Deputy Commissioner of Income-tax, Circle - 5, Pune V. Mahesh Sahakari Bank Ltd, Pune

ITA 2510/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1681 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Provision of bad debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER I TA NO. 2510 /PUN/20 17 / ASSESSMENT YEAR : 2011 - 12 DCIT, CIRCLE 5, PUNE VS. MAHESH SAHAKARI BANK LTD., 372/73/74, MARKET YARD ROAD, GULTEKDI, PUNE 411037 PAN: AAAAM1838R APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30 - 11 - 20 16 PAS SED BY THE COMMISSIONER OF INCOME - TAX ( APPEALS ) - 4 , PUNE IN RELATION TO THE ASSESSMENT YEAR 2011 - 12 . 2. THE ONLY ISSUE TAKEN UP BY THE REVENUE IS AG AINST DELETION OF ADDITION O F RS.1,67,64,206 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REVERSAL OF BAD DEBTS PROVISION . 3. SUCCINCTLY , THE FACTS OF THE CASE ARE THAT THE ASSESSEE , A CO - OPERATIVE BANK, DEBITED RS.5.00 CRORE ON ACCOUNT OF BAD AND A SSESSEE BY SHRI SUNIL GANOO RE VENUE BY S HRI S.P. WALIMBE DATE OF HEARING 11 - 1 2 - 2020 DATE OF PRONOUNCEMENT 11 - 1 2 - 2020 ITA NO . 2510 /PUN/ 20 17 MAHESH SAHAKARI BANK LTD. 2 DOUBTFUL RESERVE (BEING PROVISION). A SUM OF RS.1,67,64,206 WAS SIMULTANEOUSLY REDUCED FROM THE ABOVE AMOUNT. THE NET AMOUNT OF RS.3,32,35,794 WAS DEBITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT . IN THE COMPUTATION OF INCOME, THE ASSESSEE ADDED BACK RS. 3.32 CRORE AND ODD . THE ASSESSING OFFICER CAME TO HOLD THAT THE AMOUNT OF PROVISION OF RS.1.67 CRORE REVERSED BY THE ASSESSEE WAS LIABLE TO BE SEPARATELY CONSIDERED AS INCOME. HE, THEREFORE, MADE ADDITION FOR THE SAME, WHICH CAME TO BE DELETED IN THE FIRST A PPEAL. 4. HAVING HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT IN THE EARLIER YEARS ALSO , THE ASSESSEE HAD MADE A PROVISION FOR BAD AND DOUBTFUL DEBTS AND THEN ADDED BACK THE SAME AMOUNT WHILE C OMPUTING ITS TOTAL INCOME , I N THE SAME WAY IN WHICH THE PROVISION FOR TH E INSTANT YEAR AT RS.5.00 CRORE, AFTER ADJUSTMENT OF RS.1.67 CRORE, WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AND ALSO ADDED BACK IN THE COMPUTATION OF INCOME. IN OTHER WORDS, THE ASSE SSEE EVENTUALLY DID NOT CLAIM ANY DEDUCTION AT THE TIME OF CREATION OF PROVISION FOR BAD AND DOUBTFUL DEBTS. THIS MODE OF DEBITING THE PROFIT AND LOSS ACCOUNT AND THEN ADDING BACK THE SAME AMOUNT IN ITA NO . 2510 /PUN/ 20 17 MAHESH SAHAKARI BANK LTD. 3 COMPUTATION OF TOTAL INCOME IS TAX - NEUTRAL. ONCE THE CRE ATION OF PROVISION DID NOT RENDER REDUCTION IN THE INCOME, ITS LATER REVERSAL, EQUALLY , CANNOT ALSO LEAD TO GENERATION OF TAXABLE INCOME NOTWITHSTANDING THE MANNER OF DEPICTION IN THE ACCOUNTS. THE LD. CIT(A) HAS CATEGORICALLY RECORDED THIS FACT IN PARA 5. 3.2 OF THE IMPUGNED ORDER THAT IN EARLIER YEARS THE ASSESSEE HAD MADE A PROVISION FOR BAD AND DOUBTFUL DEBTS AND HAD ADDED BACK THE SAME WHILE COMPUTING THE TOTAL INCOME. NO MATERIAL H AS BEEN PLACED ON RECORD BY THE LD. DR TO CONTROVERT THIS F INDING. IN VIEW OF ABOVE DISCUSSION, WE ARE SATISFIED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1,67,64,20 6 . 5 . IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEM BER , 2020 . SD/ - SD/ - (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT PUNE ; DATED : 11 TH DECEM BER , 2020 GCVSR ITA NO . 2510 /PUN/ 20 17 MAHESH SAHAKARI BANK LTD. 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A) - 4 , PUNE 4 . 5. THE P R. CIT - 3 , PUNE , , / DR A , ITAT, PUNE 6 . / GUARD F ILE / BY ORDER, / / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 11 - 1 2 - 2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11 - 1 2 - 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. *