THE MALKAPUR URBAN CO-OPT .BANK LTD , AKOLA V. ASSISTANT COMMISSIONER OF INCOME TAX ALOLA CIRCLE ,AKOLA , AKOLA

ITA 334/NAG/2017

AI Insights

The case involves The Malkapur Urban Co-op. Bank Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-1, Nagpur, concerning the assessment year 2013-14. The primary issues in the appeal were the disallowance of provisions for bad and doubtful debts amounting to Rs.64,91,102 and the disallowance of depreciation on software amounting to Rs.90,024. The Assessing Officer had initially disallowed these amounts, which was upheld by the CIT(A). The Tribunal found that the issue of bad and doubtful debts needed further examination and remitted it back to the Assessing Officer, while it upheld the decision on the software depreciation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136755 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 12-09-2017
• Other Referred Cases: Vijaya Bank (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.334/NAG/2017 िनधाᭅरण वषᭅ / Assessment Year : 2013-14 The Malkapur Urban Co-op. Bank Ltd., K.N.D. & Associates, 502- 503, Satyam Apartment, Wardha Road, Dhantoli, Nagpur- 440012. PAN : AAALT0274E Vs. ACIT, Akola Circle, Akola. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 1, Nagpur [‘the CIT(A)’] dated 08.05.2017 for the assessment year 2013-14. 2. Briefly, the facts of the case are that the appellant is a Co- operative Society registered under the Maharashtra Co-operative Societies Act, 1960. It is formed for the purpose of banking business. The Return of Income for the assessment year 2013-14 was filed on 22.09.2013 declaring total income of Rs.8,00,56,920/-. Assessee by : None Revenue by : Shri Vijay Kumar Subramanyam Date of hearing : 16.10.2023 Date of pronouncement : 18.10.2023 ITA No.334/NAG/2017 2 Against the said return of income, the assessment was completed by the Asstt. Commissioner of Income Tax, Akola Circle, Akola (‘the Assessing Officer’) vide order dated 18.02.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.8,66,38,046/-. While doing so, the Assessing Officer made a disallowance of Rs.64,91,102/- u/s 36(1)(viia) of the Act on the ground that the appellant had not created provisions for bad and doubtful debts. The Assessing Officer also disallowed the depreciation on software of Rs.90,024/-. 3. Being aggrieved by the above disallowances, an appeal was filed before the ld. CIT(A), who vide impugned order after calling for the remand report, confirmed the disallowance rejecting the contention of the appellant that the provisions of Rs.40,00,000/- made on the standard advance should be considered as provisions for bad and doubtful debts. The ld. CIT(A) also confirmed the disallowance of depreciation of Rs.90,024/- after calling for the remand report. 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. When the appeal was called on, none appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceed to dispose of this matter after hearing the ld. CIT-DR. ITA No.334/NAG/2017 3 6. The first issue in ground of appeal relates to the disallowance of provisions for bad and doubtful debts. The Assessing Officer had made the disallowance of provisions for bad and doubtful debts of Rs.64,91,102/- primarily on the ground that no provisions for bad and doubtful debts was created by the assessee. It is the contention of the assessee that provisions created on standard advance should be considered as provisions for bad and doubtful debts. It is settled position of law that debiting the Profits & Loss Account by provisions for bad and doubtful debts and reducing the same from the sundry debtors in the Balance Sheet constitutes write off in terms of the law laid down by the Hon’ble Apex Court in the case of Vijaya Bank (SC). 7. On mere reading of the orders of the lower authorities, it would reveal that addition was made on the ground that no provisions was created, which is contrary to the material on record. Therefore, we remit the matter back to the file of the Assessing Officer to decide the issue of allowability of bad and doubtful debts after due verification of the entries in the books of accounts keeping in view the law laid down by the Hon’ble Apex Court in the case of Vijaya Bank (SC). Thus, the first issue in ground of appeal stands partly allowed for statistical purposes. ITA No.334/NAG/2017 4 8. As regards, the next issue in the ground of appeal relates to the disallowance of depreciation on software of Rs.90,024/-. We had carefully gone through the orders of the lower authorities and find that opening written down was computed taking into consideration the depreciation allowed in the preceding assessment year. The depreciation is admissible at the same rate at which depreciation was allowed in the initial year. Therefore, we do not find any reason to interfere with the orders of the lower authorities on this issue. Accordingly, the second issue in the ground of appeal sands dismissed. 9. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced on this 18 th day of October, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 18 th October, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-1, Nagpur. 4. The Pr. CIT-1, Nagpur. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर / DR, ITAT, Nagpur. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.