Adarniya P.D. Patilsaheb Sahakari Bank Ltd, Satara V. Assistant Commissioner of Income-tax, Satara Circle, Satara

ITA 399/PUN/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3732 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Earning of tax free income; Bad and doubtful debts; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI , JM . / ITA NO. 399 /PUN/20 1 8 / ASSESSMENT YEAR : 20 1 4 - 15 ADARNIYA P.D. PATILSAHEB SAHAKARI BANK LTD., 15/3C. MANGALWAR PETH, TILAK ROAD, KARAD, DIST. SATARA 415110. PAN : AAAJS0147E. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA. . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI. REVENUE BY : SHRI S.P. WALIMBE. / DATE OF HEARING : 07.06. 20 21 / DATE OF PRONOUNCEMENT : 08 .0 6 . 2021 / ORDER PER S. S. VISWANETHRA RAVI, J M: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 22.01.2018 BY THE COMMISSIONER OF INCOME TAX (APPEALS) 13 FOR THE ASSESSMENT YEAR 2014 - 15. 2. THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER THE COMMISSIONER OF INC OME TAX (APPEALS) IS JUSTIFIED IN CONFIRMING THE ADDITION MADE BEING EXCESS OF BAD AND DOUBTFUL DEBTS RECOVERABLE ( BDDR ) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 3. THE FACTS APPARENT FROM THE RECORD ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,15,70,280/ - AND IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER HAD DETERMINED THE SAME AT RS.1,20,70,280/ - INTER - ALIA MAKING ADDITION ON ACCOUNT OF BEING EXCESS PROVISION OF BDDR VIDE THIS ORDER DATED 31.10.2016 PASSED UNDER SEC.143(3) OF THE ACT. WE NOTE THAT THE ASSESSEE HAD CREDITED A SUM OF RS.5,00,000/ - AS EXCESS PROVISION OF BDD R CREDITED BEFORE 31.03.2007 IN ITS PROFIT AND LOSS ACCOUNT AND ACCORDINGLY, REDUCED THE SAME IN ITS COMPUTATION OF INCOME. ACCORDING TO THE ASSESSING OFFICER , THE SAID AMOUNT OF EXCESS BDDR IS TAXABLE INCOME AND IN THE ABSENCE OF SUBMISSIONS, HE PROCEEDE D TO ADD THE SAME TO THE INCOME OF THE ASSESSEE. 4. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), IT WAS CONTENDED THAT DURING THE ASSESSMENT YEAR 2006 - 07, THE ASSESSEE USED TO MAKE A PROVISION OF BDDR AS PER RESERVE BANK OF INDIA (R.B.I) GUIDELINES AN D ALSO THE INCOME OF THE ASSESSEE EXEMPT UNDER SEC.80 P(2)(A)(I) OF THE ACT UPTO THE SAME ASSESSMENT YEAR I.E., 2006 - 07. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE PASSED A JOURNAL ENTRY DEBITING BDDR BALANCE AND CREATING THE NPA PROVISION. ACCORDING TO THE ASSESSEE, IT WAS JUST A BOOK ENTRY WITHOUT HAVING ANY E FFECT ON THE TAXABLE INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS CONTENDED THAT THE ORDER OF ASSESSING OFFICER IS INCORRECT AS FAR AS TO THE EXTENT THE ADDITION OF RS. 5,00,000/ - TO THE TO TAL INCOME OF THE ASSESSEE , AS IT WAS RECOGNIZED AS INCOME OF THE ASSESSEE DURING A.Y. 2006 - 07. ACCORDING TO THE COMMISSIONER OF INCOME TAX (APPEALS), ANY EXCESS PROVISION RETURNED BACK DURING THE YEAR IS TO BE LOGICALLY ASSESSED AS INCOME AND THE REVERSA L IS OF AN ENTRY HAVING AN IMPLICATION ON THE DEDUCTION ALLOWED UNDER SEC.80P ( 2 ) (A)(I) OF THE ACT. WE NOTE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THE SUBMISSIONS OF THE ASSESSEE AS NOT ACCEPTABLE AND 3 PROCEEDED TO CONFIRM THE ADDITION MADE ON ACCOUNT OF EXCESS BDDR PROVISION. 5. BEFORE US, SHRI M.K. KULKARNI, T HE LD.A.R. REITERATED THE SUBMISSIONS AS MADE BEFORE LD.CIT(A) AND PRAYED TO ALLOW THE SOLE GROUND. 6. SHRI S.P. WALIMBE , T HE LD.D.R. RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS) AND PRAYED TO DISMISS THE GROUND RAISED BY THE ASSESSEE. 7. AS DISCUSSED ABOVE AND ALSO EMANATING FROM THE RECORD THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY INDULGED IN THE BANKING BUSINESS. THE ASSESSEE CLAIMED TO HAVE ITS INCOME EXEMPT UNDER S EC.80P(2)(A)(I) UPTO THE ASSESSMENT YEAR 2006 - 07 AND ALSO CREATING A PROVISION FOR BAD DEBTS IN ITS ACCOUNTS. WE NOTE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PASSED ON JOURNAL ENTRY DEBITING BDDR BALANCE OF RS.3 ,03,50,000/ - A ND REVERSED THE EXCESS PROVISION OF RS.5,00,000/ - . ACCORDING TO ASSESSEE , IT WAS NOT A TAXABLE INCOME AS IT WAS MADE OUT OF EARLIER YEARS INCOME WHICH WAS ALREADY OFFERED TO TAXATION . HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE OPINION THAT THE ASSESSE E IS ALSO CLAIMING ITS INCOME AS EXEMPT INCOME U/S 80P(2)(A)(I) OF THE ACT UPTO 20.06.2007 , T HEREFORE, THE PROVISION MADE AS PER RBI GUIDELINES FOR BDDR ATTAINS NO SIGNIFICANCE AND IT HAS TO BE TREATED AS INCOME BEING AN EXCESS PROVISION IN THE YEAR UNDER CONSIDERATION. IN OUR OPINION, AS RIGHTLY POINTED OUT BY THE LEARNED AUTHORISED REPRESENTATIVE, THE PROVISION MADE UNDER BDDR MADE OUT OF EARLIER YEARS INCOME WHICH WAS OFFERED TO TAX IN THE EARLIER YEAR. THEREFORE, WE FIND FORCE IN THE ARGUMENTS OF THE LD.A.R. WHEN IT WAS TAXED IN THE EARLIER YEARS, IF THE SAME IS TAXED IN THE CURRENT YEAR IT BECOMES DOUBLE TAXATION. THEREFORE, WHEN IT WAS TAXED IN THE EARLIER YEAR, THE ADDITION MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE LD.CIT(A) IS NOT JUSTIFI ED AND IT IS LIABLE TO BE DISMISSED. THUS, IN VIEW OF THE DISCUSSIONS MADE HEREIN ABOVE AND 4 FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF LD.CIT(A) IS NOT JUSTIFIED AND IS SET ASIDE. THUS, THE SOLE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 08 TH DAY OF JUNE , 2021. SD/ - SD/ - ( INTURI RAMA RAO ) ( S. S. VISWANETHRA RAVI ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 08 TH JUNE, 2021. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A ) 13, PUNE. 4. THE PR. C IT - 3, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.