Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 4933 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-06-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
31-05-2011
Assessment Year
1992-1993
Appeal Filed On
05-04-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE U.B.S.BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER .. ITA NO.425/MDS./10 ASSESSMENT YEAR:1987-88 ITA NO.426/MDS./10 ASSESSMENT YEAR:1992-93 THE KARUR VYSYA BANK LTD CENTRAL OFFICE, ERODE ROAD KARUR VS. ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE,RANGE-I, TIRUCHIRAPALLI. PAN AAACT 3373 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.QUADIR HOSEYN DEPARTMENT BY : SHRI P.B.SEKARAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEE FOR RESP ECTIVE ASSESSMENT YEARS, DIRECTED AGAINST THE ORDERS DT. 18.01.2010 OF CIT(A) TIRUCHIRAPPALLI. 2. SHORT FACTS, APROPOS ARE THAT ASSESSEE HAD WRITTEN OFF BAD DEBTS OF RS.28,543/- FOR ASSESSMENT YEAR 1987-8 8 AND RS.1,43,735 FOR ASSESSMENT YEAR 1992-93 AND CLAIMED THESE AS DEDUCTIONS. THESE WERE DISALLOWED BY THE ASSESS ING OFFICER IN THE REGULAR ASSESSMENT PROCEEDINGS. THE ISSUE WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL AND THIS TRIB UNAL IN ITS PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 2 ORDER DT.14.07.06 IN ITA NOS.819 & 823/MDS/03 HELD AS UNDER PARA-3 OF ITS ORDER:- 3. ONE ISSUE RAISED PERTAINS TO DISALLOWANCE OF BA D DEBT U/S.36(I)(VII)(A).(ITA NOS.819 & 823/MDS/03). 3.1. WE FIND THAT THIS ISSUE HAS BEEN DEALT BY THI S ITAT IN ASSESSEES OWN CASE FOR OTHER ASSESSMENT YEARS I N ITA NOS.1410/MDS/93, 2540/MDS/92,1106 & 1107/MDS/96, 2663/MDS/92 & 2160/MDS/96 VIDE ORDER DATED 21.03.02. THE TRIBUNAL HAS DECIDED AS UNDER: - SECTION 36(I)(VII) IS FOR A DIFFERENT PURPOSE, NAMELY ALLOWING OF BAD DEBTS. HERE A PROVISO HAS BEEN ADDED. BY MEANS OF THIS PROVISO, THE LEGISLATURE HAD MADE IT CLEAR THAT IN THE EVENT OF THE DEBT OF A RURAL BRANCH BECOMING BAD, IT COULD BE WRITTEN OFF AS A BAD DEBT. HOWEVER, WHEN IT COMES TO ALLOWING DEDUCTION OF BAD DEBT, IT WAS NECESSARY TO COMPARE THE AMOUNT OF DEBT TO THE AMOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBT. INVARIABLY, BANKS MAKE PROVISION WITH REFERENCE TO THE IDENTIFYING ADVANCES OR DEBTS THAT BECOME BAD. THEREFORE, IT IS IS NECESSARY FOR THE IDENTIFICATION OF EACH DEBT THAT IS TO BE WRITTEN O FF WITH THE PROVISION THAT IS MADE IN THE BOOKS OF ACCOUNT. IF THE PRO VISION COVERS THE AMOUNT OF DEBT IN FULL, THEN ACCORDING TO SECTION 36(I)(VII) THE ASSESSEE WILL NOT BE ENTITLED TO ANY FURTHER DEDUCTION BECAUSE THE ASSESSEE HAS ALREADY ENJOYED DEDUCTION WHEN MAKING THE PROVISION. PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 3 THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION OF BAD DEBTS ONLY IF THE AMOUNT OF BAD DEBT EXCEEDS THE AMOUNT OF PROVISION. IT IS THEREFORE NECESSARY TO COMPARE THE DEBT WRITTEN OFF WITH THE DEBT PROVIDED AND APPLY THE ABOVE RULES OF ALLOWING DEDUCTION IF THE DEBT EXCEEDS THE AMOUNT OF PROVISION. IT IS THEREFORE CLEAR THAT THE COMMISSIONER HAS WRONGLY COME TO THE CONCLUSION THAT SECTION 36(I)(VII)(A) IS NOT LIMITED TO ADVANCES BY RURAL BRANCHES BECAUSE HE HAS VOICED IT AGAINST THE VERY CIRCULAR THAT WAS ISSUED BY THE BOARD, PERHAPS NOT KNOWING THAT SUCH CIRCULAR EXISTS. WE THEREFORE MODIFY HIS ORDER TO THE EXTENT OBSERVED ABOVE. THE ASSESSING OFFICER SHALL GIVE THE ASSESSEE OPPORTUNITY TO PROVIDE LIST OF PROVISION F OR BAD AND DOUBTFUL DEBTS AND THE LIST OF BAD DEBTS SO THAT BOTH COULD BE COMPARED AS REQUIRED BY THE ACT. THIS APPEAL IS ACCORDINGLY TREATED AS ALLOWED IN PART. 3.2. ADHERING TO THE DOCTRINE OF STARE DECISIS, WE REMIT THIS ISSUE TO THE ASSESSING OFFICER WITH DIRECTIONS AS ABOVE. PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 4 3. ACCORDINGLY THE MATTER WAS TAKEN UP ONCE AGAIN BY THE ASSESSING OFFICER. IN THE FRESH PROCEEDINGS, ASSE SSEE FILED LETTERS DATED 21.11.07. THE SAID LETTER FOR ASSESSM ENT YEAR 1987-88 AS APPEARING IN THE ASSESSMENT ORDER IS VER BATIM REPRODUCED HEREUNDER:- FOR ASSESSMENT YEAR 1987-88 (I.E.) (PREVIOUS YEAR 1.1.86 TO 31.3.86), THE ABOVE ASSESSEE BANK HAS WRI TTEN OFF RS.28,543 AS BAD DEBTS IN ITS BOOKS. THE DEBTORS ACCOUNT CREDITED AND BAD DEBTS WRITTEN OFF ARE DEBITED. THE TOTAL BALANCE IN THE BAD DEBTS WRI TTEN OFF ACCOUNT WAS TRANSFERRED TO PROFIT AND LOSS ACCO UNT ON 31.3.1986. THE BAD DEBTS WRITTEN OFF IN THE BOOKS ARE CONSIDER ED FOR CLAIMING PROVISION FOR BAD AND DOUBTFUL DEBTS (IE) 36(I)(VIIA) THIS IS EVIDENT FROM THE FACT THAT THE ACCOUNTS WRI TTEN OFF AS BAD DEBTS DO NOT FIND A PLACE IN THE PROVISION F OR BAD AND DOUBTFUL DEBTS. A LIST AS ON 31.3.1986 SHOWING THE NAME OF ACCOUNT, BRANCH NAME, NATURE OF ADVANCE AND AMOUNT OF ADVANCE CONSIDERED FOR PROVISION 36(I)(VIIA) IS ENC LOSED. PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 5 SIMILARLY, THE DETAILS OF BAD DEBTS WRITTEN OFF FIN THE BOOKS FOR THE YEAR ENDED 31.03.1986 ARE ALSO ENCLOS ED. SINCE NUMBER OF YEARS HAVE PASSED IT IS VERY DIFFIC ULT TO TRACE THE BOOKS CONTAINING ENTRIES. SO A DECLARATIO N IS GIVEN BY THE DEPUTY GENERAL MANAGER OF THE ABOVE BANK. THEREFORE WE REQUEST THE ASSISTANT COMMISSIONER TO KINDLY ALLOW THE CLAIM. 4. FOR ASSESSMENT YEAR 1992-93 THE REPLY GIVEN, AG AIN APPEARING IN THE ASSESSMENT ORDER RAN AS UNDER: FOR ASSESSMENT YEAR 1992-93 (I.E.) (PREVIOUS YEAR 1.4.91 TO 31.3.92), THE ABOVE ASSESSEE BANK HAS WRI TTEN OFF RS.28,24,149 AS BAD DEBTS IN ITS BOOKS. THE DEBTORS ACCOUNT CREDITED AND BAD DEBTS WRITTEN OFF ARE DEBITED. THE TOTAL BALANCE IN THE BAD DEBTS WRI TTEN OFF ACCOUNT WAS TRANSFERRED TO PROFIT AND LOSS ACCO UNT ON 31.3.1992. THE BAD DEBTS WRITTEN OFF IN THE BOOKS ARE CONSIDER ED FOR CLAIMING PROVISION FOR BAD AND DOUBTFUL DEBTS (IE) 36(I)(VIIA) THIS IS EVIDENT FROM THE FACT THAT THE ACCOUNTS WRI TTEN OFF AS BAD DEBTS DO NOT FIND A PLACE IN THE PROVISION F OR BAD AND DOUBTFUL DEBTS. PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 6 A LIST AS ON 31.3.1992 SHOWING THE NAME OF ACCOUNT, BRANCH NAME, NATURE OF ADVANCE AND AMOUNT OF ADVANCE CONSIDERED FOR PROVISION 36(I)(VIIA) IS ENC LOSED. SIMILARLY, THE DETAILS OF BAD DEBTS WRITTEN OFF FIN THE BOOKS FOR THE YEAR ENDED 31.03.1992 ARE ALSO ENCLOS ED. SINCE NUMBER OF YEARS HAVE PASSED IT IS VERY DIFFIC ULT TO TRACE THE BOOKS CONTAINING ENTRIES. SO A DECLARATIO N IS GIVEN BY THE DEPUTY GENERAL MANAGER OF THE ABOVE BANK. THEREFORE WE REQUEST THE ASSISTANT COMMISSIONER TO KINDLY ALLOW THE CLAIM. 5. ASSESSING OFFICER WAS HOWEVER, OF THE OPINION T HAT THE ABOVE LETTERS WERE NOT SUFFICIENT ENOUGH TO ALLOW T HE CLAIM OF THE ASSESSEE. AS PER THE ASSESSING OFFICER, ASSESSE E HAD NOT GIVEN THE DETAILS CALLED FOR BY HIM AND THE AFFIDAV ITS SUBMITTED BY THE ASSESSEE MENTIONED THAT SUCH DETAILS WERE NO T TRACEABLE. IN THE FRESH PROCEEDINGS ALSO HE MADE T HE DISALLOWANCE AS EARLIER DONE. 6. ASSESSEE MOVED IN APPEAL ONCE AGAIN BEFORE THE COMMISSIONER OF INCOME TAX(A). THE COMMISSIONER OF INCOME TAX(A) WAS NOT IMPRESSED BY THE PLEADINGS OF THE ASSESSEE. ACCORDING TO HIM, THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO SUBMIT THE DETAILS AS REQUIRED BY T HE TRIBUNAL, BEFORE THE ASSESSING OFFICER. HE THEREFORE, CONFIR MED THE PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 7 ACTION OF THE ASSESSING OFFICER WITH REGARD TO THE DISALLOWANCE OF THE CLAIM OF BAD DEBTS. 7. NOW BEFORE US LD. AR STRONGLY ASSAILING THE ORD ERS OF THE AUTHORITIES BELOW, SUBMITTED THAT ASSESSEE HAD FURNISHED THE DETAILS CALLED FOR BEFORE THE ASSESSING OFFICER . PLACING BEFORE US A COPY OF THE ORDER OF THE COMMISSIONER O F INCOME TAX(A) IN THE ORIGINAL PROCEEDINGS RELEVANT TO ASSE SSMENT YEAR 1987-88, LD. AR ARGUED THAT ASSESSEE HAD FURN ISHED DETAILS IN SUPPORT OF THE CLAIM OF BAD DEBTS, WHICH WERE WRITTEN OFF, EVEN DURING THE COURSE OF ORIGINAL ASSESSMENT ITSELF. THEREFORE, AS PER THE LD. AR THE CLAIM OF THE ASSES SING OFFICER THAT THE ASSESSEE HAD FAILED TO FURNISH THE DETAILS, WAS INCORRECT. 8. PER CONTRA LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THIS TRIBUNAL WHILE DISPOSING OF THE APPEAL ORIGINALLY, HAD PLACED RELIANCE ON ITS OWN ORDER IN ASSESSEE'S OWN CASE IN ITA NO.1410/MDS/93, 2543/MDS/92, 1106/MDS/96, 1107/MDS/96, 2663/MDS/92 AND 2160/MDS/ 96 DT.21.03.02. SIMILAR DIRECTIONS WERE ALSO GIVEN AS GIVEN IN THOSE APPEALS. THE INTENTION BEHIND THE ORDER WAS THAT THERE OUGHT NOT BE ANY DUPLICATION OF THE ALLOWANCE FOR B AD DEBTS, SINCE ASSESSEE WAS UNDER SECTION 36(I)(VII)(A) ELIG IBLE FOR DEDUCTION OF PROVISION FOR BAD DEBTS ALSO IN ACCOR DANCE WITH THAT SECTION. THE DIRECTION OF THE TRIBUNAL TO T HE ASSESSEE PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 8 WAS TO PROVIDE A LIST OF PROVISION OF BAD AND DOUBT FUL DEBTS AND THE LIST OF BAD DEBTS WRITTEN OFF, TO THE ASSES SING OFFICER SO AS TO ENABLE HIM TO MAKE A COMPARISON OF BOTH, I N ORDER TO AVOID DUPLICATION. NOW IF WE LOOK AT THE LETTERS FI LED BY THE ASSESSEE DURING THE FRESH ASSESSMENT PROCEEDINGS, I NSOFAR AS ASSESSMENT YEAR 1992-93 IS CONCERNED, IT IS STAT ED THEREIN THAT A LIST OF ADVANCES CONSIDERED FOR PROVISIONING AS ON 31.03.92 AND ANOTHER LIST FOR BAD DEBTS WRITTEN OF F AGAIN AS ON 31.03.92 WERE ENCLOSED. SIMILARLY FOR ASSESSMENT YE AR 1987- 88 ALSO LISTS WERE SEEMINGLY PROVIDED, BUT NEVERTHE LESS, THE LETTER AS REPRODUCED BY THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER AND ALSO VERBATIM REPRODUCED BY US AT PARA 3 ABOVE, MENTIONS THE YEAR AS 31.03.1986. NEV ERTHELESS THIS COULD BE A MISTAKE AND MIGHT BE, THE ASSESSEE HAD PROVIDED THE LIST FOR YEAR ENDING 31.03.1987. THE A SSESSING OFFICER HAD HOWEVER COME TO A CONCLUSION THAT THE T RIBUNAL HAD DIRECTED PRODUCTION OF EVIDENCE FOR THE CLAIM OF BAD DEBTS AND THE CLAIM OF PROVISIONING. WHAT THE TRIBUNAL H AD ACTUALLY DIRECTED WAS ONLY TO PRODUCE A LIST OF PROVISIONING AND LIST OF BAD DEBTS WRITTEN OFF. THESE APPEAR TO HAVE BEEN P ROVIDED. THE ASSESSING OFFICER HOWEVER DID NOT MAKE ANY COM PARISON AS REQUIRED BY THIS TRIBUNAL, BEFORE COMING TO A CO NCLUSION THAT THE BAD DEBTS CLAIMED WAS NOT ALLOWABLE. THE COMMISSIONER OF INCOME TAX(A) ALSO WITHOUT GOING TH ROUGH THE LETTERS FILED BY THE ASSESSEE AND VERIFYING THE RECORDS, CONFIRMED THE ORDERS OF THE ASSESSING OFFICER. WE ARE THEREFORE OF THE OPINION THAT IN THE INTEREST OF JU STICE, THE MATTER HAS TO GO BACK TO THE ASSESSING OFFICER ONCE AGAIN. IF THE ASSESSEE HAD ALREADY PROVIDED THE LISTS OF BAD DEBTS AND PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 9 THE LISTS OF PROVISIONING FOR THE YEAR ENDED 31.03. 87 FOR ASSESSMENT YEAR 1987-88 AND FOR THE YEAR ENDED 31.0 3.92 FOR ASSESSMENT YEAR 1992-93, THEN THE ASSESSING OFF ICER HAS TO NECESSARILY MAKE A COMPARISON AND FIND OUT WHE THER THERE WERE ANY DUPLICATION IN THE CLAIM OF BAD DEBTS. AS SESSING OFFICER HAS TO ALLOW THE CLAIM OF BAD DEBTS TO THE EXTENT THERE WAS NO DUPLICATION IN BETWEEN THESE LISTS. TO THE EXTENT DUPLICATIONS ARE FOUND, DISALLOWANCE CAN BE MADE. A SSESSEE HAS TO BE GIVEN AN OPPORTUNITY TO PROVE THAT IT HAD FILED THE LISTS, ALONG WITH ITS LETTERS DT.21.11.07. ORDERED ACCORDINGLY. 10. IN THE RESULT, APPEALS OF THE ASSESSEE STAND A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 10 TH JUNE, 2011. SD/- SD/- ( U.B.S.BEDI ) ( ABRAHAM P.GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH JUNE, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 10 ITA. 425/426 /MDS/10 THE KAUR VYSYA BANK LTD 10 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER
