The DCITPatan Circle, Patan V. Gozaria Nagrik Sahakari Bank Ltd., Mehsana

ITA 369/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0248 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

I.T.A. NO. 369/AHD/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 369/AHD/2013 ASSESSMENT YEAR: 2009 - 10 DEPUTY COMMISSIONER OF INCOME TAX PATAN CIRCLE, PATAN ...... . .APPELLANT VS. GOZARI A NAGARIK SAHKARI BANK LTD . .. . . RESPONDENT MAIN BAZAR, GOZARIA DISTRICT MEHSANA. PIN - 382 825 [PAN: AAAAT1074G] APPEARANCES BY: PRASOON KABRA FOR THE APPELLANT SANJAY R SHAH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 16 , 20 16 DATE OF PRONOUNC ING THE ORDER : OCTOBER 19 TH , 2016 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 8 TH NOVEMBER 2012, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009 - 10. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS 96,23,606 MADE ON ACCOU NT OF DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE INCOME TAX ACT, 1961. I.T.A. NO. 369/AHD/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 2 OF 4 3. THE ASSESSEE BEFORE US IS A COOPERATIVE BANK . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED A DED UCTION OF RS 1,01,08,760. IT WAS ALSO NOTED THAT WHILE IN THE PROFIT AND LOSS ACCOUNT, THERE IS A PROVISION FOR BAD DEBTS OF RS 4,85,154 AND OF RS 1,42,36,140, THE DEDUCTION, AS MADE IN THE COMPUTATION, IS OF RS 1,01,08,760. THE AO, ON A PERUSAL OF MATERI AL ON RECORD, WAS OF THE VIEW THAT THE AMOUNT OF RS 1,42,36,140, AGAINST INVESTMENT IN CRB CAPITAL MARKETS, HAS BEEN DEBITED TO RESERVE FUND, AND, AS SUCH, NO PROVISION IS CREATED AS REQUIRED UNDER SECTION 36(1)(VIIA). HE NOTED THAT AS THE PROVISION IS CON FINED TO RS 4,85,154, THE DEDUCTION UNDER SECTION 36(1)(VIIA) IS RESTRICTED TO THE SAME AMOUNT, AS AGAINST THE CLAIM OF RS 1,01,08,760. ACCORDINGLY, A DISALLOWANCE OF RS 96,23,60 6 WAS MADE IN RESPECT OF THE BAD DEBTS. AGGRIEVED, ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE. THE ASSESSING OFFICER IS AGGRIEVED AND IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THAT SO FAR AS THE PROVISION O F RS 1, 42,36,140 IN RESPECT OF CRB CAPITAL MARKET IS CONCERNED, THE ASSESSEE HIMSELF HAS ADDED IT BACK , ALONGWITH THE PROVISION OF RS 4,85,154 FOR OTHER BAD DEBTS, IN THE C OMPUTATION OF INCOME. WHAT HAS BEEN CLAIMED IS DEDUCTION IS AS PER THE FORMULAE SET OUT IN SECTION 36(1)(VIIA) WHICH PROVIDES FOR DEDUCTION OF 10% OF RURAL ADVANCES AND 7.5% OF GROSS TOTAL INCOME, WHICH WORKS OUT TO RS 86,,71,687 AND RS 14,37,073 RESPECTIV ELY, AND THUS AGGREGATE TO RS 1,01,08,760. AS REGARDS THE ASSESSING OFFICER S OBSERVATIONS TO THE EFFECT THAT SINCE NO PROVISION IS CREATED FOR THE BAD DEBTS, AND THAT, FOR THIS REASON, THE SAME CANNOT BE ALLOWED AS DEDUCTION, WE FIND THIS ASPECT OF THE MATTER IS NOW COVERED BY THE DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF POWER FINANCE CORPORATION LIMITED VS JCIT [(2006) 10 SOT 190 (DEL)] INASMUCH AS UNDISPUTEDLY THE ASSESSEE HAS CREATED A PROVISION OF RS 1,42,36,140 TO THE DEBIT OF RESERVE FUND AGAINST THE I NVESTMENT IN CRB CAPITAL MARKET, AND THE MERE FACT THAT IT IS TERMED AS TRANSFER TO RESERVE DOES NOT ALTER SUBSTANCE OF THE PROVISION BECAUSE I.T.A. NO. 369/AHD/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 3 OF 4 ADMITTEDLY IT IS AN ABOVE THE LINE TRANSFER AND NOT BELOW THE LINE APPROPRIATION. IN V IEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE RELIEF GRANTED BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 6 . GROUND NO. 1 IS THUS DISMISSED. 7 . IN GROUND NO. 2, THE ASSESSING OFFICER HAS RAISED THE FOLLOWI NG GRIEVANCE: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PROVISION ON ACCOUNT OF GOVERNMENT SECURITIES. 8 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS COVERED, IN FAVOUR OF THE ASSESSEE, BY DECISION OF A COORDINATE BENCH, IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. IN THIS VIEW OF THE MATTER, EVEN AS LEARNED DEPARTMENTAL REPRESENTATIVE, RELIED UPON THE STAND TAKEN IN THE ORDER OF THE ASSESSING OFFICER, WHICH HAS ANYWAY BEEN REJECTED BY THE COORDINATE BENCH IN IMMEDIATELY PRECEDING ASSESSMENT YEAR, WE SEE NO REASONS TO INTERFERE IN THE RELIEF GRANTED BY THE CIT(A). A COPY OF THE REASONED ORDER DATED 13 TH AUGUST 2015, IN ASSESSEE S OWN CASE FOR THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR, WILL BE DEEMED TO BE ATTACHED TO AND FORMING PART OF THIS ORDER AS WELL. 9 . GROUND NO. 2 IS ALSO DISMISSED. 1 0 . IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 19 TH DAY OF OCTOBER , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 19 TH DAY OF OCTOBER , 2016. I.T.A. NO. 369/AHD/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 4 OF 4 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REP RESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD