M/s. Shreerama Credit Co-operative Society Limited, Udupi V. Assistant Commissioner of Income Tax, Circle-1, Udupi

ITA 436/BANG/2023

AI Insights

The case involves Shreerama Credit Co-operative Society Ltd., which appealed against the decision of the CIT(Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2017-18. The primary issue was the disallowance of provisions made in the books of accounts towards bad debts amounting to Rs.28,98,170 and service tax of Rs.92,856, totaling Rs.29,91,026. These provisions were initially disallowed by the Assessing Officer due to insufficient details and were upheld by the CIT(Appeals). The society argued that despite these disallowances, they should be eligible for deductions under section 80P(2)(a)(i) of the Income Tax Act, supported by CBDT Circular No.37/2016. The Tribunal agreed with the society's position, allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124937 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-06-2023
• Laws Referred To: Income Tax Act, CBDT Circular No.37/2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No. 436/Bang/2023 Assessment year : 2017-18 Shreerama Credit Co-operative Society Ltd., Shankar Shet Towers, Kundapura – 576 201. PAN: AAAJS 1565Q Vs. The Assistant Commissioner of Income Tax, Circle 1, Udupi. APPELLANT RESPONDENT Appellant by : Shri Mahesh R. Uppin, Advocate Respondent by : Smt. Supriya Rao, Addl.CIT(DR)(ITAT), Bengaluru. Date of hearing : 20.07.2023 Date of Pronouncement : 20.07.2023 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the DIN & Order No.ITBA/NFAC/S/250/2023-24/1051999933(1) dated 11.4.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC] for the AY 2017-18. 2. The sole and substantive issue involved in this appeal is not allowing the provisions made in the books of accounts of assessee towards provisions for bad debts of Rs.28,98,170 and Service Tax of ITA No. 436/Bang/2023 Page 2 of 3 Rs.92,856 aggregating to Rs.29,91,026 and that the assessee has not been given the benefit of deduction on the same of business profits u/s. 80P(20(a)(i) under Chapter VIA of the Act as per CBDT Circular No.37/2016 dated 2.11.2016. 3. In the impugned case, the assessee created provision for Non- Performing Assets (NPA) as bad and doubtful debts and provision for service tax which was disallowed by the AO. The CIT(Appeals) confirmed the same. Both the authorities below disallowed the provision made by the assessee for want of details as required by the authorities. 4. The assessee’s contention is that the above provisions made are not allowed, the assessee may be given the benefit of CBDT Circular No.37/2016 dated 02.11.2016 since the assessee is eligible for deduction under Chapter VIA. 5. The ld. DR relied on the orders of authorities below. 6. We heard the case & perused the entire material on record. The assessee is a co-operative society and claimed deduction u/s. 80P(2)(a)(i) of the Act It is not disputed that the provisions made by the assessee are not part of business activity carried on by the assessee. Since the provisions made in the profit & loss account of assessee has not been allowed as expenditure, accordingly, the corresponding profit will qualify for deduction under the relevant provisions and assessee is eligible to claim deduction under Chapter VIA of the Act. The CBDT ITA No. 436/Bang/2023 Page 3 of 3 Circular No.37/2016 dated 02.11.2016 relied on by the assessee would clearly apply in the impugned case. Following the aforesaid CBDT Circular, we hold that the assessee is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act on the disallowance of provisions debited to the Profit & Loss account. Accordingly, the assessee’s appeal is allowed. Pronounced in the open court on this 20 th day of July, 2023. Sd/- Sd/- ( GEORGE GEORGE K.) (LAXMI PRASAD SAHU ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 20 th July, 2023. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.