The Nashik Road Deolali Vyapari Sahakari Bank Ltd, V. Deputy Commissioner of Income tax,

ITA 2647/PUN/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6803 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: IS ARISING OUT OF PASSED
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHADHURY, JUDICIAL MEMBER . / ITA NO.2647/PUN/16 / ASSESSMENT YEAR : 2012-13 THE NASHIK ROAD DEOLALI VYAPARI SAHAKARI BANK LTD., 16, SALPARUKSHA, ASHA NAGAR, NASHIK ROAD 422 101 PAN : AAAAT4688C VS. DCIT, CENTRAL-1, NASHIK (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER PAS SED BY THE CIT(A) ON 15-09-2016 IN RELATION TO THE ASSESSMENT Y EAR 2012-13. 2. THE SECOND GROUND WAS NOT PRESSED BY THE LD. AR, WH ICH IS HEREBY DISMISSED. APPELLANT BY SHRI PRAMOD SHINGTE RESPONDENT BY SHRI SUDHENDU DAS DATE OF HEARING 20-12-2018 DATE OF PRONOUNCEMENT 20-12-2018 ITA NO.2647/PUN/2016 THE NASHIK ROAD DEOLALI VYAPARI SAHAKARI BANK LTD., 2 3. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANC E OF RS.44,94,267/- CLAIMED BY THE ASSESSEE U/S. 36(1)(V IIA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED AS THE ACT) . 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSES SEE BANK CLAIMED DEDUCTION OF RS.44,94,267/-, INTER ALIA, ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS @7.5% OF THE TOTAL INCO ME IN TERMS OF SECTION 36(1)(VIIA) OF THE ACT. THE AO OBSERVED THAT THE ASSESSEE DID NOT CREATE PROVISION FOR SUCH BAD DEBTS IN ITS ACCOUNTS AS PER THE MANDATE OF SECTION 36(2)(V) OF THE ACT. HE, THEREFORE, MADE THE DISALLOWANCE OF THIS SUM, WHICH CAME TO BE UPHELD I N THE FIRST APPEAL. 5. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. SECTION 36(1)(VIIA) PROVIDES FOR GRANTING DEDUCTION IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE, INTER ALIA, BY A CO-OPERATIVE BANK AT THE GIVEN PERCENTAGE. SECTION 36(2)(V) PROVIDES THAT WHERE PROVISIONS OF SECTION 36(1)(VIIA) APPLY, NO SUCH DEDUCTION SHALL BE ALLOWED UNLESS THE ASSESSEE HAS DEBITED THE AMOUNT OF SUCH DEBT OR PART OF D EBT IN THAT PREVIOUS YEAR TO THE PROVISIONS FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE UNDER THAT CLAUSE. IT BECOMES APPARENT FROM THE M ANDATE OF ITA NO.2647/PUN/2016 THE NASHIK ROAD DEOLALI VYAPARI SAHAKARI BANK LTD., 3 SECTION 36(2)(V) THAT THE MAKING OF A PROVISION FOR BAD AN D DOUBTFUL DEBTS IS SINE QUA NON FOR CLAIMING DEDUCTION U/S.36(1)(VIIA) OF THE ACT. PAGES 14 TO 16 OF THE PAPER B OOK ARE A COPY OF ASSESSEES PROFIT AND LOSS ACCOUNT, WHICH SHOWS THAT THE ASSESSEE MADE A `PROVISION AGAINST STANDARD ASSETS FOR A SUM OF RS.20 LAKHS. IN THE COMPUTATION OF TOTAL INCOME, WHOSE COPY HAS BEEN PLACED AT PAGE 8 OF THE PAPER BOOK, THE ASSESSEE SUO MOTU ADDED BACK THE AMOUNT OF SUCH PROVISION FOR THE PURPOSE S OF COMPUTATION OF TOTAL INCOME. IT, THEREFORE, BECOMES APPARE NT THAT THE ASSESSEE DID MAKE A PROVISION OF RS.20 LAKHS IN ITS BOO KS OF ACCOUNT, EVEN THOUGH IT WAS CHARACTERIZED AS HAVING BEEN M ADE FOR STANDARD ASSETS, FOR WHICH NO SEPARATE DEDUCTION WAS CLA IMED. THE STATUTE REQUIRES CREATION OF PROVISION AS A MANDATORY PR E- CONDITION FOR CLAIMING DEDUCTION U/S. 36(1)(VIIA). MERELY BECA USE A DIFFERENT NOMENCLATURE WAS GIVEN TO THE PROVISION OF RS.20 LAKHS, FOR WHICH NO SEPARATE DEDUCTION WAS CLAIMED, THE SAME DOE S NOT SHED THE CHARACTER OF A PROVISION RELATING TO THE DEBTS OF THE ASSESSEE BANK MEANT FOR THE PURPOSE OF SECTION 36(1)(VIIA ). IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT BE DEBARRED FRO M CLAIMING DEDUCTION U/S.36(1)(VIIA) TO THE EXTENT OF SUCH PROVISION MAD E IN THE BOOKS OF ACCOUNT TO THE TUNE OF RS.20 LAKHS. WE, THE REFORE, ITA NO.2647/PUN/2016 THE NASHIK ROAD DEOLALI VYAPARI SAHAKARI BANK LTD., 4 DIRECT TO GRANT DEDUCTION, BEING A SUM OF PROVISION CREATED IN THE BOOKS OF ACCOUNT FOR A SUM OF RS.20.00 LAKHS, AS AGA INST THE DEDUCTION CLAIMED IN THE COMPUTATION OF INCOME AT RS.44,94,26 7/-. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2018. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 20 TH DECEMBER, 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, NASHIK 4. 5. THE PR.CIT -1, NASHIK , , / DR B, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2647/PUN/2016 THE NASHIK ROAD DEOLALI VYAPARI SAHAKARI BANK LTD., 5 DATE 1. DRAFT DICTATED ON 20-12-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 20-12-18 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. *