BANK OF INDIA, MUMBAI V. ASST CIT 2(1), MUMBAI

ITA 2967/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3071 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHISHIR DHAMIJA
• Keywords: Rectification of order; Bad and doubtful debts
• Section: 43B; 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI B.R. BASKARAN, AM AND SHRI RAM LAL NEGI , JM ./ I.T.A. NO. 2967/MUM/2014 ( / ASSESSMENT YEAR: 2008-09) BANK OF INDIA 8 TH FLOOR, STAR HOUSE, TAXATION DEPARTMENT, BANDRA-KURLA COMPLEX, BANDRA (EAST) MUMBAI-400 051. / VS. ASSISTANT COMMISSIONER OF INCOME TAX 2(1), AAYAKAR BHAVAN, MUMBAI-400 020. ./ ./PAN/GIR NO. AAACB 0472C ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI C. NARESH / RESPONDENT BY : SHRI SHISHIR DHAMIJA / DATE OF HEARING : 20/06/2016 !'# / DATE OF PRONOUNCEMENT : 20/06/2016 $% / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 12-02-2014 PASSED BY LD CIT(A)-4, MUMBAI AGAIN ST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE ACT AND IT REL ATES TO THE ASSESSMENT YEAR 2008-09 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN UPHOLDING THE VALIDITY OF RECTIFICATION PROCEEDING INITIATED BY T HE AO. 2 ITA NO. 2967/MUM/14 BANK OF INDIA VS. ACIT 3. THE AO PASSED THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09 U/S 143(3) OF THE INCOME TAX ACT ON 31/12/2010 AND LATER A RECTIFICATION ORDER DATED 22.2.2011 WAS PASSED U/S 154 OF THE ACT. SUBSEQUENT LY THE AO AGAIN NOTICED THAT FOLLOWING MISTAKES APPARENT FROM RECORD REMAINE D UN-RECTIFIED AND HENCE HE PASSED THE IMPUGNED RECTIFICATION ORDER DATED 23.4. 2012:- A. BROUGHT FORWARD LOSS PERTAINING TO AY 2005-06 AND 2006-07 WAS ERRONEOUSLY ALLOWED. B. PROVISION FOR LEAVE ENCASHMENT WAS ERRONEOUSLY NOT D ISALLOWED U/S 43B OF THE ACT. C. DEDUCTION U/S 36(1)(VIIA) OF THE ACT RELATING TO PROVISION FOR BAD AND DOUBTFUL DEBTS WAS ALLOWED IN EXCESS OF THE AMOUNT ACTUALLY PROVIDED FOR BY THE ASSESSEE. THE ASSESSEE WAS NOT SATISFIED WITH THE RECTIFICATION ORDER PASSED BY AO IN RESPECT OF ISSUES STATED AS (B) AND (C) ABOVE AND H ENCE THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). HOWEVER, THE CONTENTION S OF THE ASSESSEE DID NOT FIND FAVOUR WITH LD. CIT(A) AND HENCE HE DISMISSED TH E APPEAL FILED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE HAS FILED AN APP EAL BEFORE US. 4. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF PR OVISION FOR LEAVE ENCASHMENT MADE U/S 43B OF THE ACT. THE LD. AR SUBM ITTED THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED VS. UOI 292 ITR 470 HAS HELD THAT THE PROVISION OF SECTION 43B(F) RELAT ING TO DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT IS ARBITRARY, UN-CONSCIONABLE . LD. AR FURTHER SUBMITTED THE SAME VIEW WAS EXPRESSED BY HONBLE KERALA HIGH COURT IN ANOTHER DECISION. ACCORDINGLY LD. AR SUBMITTED THAT THE DISALLOWANCE R EQUIRED TO BE MADE IN RESPECT OF PROVISION FOR LEAVE ENCASHMENT U/S 43B ( F) OF ACT WAS SUBJECT TO 3 ITA NO. 2967/MUM/14 BANK OF INDIA VS. ACIT VARIOUS LEGAL DISPUTES. ACCORDINGLY HE SUBMITTED T HAT THIS ISSUE IS A DEBATABLE ONE HENCE IT FALLS BEYOND THE SCOPE OF RECTIFICATIO N U/S 154 OF THE ACT. 5. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE D ECISION RENDERED BY HONBLE CALCUTTA HIGH COURT IN THE CASE EXIDE INDUS TRIES LTD.(SUPRA) HAS SINCE BEEN STAYED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXIDE INDUSTRIES LTD. IN SLP NO.CC 12060008 DATED 08.09.2008. SUBSE QUENTLY HONBLE SUPREME COURT IN SLP CC NO.22889/2008 DATED 27.06.2007 IN T HE CASE OF CIT VS. EXIDE INDUSTRIES LTD. HAS HELD THAT, DURING THE PENDENCY OF APPEAL, THE ASSESSEE HAS TO PAY TAX AS IF SECTION 43B (F) IS ON THE STATUTE BOO K. ACCORDINGLY, THE LD. DR SUBMITTED THAT THE DISALLOWANCE OF PROVISION FOR LEA VE ENCASHMENT IS REQUIRED TO BE MADE U/S 43B(F) OF THE ACT. SINCE THE ORIGINAL ORDER WAS PASSED BY THE AO WITHOUT COMPLYING STATUTORY PROVISIONS, HE HAS PASSE D THE IMPUGNED RECTIFICATION ORDER DISALLOWING THE PROVISION LEAVE ENCASHMENT AND THE SAME IS IN ACCORDANCE WITH THE DECISION RENDERED BY THE HONBLE SUPREME CO URT. 6. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSE D THE RECORD. AS SUBMITTED BY LD. DR, THE HONBLE SUPREME COURT, IN THE CASE O F EXIDE INDUSTRIES LTD., (REFERRED SUPRA) HAS STAYED THE DECISION RENDERED B Y HONBLE CALCUTTA HIGH COURT AND FURTHER HELD THAT THE DISALLOWANCE SHOULD BE MAD E IN TERMS OF SEC. 43B OF THE ACT, DURING THE PENDENCY OF APPEAL, AS IF SECTI ON 43(B)(F) IS IN THE STATUTE BOOK. HENCE THE PROVISION FOR LEAVE ENCASHMENT IS R EQUIRED TO BE DISALLOWED IN TERMS OF SECTION 43B(F) OF THE ACT IF IT HAS NOT BE EN PAID ON OR BEFORE THE DUE DATE PRESCRIBED FOR FURNISHED RETURN OF INCOME U/S 139(1) OF THE ACT. IN THE INSTANT CASE, THE AO HAS PASSED THE ORIGINAL ASSESS MENT ORDER WITHOUT MAKING DISALLOWANCE, AS MANDATED BY SEC. 43B(F) OF THE ACT AND THE SAME, IN OUR VIEW, 4 ITA NO. 2967/MUM/14 BANK OF INDIA VS. ACIT CONSTITUTES MISTAKE APPARENT FROM RECORD. HENCE, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ORDER PASSED BY AO IN RESPECT OF THIS ISSUE. 7. THE NEXT ISSUE RELATES TO RESTRICTING THE DEDUC TION OF PROVISION FOR BAD AND DOUBTFUL DEBTS CLAIMED BY THE ASSESSEE U/S 36( 1)(VIIA) OF THE ACT TO THE AMOUNT ACTUALLY PROVIDED FOR. THE SAID PROVISION A LLOWS DEDUCTION OF AMOUNT CREATED TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBT TO THE MAXIMUM EXTENT PRESCRIBED IN THAT SECTION. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION TO THE MAXIMUM EXTENT PRESCRIBED IN 36(1) (VIIA), EVEN THOUGH THE PROVISION WAS MADE FOR A LESSER AMOUNT. SINCE THE C LAIM WAS INITIALLY ALLOWED WITHOUT VERIFYING THE ACTUAL AMOUNT OF PROVISION CRE ATED BY THE ASSESSEE, THE AO RECTIFIED THE SAME U/S 154 OF THE ACT. THE LD CIT(A) ALSO CONFIRMED THE SAME. 8. THE LD. AR SUBMITTED THAT THE MATTER RELATING TO DEDUCTION U/S 36(1)(VIIA) WAS ALWAYS IN DISPUTE AND HENCE THE SAME WAS DEBATABLE ONE. ACCORDINGLY HE SUBMITTED THAT THE RECTIFICATION MADE BY THE AO IS BEYOND THE SCOPE OF PROVISION OF SECTION 154 OF THE ACT. THE LD. AR FURTHER SUBMIT TED THAT THE HONBLE COCHIN BENCH OF TRIBUNAL IN THE CASE OF KANNUR DISTT. CO-OP BANK LTD VS ACIT (2012) 20 TAXMANN.COM 667 (COCH.) HAS HELD THAT THE DEDUCTION U/S 36(1)(VIIA) SHOULD BE ALLOWED ON THE GROSS AMOUNT OF PROVISION MADE IN THE BOOKS OF ACCOUNT. 9. ON THE CONTRARY, LD. DR SUBMITTED THAT THE AO HA S ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 36(1)(VIIA) IN THE ORIG INAL ASSESSMENT PROCEEDING, WITHOUT VERIFYING THE AMOUNT ACTUALLY PROVIDED FOR. SINCE THE AMOUNT PROVIDED BY THE ASSESSEE WAS LESS THAN THE MAXIMUM LIMIT PRES CRIBED U/S 36(1)(VIIA) OF THE ACT, THE DEDUCTION SHOULD BE RESTRICTED TO THE AMOUNT ACTUALLY PROVIDED FOR. 5 ITA NO. 2967/MUM/14 BANK OF INDIA VS. ACIT HENCE THE DEDUCTION ORIGINALLY ALLOWED BY THE AO WAS A MISTAKE APPARENT FROM RECORD AND HENCE THE SAME WAS RECTIFIED U/S 154 OF T HE ACT. 10. WE HEARD THE PARTIES ON THE ISSUE. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT DEDUCTION UNDER SECTION 36(1)(VIIA) SHALL BE ALLOWED TO THE AMOUNT ACTUALLY PROVIDED FOR SUBJECT TO THE LIMITS PRESCRI BED IN THAT SECTION. IN THE INSTANT CASE, THE AMOUNT ACTUALLY PROVIDED FOR WAS L ESS THAN THE MAXIMUM LIMIT PRESCRIBED IN THAT SECTION. THE ASSESSEE HAS CLAIM ED THE MAXIMUM AMOUNT PRESCRIBED IN THAT SECTION, EVEN THOUGH THE AMOUNT ACTUALLY PROVIDED FOR WAS LESSER AMOUNT. IN THE ORIGINAL ORDER, THE AO HAS A LSO ALLOWED THE CLAIM WITHOUT VERIFYING THE ACTUAL AMOUNT PROVIDED FOR IN THE BOO KS OF ACCOUNT. SINCE THE DEDUCTION WAS ALLOWED BY THE AO WITHOUT COMPLYING WITH THE MANDATE OF PROVISIONS OF SEC. 36(1)(VIIA) OF THE ACT, WE ARE O F THE VIEW THAT THE SAME HAS RESULTED IN A MISTAKE APPARENT FROM RECORD AND HENC E HE WAS JUSTIFIED IN RECTIFYING THE MISTAKE IN THE ORDER PASSED BY HIM U /S 154 OF THE ACT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE AO ON THIS ISSUE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2016 SD/- SD/- (RAM LAL NEGI ) (B.R. BASKARAN) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED : 20.06.2016 PS. ASHWINI 6 ITA NO. 2967/MUM/14 BANK OF INDIA VS. ACIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI