Assistant Commissioner of Income-tax, Circle -2, Kolhapur V. The Sindhudurg District Central Co-op. Bank Ltd, Sindhudurg

ITA 2352/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6344 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-09-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 06-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2352/PUN/2017 / ASSESSMENT YEAR : 2014-15 ACIT, CIRCLE-2, KOLHAPUR VS. THE SINDHUDURG DISTRICT CENTRAL COOPERATIVE BANK LTD., A/P. SINDHUDURG, ORAS, TAL. KUDAL, DIST. SINDHUDURG PAN : AABAT4262F APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 01-08-2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, KOLHAPUR IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST ALLOWING THE CLAIM FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.2,00,66,430/- U/S.36(1)(VIIA) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER ALSO CALLED THE ACT). ASSESSEE BY NONE REVENUE BY SHRI VISHAL A. MAKAWANE DATE OF HEARING 22-09-2020 DATE OF PRONOUNCEMENT 22-09-2020 ITA NO.2352/PUN/2017 THE SINDHUDURG DISTRICT CENTRAL COOP. BANK LTD. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A DISTRICT CENTRAL CO-OPERATIVE BANK ENGAGED IN THE BUSINESS OF BANKING. ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE DEBITED NIL AMOUNT TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS FOR RURAL ADVANCES. HOWEVER, IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 36(1)(VIIA) OF THE ACT AT RS.2.00 CRORE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS FOR RURAL ADVANCES. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE EXCESS PROVISION SHOULD NOT BE DISALLOWED, THE ASSESSEE UNSUCCESSFULLY TRIED TO JUSTIFY THE CLAIM. THE AO NOTED THAT THE ASSESSEE HAD NOT MADE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS DURING THE YEAR. IT WAS ONLY ON 2.8.2013, THAT IS THE NEXT YEAR, THAT THE BOARD OF DIRECTORS IN ITS MEETING DECIDED FOR ALLOWING APPROPRIATION TOWARDS PROVISION. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD, IN FACT, MADE A CORRESPONDING PROVISION IN ITS PROFIT AND LOSS APPROPRIATION ACCOUNT FOR THE YEAR, ALBEIT IT WAS NOT IN THE MAIN PROFIT AND LOSS ACCOUNT. RELYING ON THE ORDER DATED 28-08-2014 PASS ED BY THE PUNE BENCH OF THE TRIBUNAL IN WARANA SAHAKARI ITA NO.2352/PUN/2017 THE SINDHUDURG DISTRICT CENTRAL COOP. BANK LTD. 3 BANK LTD. IN ITA NO.447/PUN/2012, THE LD. CIT(A) DECIDED THIS ISSUE IN ASSESSEES FAVOUR. AGGRIEVED THEREBY, THE REVENUE APPROACHED THE TRIBUNAL. 4. HAVING HEARD THE LD. DR THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS FOUND THAT SECTION 36(1)(VII)(B) PROVIDES FOR ALLOWING DEDUCTION :`IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY THE ELIGIBLE BANK. THUS IT IS MANIFEST THAT MAKING OF PROVISION IN THE YEAR UNDER CONSIDERATION IS ESSENTIAL FOR CLAIMING DEDUCTION. WE ARE CONFRONTED WITH A SITUATION IN WHICH THE AO HAS RECORDED A CATEGORICAL FINDING THAT THE ASSESSEE MADE NO PROVISION IN THE YEAR IN QUESTION, BUT O NLY IN THE NEXT YEAR, WHEREAS THE LD. CIT(A) HAS NOTED THAT THE ASSESSEE MADE APPROPRIATION OF PROFIT DURING THE YEAR UNDE R CONSIDERATION. THERE IS A DIRECT CONFLICT OF THE OPINIONS AND THE ASSESSEE HAS NOT PARTICIPATED IN THE PROCEEDINGS TO THROW LIGHT ON THE ISSUE. UNDER SUCH CIRCUMSTANCES, WE SET A SIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR EXAMINING THE CORRECT FACTUAL POSITION IN THIS REGARD ITA NO.2352/PUN/2017 THE SINDHUDURG DISTRICT CENTRAL COOP. BANK LTD. 4 AND THEN DECIDING THE ISSUE, AFTER ALLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDEN T PUNE; DATED : 22 ND SEPTEMBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, KOLHAPUR 4. 5. THE PR. CIT-2, KOLHAPUR , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2352/PUN/2017 THE SINDHUDURG DISTRICT CENTRAL COOP. BANK LTD. 5 DATE 1. DRAFT DICTATED ON 22-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *