THE NAVAL DOCKYARD CO OP BANK LTD, MUMBAI V. DCIT 1(3),

ITA 425/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5382 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: JAYESH KALA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 425 / MUM/20 16 ( ASSESSMENT YEAR : 2011 - 12 ) THE NAVAL DOCKYARD CO - OP BANK LTD., LION GATE, NAVAL DOCKYARD FORT MUMBAI 400 023 VS. C OMMISSIONER OF INCOME TAX (APPEALS) 3 , MUMBAI PAN/GIR NO. AABAT7232R APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI JAYESH KALA REVENUE BY SHRI SUMAN KUMAR DATE OF HEARING 12 / 07 /201 8 DATE OF PRONOUNCEMENT 30 / 07 / 201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, MUMBAI DATED 23/11/2015 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. GROUNDS RAISED BY THE ASSESSEE READS A S UNDER: - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LD. COMM. OF INCOME TAX (APPEALS) - 3 ERRED IN SUSTAINING THE DISALLOWANCE OF THE AMOUNT OF RS. 13,05,0337 - OUT OF THE TOTAL DEDUCTION CLAIMED U/S 36(L)(VIIA) OF THE INCOM E TAX ACT 1961 OF RS . 23,05,033/ - WITHOUT UNDERSTANDING THE FACTS & CIRCUMSTANCES OF THE CASE & THE REASONS ASSIGNED FOR DOING SO ARE WRONG & CONTRARY TO THE PROVISIONS OF THE INCOME TAX ACT & THE RULES MADE THERE UNDER 2. THE APPELLANT CRAVES HAVE TO ADD, ALTER, AMEND AND/ O R MODIFY ALL OR ANY OF THE ABOVE GROUND OF APPEAL ON OR BEFORE THE DATE OF HEARING. ITA NO. 425/MUM/2016 THE NAVAL DOCKYARD CO - OP BANK LTD., 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE HAD E - FILED ITS RETUR N OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME OF RS. 2,79,91,750 / - . THE A SSESSEE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT . THE A SSESSEE HAS CLAIMED THE DEDUCTION OF RS. 23,05,033/ - BEING 7 1/2% OF THE T OTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAU SE AND CHAPTER VIA) AS PER THE PROVISION OF SEC 36(L)(VIIA) OF THE INCOME TAX ACT 1961. HOWEVER, THE LD. ASSESSING OFFICER PASSED THE ORDER & MADE ADDITION OF RS.13,05,033/ - WITHOUT ASKING FOR ANY CLARIFICATIONS & WITHOUT UNDERSTANDING THE F ACTS. THE LD ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE OF RS. 13,05,033/ - STATING THAT THE PROVISION OF SEC 36( 1 )(VIIA) ARE VERY CL EAR THAT PROVISION FOR BAD & DOUBTFUL DEBTS IS ALLOWABLE IN RESPECT OF PROVISION FOR BAD & DOUBTFUL DEBT MADE AN D THE WORDS USED ARE PROVISION MADE BY THE ASSESSES AND THE SAME ARE RESTRICTED TO 7.5%. 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE LD. ASSESSING OFFICER NEVER ASKED FOR ANY DETAILS OR CLARIFICATION IN RESPECT OF DEDUCTION U/S 36(1)(VIII) OF RS. 1,30,000/ - . THEREFORE, THE ASSESSEE WAS UNDER THE BONAFI DE BELIEF THAT THE LD . ASSESSING OFFICER HAS BEEN SATISFIED WITH THE DETAILS SUBMITTED. ITA NO. 425/MUM/2016 THE NAVAL DOCKYARD CO - OP BANK LTD., 3 7. AS P ER THE PROVISIONS OF SEC 36(L)(V III) OF IT ACT 1961, A SPECIFIED ENTITY CAN CLAIM THE DEDUCTION OF AN AMOUNT NOT EXCEEDING 20% OF THE PROFITS DERIVED FROM ELIGIB LE BUSINESS. ACCORDINGLY, THE ASSESSEE BANK BEING AN SPECIFIED ENTITY ENGAGED IN THE ELIGIBLE BUSINESS OF PROVIDING LONG TERM FINANCE FOR DEVELOPMENT OF HOUSING IN INDIA HAD CREATED SPECIAL RESERVE AS PER THE PROVISION OF SEC 36(I )(VIII) & CLAIMED THE DEDU CTION OF RS. L,30,000/ - . THE LD ASSESSING OFFICER DISALLOWED THE AFORESAID AMOUNT STATING THAT NO FURTHER CLAIM UNDER THE HEAD 36(1) CAN BE ALLOWED AS THE ASSESSEE HAS BEEN ALLOWED THE DEDUCTION U/S 36(1)(VIIA) OF RS.10,00,000/ - . 8. A S PER MATERIAL PLACED ON RECORD, PROVISION IN BOOKS UNDER SECTION 36(1)(VIIA) IN THE A.Y.2007 - 08 TO 2011 - 12 WAS AS UNDER: - A.Y. OPENING BALANCE PROVISION IN BOOKS U/S. 36(L)(VIIA) DEDUCTION CLAIMED IN ITR U/S 36(1) (VIIA) EXCESS PROVISION CLOSING BALANC E 2007 - 08 - 459,554,19 - 459554.19 2008 - 09 459,554.19 4,500,000.00 - 4,959,554,19 2009 - 10 4,959,554.19 8,964,000.00 2,737,574.85 11,185,979.34 2010 - 11 11,185,979.34 - 2,390,583.00 8,795,396.34 2011 - 12 8,795,396.34 1,000,000.00 2,305,033.00 7,490,363.34 9. IT IS CLEAR FROM THE ABOVE FACT THAT EVEN AT THE END OF THE YEAR, THE ASSESSEE WAS HAVING EXCESS PROVISION OF RS.87,95,396/ - . ACCORDINGLY, ITA NO. 425/MUM/2016 THE NAVAL DOCKYARD CO - OP BANK LTD., 4 THERE IS NO JUSTIFICATION IN AOS ACTION FOR DECLINING ASSESSEES CLAIM OF PROVISIO NING. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 / 07 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI ; DATED 30 / 07 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//