR BAD DEBTS IN RELATION TO S UCH RURAL BRANCHES. THE FUNCTIONING OF SUCH BANKS IS SUCH THAT THE RURA L BRANCHES WERE PRACTICALLY TREATED AS A DISTINCT BUSINESS, THOUGH ULTIMATELY THESE ADVANCES WOULD FORM PART OF THE BOOKS OF ACCOUNTS O F THE HEAD OFFICE. AN INTERPRETATION WHICH SERVES THE LEGISLATIVE OBJE CT AND INTENT IS TO BE PREFERRED RATHER THAN ONE WHICH SUBVERTS THE SAME. THE DEDUCTION U/S 36(1)(VII) CANNOT BE NEGATED BY READING INTO IT THE LIMITATIONS OF S. 36(1)(VIIA) AS IT WOULD FRUSTRATE THE OBJECT OF GRA NTING SUCH DEDUCTIONS. THE REVENUES ARGUMENT THAT THIS WOULD LEAD TO DOUB LE DEDUCTION IS NOT CORRECT IN VIEW OF THE PROVISO TO S. 36(1)(VII) WHI CH PROVIDES THAT IN RESPECT OF RURAL ADVANCES, THE DEDUCTION ON ACCOUNT OF THE ACTUAL WRITE OFF OF BAD DEBTS WOULD BE LIMITED TO EXCESS OF THE AMOUNT WRITTEN OFF OVER THE AMOUNT OF THE PROVISION WHICH HAD ALREADY BEEN ALLOWED U/S 36(1) (VIIA) (SOUTHERN TECHNOLOGIES 320 ITR 577 (SC ) & VIJAYA BANK 323 ITR 166 (SC) REFERRED) ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 5 10. IN THE INSTANT CASE, WE ENDORSE THE DECISION OF LD.CIT(A) WHICH HELD THAT THE ASSESSEE HAS ADMITTED IN ITS SUBMISSIONS AS WELL AS BEFORE AO REGARDING THE ENTI TLEMENT OF DEDUCTION U/S 36(1)(VIIA) OF RS. 114.76 CRORES. THERE IS NO DISPUTE AS TO THE CORRECTNESS OF THE CALCULATION OF THE ENTITLEMENT OF DEDUCTION U/S 36(1)(VIIA) OF THE ACT . IT IS A SETTLED LAW THAT ONLY AGAINST ASCERTAINED LIABILITY DEDUCTION CAN BE ALLOWED EXCEPT FOR SPECIFIC PROVISIONS IN AC T WHERE DEDUCTION IS ALLOWED ON PROVISIONS ALSO. THE ACT H AS SPECIFICALLY PROVIDED IN SEC. 36(1)(VIIA) FOR DEDUC TION FOR PROVISION MADE FOR ADVANCES MADE BY THE RURAL BRANC HES OF THE BANK. 11. THE METHOD OF CALCULATING DEDUCTION HAS BEEN DE FINED IN THE ACT. THE BANK IS ENTITLED FOR DEDUCTION FOR 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCH ES PLUS 7.5% OF THE TOTAL INCOME COMPUTED BEFORE THIS DEDUCTION AND AMOUNT DEDUCTIBLE UNDER SEC 80C TO 80 U. IT IS MANDATORY FOR ALL THE BANKS TO FOLLOW THE INCOME RECOGNITION NORMS AND ASSETS CLASSIFICATION NORMS A S PRESCRIBED BY RESERVE BANK OF INDIA. THE ASSESSEE H AS ALSO MADE PROVISION FOR NPAS BY FOLLOWING THE INCOME RECOGNITION NORMS OF RESERVE BANK OF INDIA. THE HON . SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK L TD LAID DOWN THAT THE LEGISLATIVE INTENT WAS TO ENCOURAGE T HE RURAL ADVANCE AND MAKING OF PROVISIONS FOR BAD DEBTS IN R ELATION TO SUCH RURAL ADVANCES AND FOR PROVIDING GREATER DE DUCTIONS. BUT THE DEDUCTION IS ALLOWABLE ONLY ON BEING LEGALL Y ENTITLED AND ON MAKING ACTUAL PROVISIONS FOR SUCH DEDUCTION IN THE BOOKS OF ACCOUNT. 12. FROM THE FACTS OF THE CASE AND IN LAW, AFTER TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SY RIAN BANK VS CIT THRISSUR 206 TAXMAN 182(SC) THERE IS NO AMBIGUITY LEFT IN THE INTERPRETATION OF PROVISION O F SEC 36 (1)(VIIA). THE APPELLANT IS A REGIONAL RURAL BANK S PONSORED BY PUNJAB NATIONAL BANK. THE ASSESSEE HAS MADE ADVA NCES FROM ITS RURAL BRANCHES WHICH ARE NOT QUESTIONED. T HE PROVISIONS OF SEC 36(1)(VIIA) ARE CLEARLY INTERPRET ED BY SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS. 16.07 CRORES AGAINST ITS ENTITLEMENT OF RS 114.76 CRORES IN THE BOOKS I T HAS MADE PROVISION FOR BAD DEBTS OF RURAL BRANCHES FOR RS 3,70,00,000/- OVER AND ABOVE THE PROVISION MADE FOR NPAS AS PER RBI NORMS. THIS FACT HAS BEEN STATED IN THE AUDITED BALANCE SHEET OF THE BANK IN SCHEDULE 17: PRINCIPLE ACCOUNTING POLICIES & NOTES ON ACCOUNT, WHERE POINT 1(IV)(III) WHICH IS REPRODUCED AS UNDER: ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 6 (III) BANK HAS MADE PROVISION OF RS.3,70,00,000/- (PREVIOUS YEAR- NIL) AGAINST TOTAL MONTHLY AVERAGE ADVANCE OF RURAL BRANCHES OF THE BANK FOR THE BAD AND DOUBTFUL DEBTS, OVER AND ABOVE THE PROVISION FOR BA D & DOUBT DEBTS REQUIRED TO BE MADE IN ACCORDANCE WITH THE PR UDENTIAL NORMS SUGGESTED BY RBI. THE BANK HAS REDUCED RS. 210.36 LACS (PREVIOUS YEAR RS 363.05 LA CS) FOR WRITE OFF OF THE RURAL ADVANCES NOT RECOVERABLE AND ARE BAD AND DOUBTFUL DEBTS FROM THE PROVISION MADE IN EARLIER YEARS AND NET PROVISION FOR RURAL BRANCH ES ADVANCES IS RS 2844.03 LACS (RS 3054.39 LACS - RS. 210.36 LAGS).. INCLUDED IN OTHER PROVISIONS IN SCHEDULE -5 . THE ITAT BANGLORE IN THE CASE OF DEPUTY COMMISSIONE R OF INCOME TAX VS. ING VYSYA BANK LTD (2014) 62 SOT 0 026 (BANGLORE) AND ITAT CHENNAI IN THE CASE OF TAMILNAD U STATE APEX COOPERATIVE BANK LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (2014) 62 SOT 0113 (CHENNAI) (URO) HAS HELD THAT THE ACTUAL PROVISION MADE IN THE BOOKS BY THE ASSESSEE ON ACCOUNT OF PBDD (IRRES PECTIVE OF WHETHER IT IS RURAL OR NON- RURAL) HAS TO BE SEE N. 13. IN THE PRESENT CASE, THE ASSESSEE HAS ADMITTEDL Y MADE PROVISION FOR NONPERFORMING ASSETS (NPA) IN RESPECT OF ITS URBAN BRANCHES. THE ASSESSEE HAS DEBITED RS.2.52 CR ORES (APPROXIMATELY) (I.E., 7.5% OF THE GROSS TOTAL INCO ME) IN P&L A/C CREATING PROVISION FOR NON-PERFORMING ASSETS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 36(1)(VII A) OF THE ACT. THE REVENUE HAS DISPUTED THE DEDUCTION CLAIMED FOR THE REASON, THAT THE ASSESSEE HAS NOT CREATED PROVISION FOR BAD AND DOUBTFUL DEBTS. IN CASE OF BANKING COMPANIES, T HE ACCOUNTS ARE MADE IN ACCORDANCE WITH THE RBI GUIDEL INES AND THE BANKING REGULATION ACT, 1949. ALTHOUGH, THE ASS ESSEE HAS NAMED THE PROVISION AS PROVISION FOR NPA, BUT IN PITH AND SUBSTANCE THE PROVISION HAS BEEN CREATED FOR B AD AND DOUBTFUL DEBTS. THE TAXONOMY OF THE PROVISION HAS BEEN DONE BY THE ASSESSEE TO KEEP IT IN LINE WITH THE RB I AND NABARD GUIDELINES. 14. WE ARE SATISFIED THAT THE ASSESSEE HAS MADE PRO VISION AND CLAIMED DEDUCTION IN ACCORDANCE WITH THE PROVIS IONS OF SECTION 36(1)(VIIA). THE ASSESSEE IS ENTITLED TO TH E BENEFIT OF SAME. 15. SIMILARITY THE HONBLE ITAT CHENNAI IN THE CASE OF V ELLORE D IST . C ENTRAL C O -O PERATIVE B ANK L TD . V S . C OMMISSIONER O F I NCOME T AX - (2013) 145 IDT 0129 (CHENNAI) HAS HELD THAT THE QUESTION WHICH ARISES F OR ITA NO. 2096/DEL/2017 SARVA UP GRAMIN BANK 7 DETERMINATION BEFORE US IS WHETHER THE ASSESSEE HAS CREATED ANY RESERVE/ PROVISION FOR BAD AND DOUBTFUL DEBTS? THE AR HAS CONTENDED THAT THE ASSESSEE HAS CREATED PROVISI ONS FOR BAD AND DOUBTFUL DEBTS UNDER THE NOMENCLATURE RESE RVE FOR NPA. THE TERMINOLOGY RESERVE FOR NPA HAS BEEN US ED BY THE ASSESSEE IN ACCORDANCE WITH THE RBI DIRECTIONS. AS IS EVIDENT FROM THE ASSESSMENT ORDER, THE ASSESSEE HAS INDEED CREATED RESERVE FOR NPA. FOR CLAIMING BENEFIT UND ER THE PROVISIONS OF SECTION 36(1)(VIIA)(A) THE CONDITIONS TO BE SATISFIED IS: THAT PROVISION FOR BAD AND DOUBTFUL D EBTS SHOULD HAVE BEEN MADE BY THE BANK ELIGIBLE TO CLAIM SUCH DEDUCTION. CO-OPERATIVE BANKS DO NOT STRICTLY FOLLO W THE PROVISIONS OF BANKING REGULATION ACT FOR THE PURPOS E OF MAINTAINING THEIR BOOKS OF ACCOUNTS. IN OUR CONSIDE RED OPINION, THE ASSESSEE HAS CREATED PROVISION FOR BAD AND DOUBTFUL DEBTS MAY BE UNDER DIFFERENT NOMENCLATURE. THIS WILL NOT DIS-ENTITLE THE ASSESSEE FOR CLAIMING DEDU CTION UNDER THE PROVISIONS OF SECTION 36(1)(VIIA)(A). THE PURPO SE FOR CREATION OF RESERVE FOR NPA IS SAME I.E., CREATING PROVISION TOWARDS BAD AND DOUBTFUL DEBTS. THUS, IN VIEW OF THE FACTS OF THE CASE AND JUDICIAL PRONOUNCEMENTS IN THE ABOVE STATE CASES THE ASSESSE E WILL BE ENTITLED TO DEDUCTION U/S 36(1)(VIIA) TO THE EXT ENT OF PROVISION MADE FOR BAD AND DOUBTFUL DEBTS OF RS 16,06,72,355/-. THE A.O IS THEREFORE DIRECTED TO AL LOW THE FULL DEDUCTION OF RS 16,06,72,355/- AS CLAIMED BY T HE ASSESSEE IN THE COMPUTATION OF INCOME AND NOT TO RE STRICT IT ON RS 1,33,93,000/. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/02/2020. SD/- SD/- (KULDIP SINGH) (D R. B. R. R. KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 24/02/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR