The Asstt. Commissioner of Income Tax, Hoshiarpur V. The Hoshiarpur Central Co-op Bank Ltd., Hoshiarpur

ITA 453/ASR/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0644 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Business income; Bad and doubtful debts; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.453/ASR/2015 ASSESSMENT YEAR: 2012-13 ASST. CIT, HOSHIARPUR CIRCLE, HOSHIARPUR. VS. THE HOSHIARPUR CENTRAL CO-OP. BANK LTD., RAILWAY ROAD, HOSHIARPUR. [PAN: AAAAT 0384K] (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PAWAN KUMAR (CIT-D.R.) RESPONDENT BY: SH. J. S. BHASIN, ADVOCATE DATE OF HEARING : 05.11.2018 DATE OF PRONOUNCEMENT: 04.12.2 018 ORDER PER SANJAY ARORA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-I, JALANDHAR ( CIT(A) FOR SHORT) DATED 01.06.2015, DISMISSING THE REVENUES APPEAL CONTEST ING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR ASSESSMENT YEAR (A.Y.) 2012-13 VIDE ORDER DATED 11.03.2015. 2. AT THE VERY OUTSET, IT WAS CLAIMED BY THE LEARNE D COUNSEL FOR THE ASSESSEE, SH. BHASIN, THAT THE ASSESSEES CASE IN INSTANT APP EAL IS COVERED BY THE ORDER BY THE TRIBUNAL IN ITS OWN CASE FOR AY 2008-09, ADDUCING A COPY OF THE SAID ORDER (IN ITA NOS. 348/ASR/2011 & 399/ASR/2011, DATED 16.7.2018). THE ISSUE INVOLVED, HE WOULD CONTINUE, IS THE ASSESSEES CLAIM FOR BAD AND DOUBTFUL DEBTS, MADE AT RS. 340 ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 2 LACS BY WAY OF A PROVISION, WHICH WAS DENIED BY THE ASSESSING OFFICER (AO) ON THE GROUND THAT THE PROVISION IMPLIES A CONTINGENT, AND NOT AN ASCERTAINED, LIABILITY, INADMISSIBLE IN COMPUTING BUSINESS INCOME. TWO, HOW COULD A PROVISION FOR BAD AND DOUBTFUL DEBTS BE CLAIMED IN RESPECT OF STANDAR D ASSETS, I.E., ASSETS WHICH BY THE ASSESSEES OWN ESTIMATION ARE GOOD, PROVISION I N RESPECT OF WHICH THOUGH STANDS BOOKED IN THE ASSESSEES ACCOUNTS IN COMPLIA NCE WITH THE RBI GUIDELINES, EVEN AS THE ACT IS A SEPARATE CODE IN ITSELF AND IN COME CHARGEABLE TO TAX UNDER THE ACT IS TO BE COMPUTED IN ACCORDANCE WITH ITS PROVI SIONS ( SOUTHERN TECHNOLOGIES LTD. V. JT. CIT [2010] 320 ITR 577 (SC)). 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE RELEVANT PART OF THE TRIBUNALS ORDER SUPRA READS AS UNDER: ASSESSEES APPEAL (ITA NO. 348/ASR/2011) 11. GROUND 1 OF THE ASSESSEES APPEAL RAISES THE (S AME) ISSUE OF DENIAL OF CLAIM FOR FUEL AND HIRE CHARGES. OUR ADJUDICATION OF GROUND 3 FOR AY 2007-0 8 (IN ITA 47/ASR/2011) SHALL MUTATIS MUTANDIS APPLY FOR THIS GROUND AS WELL (REFER PARA 4 & 5 OF THIS O RDER) 12. GROUND 2 RAISES THE ISSUE OF DISALLOWANCE OF PR OVISION (AT THE RATE OF 0.25% ON STANDARD LOANS). WHILE THE BASIS OF THE AOS DISALLOWANCE IS THE SAM E AS FOR AY 2007-08, I.E., THERE BEING NO LIABILITY IN PRAESENTI , SO THAT IT IS ONLY IN THE NATURE OF A CONTINGENT LIABILITY, NOT ADMISSIBLE U/S. 37(1), THE LD. CIT(A ), AS FOR AY 2007-08, ACCEPTED THE ASSESSEES CLAIM AS , IN HIS VIEW, THERE WAS NOTHING TO SHOW THAT THE CLAIM WAS NOT COVERED BY THE PROVISION OF SECTION 3 6(1)(VIIA). THE PROVISION AGAINST STANDARD LOANS BE ING ONLY A PROVISION FOR BAD AND DOUBTFUL DEBTS, WOULD STAND TO BE COVERED U/S. 36(1)(VIIA). THAT BEING TH E CASE, WE FIND NO REASON FOR THE REVENUE IMPUGNING T HE PROVISION AGAINST STANDARD ASSETS. THUS, SUBJECT TO THE LIMIT PRESCRIBED U/S. 36(1) (VIIA), I.E., 7. 5% OF THE INCOME, BEING NOT BREACHED, THE ASSESSEE WOULD BE ENTITLED TO THE PROVISION AGAINST STANDARD ASSET S. WE DECIDE ACCORDINGLY. 13. THIS BRINGS US TO GROUNDS 3 AND 4. THE ASSESSEE S CLAIM U/S. 36(1)(VIIA), HOWEVER, WAS EXAMINED BY HIM TO FIND IT TO INCLUDE THE FOLLOWING: (A) LOSS ON SALE OF CAR: RS.0.11 LACS (B) WRITE OFF OF PERISHABLE GOODS: RS.0.46 LACS (C) UNREALIZED INTEREST FOR 2006-07 NOT REALIZED DURING 2007-08 RS.1.43 LACS RS. 2.00 LACS ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 3 LOSS ON SALE OF CAR AS WELL AS WRITE OFF OF PERISHA BLE GOODS COULD NOT BE REGARDED AS A PROVISION FOR BAD AND DOUBTFUL DEBTS. THE ASSESSEE STATES THAT WHILE, WITHOUT DOUBT, WRITE OFF OF PERISHABLE ARTICLES CA NNOT BE CLAIMED AS A PROVISION FOR BAD AND DOUBTFUL DEBT S, IT IS NOT BARRED FROM CLAIMING THE SAME AGAINST ANY OTHER PROVISION FALLING UNDER CHAPTER IV-D. SURELY, HOWEVER, THE ASSESSEE HAS TO SPECIFY THE PROVISION WHERE-UNDER THE SAID CLAIM IS ADMISSIBLE. WHY, THE LD. AR, ON BEING QUERIED BY THE BENCH DURING HEARIN G IN THIS REGARD, WAS UNABLE TO SPECIFY THE SAME OR E VEN THE NATURE OF THE ARTICLES, STATED TO HAVE SINC E PERISHED, OR EVEN IF THE SAID ARTICLE STOOD INCLUDE D IN THE ASSESSEES BLOCK OF ASSETS. THAT IS, THEIR ACCOUNTING TREATMENT. WHILE, THEREFORE, NO CASE FOR A SET ASIDE IS MADE OUT, WE, YET, IN THE INTEREST OF JUSTICE, CONSIDER IT PROPER TO ALLOW THE ASSESSEE A FINAL OPPORTUNITY TO PRESENT ITS CASE BEFORE THE A O IN THE APPEAL EFFECT GIVING PROCEEDINGS. THE AO SHALL, WHERE A CASE DULY SUBSTANTIATED, IS MADE OUT BY TH E ASSESSEE, CONSIDER THE ASSESSEES CONTENTION AND AD JUDICATE PER A SPEAKING ORDER. WITHOUT DOUBT, THE ONUS TO PROVE ITS CLAIM, BOTH ON FACTS AND IN LAW, WOULD BE ON THE ASSESSEE. WE DECIDE ACCORDINGLY. 14. GROUND 4 IS IN RESPECT OF CLAIM OF RS.1.43 LACS (REFER PARA 13 ABOVE). THE SAME WAS DENIED ON THE BASIS THAT THE SAID PROVISION COULD NOT BE REGARDED AS A PROVISION FOR BAD AND DOUBTFUL DEBTS. THE ASSESSEES CLAIM IS THAT THE INTEREST, BOOKED AS IN COME FOR FY. 2006-07 (AY 2007-08), BEING NOT REALIZ ED EVEN DURING FY. 2007-08 (AY 2008-09), WAS REVERSED. THAT IS, CONSTITUTES REVERSAL OF INTEREST, SO THAT IT WOULD NOT, AS STATED BY THE LD. CIT(A), STAND TO BE DEBITED TO THE PROVISION ACCOUNT. 15. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSEE BANK, FOLLOWING ACCRUAL SYSTEM OF ACC OUNTING, HAD BOOKED INCOME FOR AY 2007-08 EVEN AS THE INTEREST WAS PENDING REALIZATION. THE S AME HAVING NOT BEEN REALIZED EVEN DURING AY 2008- 09, THE CURRENT YEAR, THE SAME WAS REVERSED. THE AS SESSEE HAS ITSELF CLAIMED THIS REVERSAL AS A PROVIS ION FOR BAD AND DOUBTFUL DEBTS. IF THE INCOME HAD BEEN, AS CLAIMED, ALREADY BOOKED AS INCOME (FOR AY 2007- 08), ALL THAT NEEDS TO BE DONE IS TO THE DEBIT THE PROVISION (FOR BAD AND DOUBTFUL DEBTS) ACCOUNT, WIT H A CORRESPONDING CREDIT TO THE RESPECTIVE DEBTORS ACCO UNT/S, WHOSE ACCOUNT/S WOULD HAVE BEEN DEBITED ON CHARGE OF INTEREST FOR FY. 2006-07 (AY 2007-08). WE FIND NOTHING WRONG IN THE ADJUDICATION BY THE LD. CIT(A), NOR COULD THE LD. AR DURING HEARING POINT O UT TO ANY. THIS DECIDES ASSESSEES GROUND 4. THIS, HOWEVER, YET, LEAVES ANOTHER ASPECT OF THE M ATTER. THE ASSESSEE HAS, APART FROM THE PROVISION OF RS.2 LACS (AS AT PARA 13 ABOVE), MADE FURTHER PROVISION OF RS.850 LACS U/S. 36(1) (VIIA), AS UNDER, I.E., AT A TOTAL OF RS.852 LACS: (A) PROVISION MADE AGAINST STANDARD ASSETS RS.100 LACS (B) PROVISION AGAINST RURAL ADVANCES RS.750 LACS RS.850 LACS THE PROVISION U/S. 36(1)(VIIA) AT THE RATE OF 7.5% OF INCOME WORKING TO RS.98.31 LACS, THE LD. CIT(A) RESTRICTED THE DEDUCTION FOR THE PROVISION FOR BAD AND DOUBTFUL DEBTS THERETO, THUS, IN EFFECT, DIRECT ING A DISALLOWANCE FOR RS.1.69 LACS (RS.100 LACS-RS.98.31 LACS). THE ASSESSEES CASE (ALSO REFER GROUND 2) I S THAT THE PROVISION U/S. 36(1)(VIIA) SHOULD BE CONSIDERED AT RS.850 LACS, I.E., BY INCLUDING RS.750 LACS, WH ICH IS WITHIN THE PRESCRIBED LIMIT OF 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY RURAL BRANCHES OF THE BANK (COMPUTED IN THE PRESCRIBED MANNER). THAT IS, THERE IS NO SCOPE FOR CONSIDERING THE PROVISION (U/ S. 36(1)(VIIA)) DISJUNCTIVELY. AND THAT BOTH THE COMPO NENTS OF 36(1)(VIIA) MUST BE CONSIDERED TOGETHER IN - ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 4 AS-MUCH AS IT IS A SINGLE PROVISION, ALBEIT COMPRIS ING OF TWO PARTS, EACH OF WHICH IS TO BE COMPUTED SEPARATELY. AS LONG AS THEREFORE THE TOTAL PROVISIO N IS WITHIN THE TOTAL AMOUNT COMPUTED AS PRESCRIBED U/S. 36(1)(VIIA), NO DISALLOWANCE COULD BE MADE WIT H REFERENCE TO EITHER COMPONENT. IN OUR CONSIDERED VIEW, FIRSTLY, THE CRYSTALLIZATION OF THE AMOUNT OF PROVISION U/S. 36(1)(VIIA), IN-SO-FAR AS IT IS BAS ED ON ASSESSED INCOME, SHALL HAVE TO AWAIT THE FINALIZATI ON OF AND, THUS, COULD ONLY BE AFTER GIVING THE EFF ECT TO THE ASSESSEES OTHER CLAIMS (OR COUNTER CLAIMS), I. E., IN APPEAL PROCEEDINGS. ON MERITS, THE ASSESSEE HAS AGGREGATED THE PROVISION INTO ITS TWO CONSTITUENTS, OPENING AND MAINTAINING SEPARATE (PROVISION) ACCOUNTS FOR EACH OF THEM, AS IS INCUMBENT UPON IT. THIS IS AS THOUGH EACH OF THE TWO LIMBS IS, IN EFF ECT, A PROVISION FOR BAD AND DOUBTFUL DEBTS, THE DEDUCTION FOR THE SAME IS TO BE MADE WITH REFERENCE TO THE UPPER LIMIT FOR EACH OF THE TWO LIMBS, DEFINED SEPA RATELY AS, NOT EXCEEDING I.E., THE SPECIFIED PERCENTAGE OF TOTAL INCOME IN ONE CASE, AND OF THE AGGREGATE RURAL BRANCH ADVANCES FOR THE OTHER. EACH OF THE TWO COMPONENTS WOULD THEREFORE HAVE TO BE RE CKONED SEPARATELY, AND NO DISALLOWANCE COULD BE MADE WHERE EACH OF THE TWO COMPONENTS DOES NOT EXCE ED THE LIMITS SPECIFIED THERE-FOR. IT DOES NOT MEAN THAT THE PROVISION ALREADY MADE IN ACCOUNTS IS TO BE DISTURBED TO ACCOMMODATE OTHER PROVISION, I.E., ADJUST THE PROVISION ACCOUNT, WHERE IN EXCESS (AS BY RS.1.69 LACS QUA THE INCOME BASED PROVISION IN THE INSTANT CASE), WITH THAT WHERE IT IS SHORT. WE SAY SO AS THE SECTION DOES NOT SPECIFY THE AMOUNT O F DEDUCTION PER SE, BUT PERMITS THE DEDUCTION IN RESPECT THEREOF UP TO A PARTICULAR SUM. AS SUCH, AS ALONG AS THE LIMIT, SPECIFIED SEPARATELY, WHICH IS THE RE ASON FOR OUR STATING OF THE ASSESSEE BEING REQUIRED TO MAINTAIN TWO PROVISION ACCOUNTS, IS NOT BREACHED, N O DISALLOWANCE COULD BE MADE. PER CONTRA, TO THE EXTENT IT IS, DISALLOWANCE FOR THE EXCESS CLAIM WOU LD FOLLOW. IT MAY BE ARGUED THAT THE ASSESSEE COULD , IN THAT CASE, OPEN A SINGLE ACCOUNT WHICH WOULD MAKE T HE ADJUSTMENT AFORESAID, I.E., TRANSFER FROM ONE PROVISION ACCOUNT TO ANOTHER, UNNECESSARY. THE TOTA L PROVISION MADE EACH YEAR WOULD STAND TO BE RECKONED WITH REFERENCE TO THE SUM OF THE TWO LIMBS , AND AS LONG AS THE AGGREGATE OF THE TWO, I.E., 7. 5% OF THE CURRENT YEARS INCOME AND 10% OF THE AGGREGA TE RURAL ADVANCES, IS NOT BREACHED, NO DISALLOWANCE COULD BE CALLED FOR. THE ARGUMENT NEEDS EXAMINATION . AS AFORE-STATED, EACH OF THE TWO LIMBS, NEVERTHELESS, REPRESENT A PROVISION U/S. 36(1)(VIIA ). THIS, HOWEVER, WOULD REQUIRE US TO CONSIDER AS T O IF THE PROVISION COMPONENT RECKONED ON THE BASIS OF AL L RURAL BRANCH ADVANCES IS TO BE RECKONED ON A YEAR - WISE BASIS OR THE PROVISION ALREADY CREDITED IN ACC OUNTS IS TO BE TAKEN INTO ACCOUNT, I.E., IF A PROVI SION FOR RS.10 LACS (SAY) STANDS ALREADY MADE AND ALLOWED FO R AN EARLIER YEAR (AY 2007-08, SAY), WOULD THE ASSESSEE BE ELIGIBLE FOR ANOTHER DEDUCTION OF RS.10 LACS QUA RURAL ADVANCES ASSUMING, FOR THE SAKE OF SIMPLICITY, NO INCREASE IN THE RURAL ADVANCES DURIN G THE PREVIOUS YEAR RELEVANT TO AY 2008-09. THIS CO ULD BE EXTRAPOLATED FOR EACH SUCCEEDING YEAR. IT DOES N OT APPEAR TO BE SO, I.E., THAT THE PROVISION ALREAD Y MADE WOULD HAVE TO BE TAKEN INTO ACCOUNT. THIS IS A S, WHERE NOT SO, THE AGGREGATE PROVISION QUA RURAL ADVANCES WOULD, IN TIME, EXCEED HUNDRED PER CENT OF SUCH ADVANCES, I.E., AS OUTSTANDING AT THE END OF THE RELEVANT YEAR, AND WHICH CANNOT BE. THE PROVISI ON, IT NEEDS TO BE APPRECIATED, IS AGAINST AN ASSET , I.E., RECOGNIZES THE RISK ASSOCIATED WITH ITS REALI SABILITY AND, THEREFORE, IS VALID ONLY WITH REFEREN CE TO THE EXTANT ASSETS, I.E., AS OBTAINING AT THE RELEVANT T IME. THE PROVISION AS ON 31.03.2008 (ASSET) WOULD THEREFORE HAVE TO BE RECKONED WITH REFERENCE TO THE ADVANCES (BY RURAL BRANCHES OF THE BANK, SPEAKING IN THE CONTEXT OF SECTION 36(1)(VIIA)) AS ON 31.03. 2008. THE SAID PROVISION MAY INCLUDE THAT MADE DURI NG THE EARLIER YEARS, I.E., WHERE NOT REVERSED, WHICH THUS WOULD HAVE TO BE TAKEN INTO ACCOUNT WHILE COMPUTING THE UPPER LIMIT SPECIFIED QUA RURAL ADVANCES U/S. 36(1)(VIIA). AND IN WHICH CASE , THEREFORE, THE PROVISION BASED ON INCOME (FOR EACH YEAR U/S. 36(1) (VIIA) WOULD HAVE TO BE MADE, ACCOUNTED FOR AND ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 5 RECKONED (FOR THE BREACH OF THE LIMIT SPECIFIED IN ITS RESPECT) SEPARATELY. THE ARGUMENT AFORESAID, APPEALING AT FIRST BLUSH, DOES NOT HOLD. AT THIS STAGE, WE MAY REFER TO THE REVENUES GROUN D NO. 2 (FOR AY 2008-09, IN ITA NO. 399/ASR/2011). THE AO REGARDING THE ENTIRE PROVISIO N OF RS.852 LACS BY THE ASSESSEE AS AGAINST STANDAR D LOANS, EFFECTED AN ADDITION FOR THE SAME, I.E., RS. 852 LACS. THE LD. CIT(A), WHILE CONFIRMING DISALLOW ANCE OF RS.2 LACS (AGITATED BY THE ASSESSEE PER ITS APPE AL), REGARDING THE BALANCE RS. 850 LACS AS IN EXCES S BY RS.1.69 LACS, ALLOWED THUS, IN EFFECT, A RELIEF OF RS.848.31 LACS, WHICH THE REVENUE CONTESTS PER ITS GROUND 2. EVEN IF AGAINST STANDARD ASSETS, WHY COULD NOT T HE PROVISION BE REGARDED AS A PROVISION FOR BAD AND DOUBTFUL DEBTS. A PROVISION, THOUGH NORMALLY IN-ADM ISSIBLE IN COMPUTING INCOME U/S. 28, IS ALLOWED AS SPECIAL MEASURE (IN COMPUTING TAXABLE INCOME) FOR B ANKS, INCLUDING COOPERATIVE BANKS, IN VIEW OF THE NATURE OF THE BUSINESS. WHILE ONE COMPONENT OF THE PROVISION IS BASED ON INCOME, SO THAT IT WOULD NECESSARILY HAVE TO BE A REGULAR COMPONENT, I.E., F OR EACH YEAR, BASED ON ITS INCOME, THE OTHER PART I S BASED ON THE AGGREGATE (AVERAGE) ADVANCES BY RURAL BRANCHES, LIMIT FOR WHICH STANDS SEPARATELY ALREADY SPECIFIED. THE PROVISION MADE DURING THE CURRENT YE AR SHALL BE ALLOWED SUBJECT TO THE TOTAL PROVISION (I.E., INCLUDING THAT ALREADY MADE) NOT EXCEEDING THE LIMI TS SPECIFIED IN ITS RESPECT. TO CONCLUDE, THE ISSUE OF DISALLOWANCE OF RS.1.69 LACS SUSTAINED BY LD. CIT(A) AND RS.848.31 LACS DELETED BY HIM, AND QUA WHICH THE OPPOSING SIDES ARE IN APPEAL, ARE CORREL ATED. THIS ALSO EXPLAINS OUR CONSIDERING THE TWO TOGETHER, AS ALSO APPARENT FROM THE SAID CONSIDERATION. HOWEVER, WHILE ARGUMENTS WERE MADE IN RESPECT OF THE ASSESSEES APPEAL, THE REVENUES APPEAL WAS LARGELY CONSIDERED AS CONSEQUENTIAL. IN THE ABSENCE OF PROPER DELIBERATIO N, WE DO NOT CONSIDER IT PROPER TO CONCLUDE THE TWO (CORRELATED) ISSUES. OUR FOREGOING OBSERVATIONS NOT WITHSTANDING, WHICH MAY WELL BE RELIED UPON BY EITHER SIDE IN THE SET ASIDE PROCEEDINGS, WE ONLY C ONSIDER IT PROPER THAT THE MATTER IS RESTORED TO TH E FILE OF THE AO FOR ADJUDICATION AFRESH AFTER ALLOWING TH E ASSESSEE A REASONABLE OPPORTUNITY OF PRESENTING I TS CASE, IN ACCORDANCE WITH LAW. NO SIDE, WE MAY THOUG H ADD, BE CONSTRAINED BY OUR OBSERVATIONS, SO THAT IS AN OPEN SET ASIDE. GROUND 2 OF THE ASSESSEES AN D THE REVENUES APPEAL IS DISPOSED OF ACCORDINGLY. 3.2 IT MAY THEREFORE NOT BE CORRECT TO STATE THAT T HE ISSUE ARISING IN THE PRESENT APPEAL, I.E., THE MAINTAINABILITY OF THE ASSESSEES CLAIM FOR PROVISION FOR BAD AND DOUBTFUL DEBTS, IS COVERED BY THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR AY 2008-09. AS APPARENT, THE TRIBUNAL OBSERVING THAT T HE ISSUE, IN PART, ALSO AROSE IN THE REVENUES APPEAL, ON WHICH NO ARGUMENTS WERE MA DE, DECLINED TO ADJUDICATE, AND RESTORED THE MATTER TO THE FILE OF THE FIRST AP PELLATE AUTHORITY, ALBEIT WITH ITS OBSERVATIONS. SH. BHASIN WOULD, ON THIS BEING POINT ED OUT BY THE BENCH DURING HEARING, CONCEDE THERETO, MODIFYING HIS PRAYER FOR A SIMILAR COURSE BEING ADOPTED FOR THE CURRENT YEAR. WE SEE NO REASON NOT TO ADDRE SS THE ISSUE AT HAND; THE SAME HAVING TRAVELLED THE EARLIER STAGES, WITH THE FINDI NGS BY THE TWO REVENUE ON MERITS ON RECORD. THE NON-ADJUDICATION FOR AY 2008-09 BY T HE TRIBUNAL, AS AFORE-NOTED, ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 6 WAS FOR THE REASON OF IT SUBSEQUENTLY COMING TO ITS NOTICE THAT THE ISSUE, RAISED IN CONTEXT OF SOME SPECIFIC AMOUNTS IN THE ASSESSEES APPEAL, DULY HEARD, ALSO AROSE, I.E., IN PRINCIPLE, IN THE REVENUES APPEAL, WHICH THOUGH HAD NOT BEEN SUBJECT TO PROPER HEARING. IT, THEREFORE, TO AVOID PREJUDICE B EING CAUSED TO EITHER SIDE, REFRAINED FROM ADJUDICATING THE ISSUE IN PRINCIPLE. NO SUCH CONSTRAINT OBTAINS IN THE INSTANT CASE. 3.3 EVEN AS OBSERVED BY THE TRIBUNAL PER ITS ORDER SUPRA, THE CLAIM FOR PROVISION, GENERALLY INADMISSIBLE, IS ALLOWABLE ONLY IN VIEW O F THE SPECIFIC PROVISION FOR PROVISION FOR BAD AND DOUBTFUL DEBTS IN THE CASE OF BANKS, INCLUDING THE COOPERATIVE BANKS, AS THE ASSESSEE, IN VIEW OF THE NATURE OF TH EIR BUSINESS (SEC.36 (1)(VIIA)). THE ONLY QUESTION THAT THEREFORE SURVIVES IS WITH REGAR D TO ITS QUANTUM, I.E., IF THE PROVISION AS MADE AND BEING CLAIMED IS IN TERMS OF, AND IN ACCORDANCE WITH, THE SAID PROVISION (S. 36(1)(VIIA)), WHICH PROVIDES FOR TWO INDEPENDENT PARAMETERS, I.E., THE AVERAGE RURAL BRANCH ADVANCES , AND THE CURRENT YEARS INCOME (PRIOR TO ANY PROVISION FOR BAD AND DOUBTFUL DEBTS), STIPULATED A T 10 PERCENT AND 7.5 PERCENT THEREOF RESPECTIVELY. THE MANNER OF COMPUTING THE A VERAGE RURAL BRANCH ADVANCES STANDS PRESCRIBED IN THE INCOME TAX RULES, 1962 (T HE RULES HEREINAFTER), BEING R. 6ABA. THE ONLY ISSUE, THEREFORE, THAT COULD ARISE I S IF THE PROVISION @ 10% QUA RURAL ADVANCES IS TO BE MADE ON A YEAR-TO-YEAR BASI S, OR REPRESENTS THE MAXIMUM AMOUNT FOR WHICH THE PROVISION IN ITS RESPECT COUL D BE MADE. IN OUR CLEAR VIEW, AND EVEN AS OBSERVED BY THE TRIBUNAL PER ITS ORDER SUPRA, ALSO CITING AN EXAMPLE, IT IS THE FORMER. THE PROFILE OR THE CONSTITUTION OF T HE RURAL ADVANCES RECOVERABLE ADMITTEDLY CHANGING WITH TIME, A PROVISION IN ITS RESPECT WOULD ONLY BE WITH REFERENCE TO THAT OUTSTANDING AT ANY GIVEN POINT OF TIME. AS SUCH, THIS PART OF THE PROVISION, I.E., REFERABLE TO THE RURAL ADVANCES, C OULD NOT EXCEED, AT ANY GIVEN TIME, 10% OF THE ADVANCES COMPUTED IN THE MANNER PROVIDED IN THE RULES. IN FACT, THIS IS THE ACCEPTED POSITION; THE ASSESSEES REPLY DATED 2 9/12/2014 IN THE ASSESSMENT ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 7 PROCEEDINGS, EXTRACTED AT PARA 5.1 OF THE ASSESSMEN T ORDER, WHEREAT IT SAYS THAT THE PROVISION QUA RURAL ADVANCES, INCLUDING THAT ALREADY MADE EARLIER , THUS, DOES NOT EXCEED 10% OF ITS RURAL BRANCH ADVANCES. THIS WAS IN FACT ALSO THE UNANIMOUS VIEW OF THE LEARNED REPRESENTATIVES BEFORE US. THE OTHER COMPONENT OF THE PROVISION U/S. 36(1)(VIIA) IS WITH REFERENCE TO A P ERCENTAGE OF THE INCOME (PRIOR TO THE PROVISION FOR BAD AND DOUBTFUL DEBTS). THIS, OF COURSE, WOULD STAND TO BE MADE, AND ACCORDINGLY CLAIMED, ON A YEAR-TO-YEAR BASIS. THE ASSESSEE, AS OBSERVED BY THE TRIBUNAL IN ITS O RDER FOR AY 2008-09 (PARA 15/PG. 18), MAINTAINED SEPARATE PROVISION ACCOUNTS FOR THE TWO COMPONENTS. SUBJECT, THEREFORE, TO THE QUANTUM LIMITATION PRESC RIBED BY LAW, AS EXPLAINED BY US, THE ASSESSEES CLAIM FOR DEDUCTION TOWARD PROVISION FOR BAD AND DOUBTFUL DEBTS IS TO BE ALLOWED UNDER SECTION 36(1)(VIIIA), AND THE ASSE SSEE SUCCEEDS IN PRINCIPLE. THE AO SHALL, WHILE CONFIRMING THE SAME THE PROVISION COMPONENT LINKED TO INCOME BEING REQUIRED TO BE REVISED ON EACH REVISION IN TH E ASSESSEES INCOME IN APPEAL, ALSO CLARIFY THE EXACT AMOUNT OF PROVISION MADE BY THE ASSESSEE IN ITS BOOKS; THE LD. CIT(A) POINTING TO SOME DIFFERENCE THEREIN, I.E., W HILE GIVING APPEAL EFFECT TO THIS ORDER, WHICH IS IN CONFORMITY WITH THE JUDICIAL RUL INGS. FURTHER, THE WRITE OFF OF DEBTS AS BAD AND DOUBTFUL, I.E., IN FUTURE, NEEDLES S TO ADD, WOULD BE BY WAY OF DEBIT TO THE PROVISION ACCOUNT, WHICH IS TO BE REPLENISHE D, EACH YEAR, ON THE BASIS OF THE PARAMETERS PROVIDED. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE REVENUES APPEAL IS DISPOSED OF ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COU RT ON DECEMBER 04, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEM BER DATE: 04.12.2018 PKK COPY OF THE ORDER FORWARDED TO: ITA NO.453/ASR/2015 (A.Y.2012-13) ASST. CIT V.THE HOSHIARPUR CENTRAL CO-OP. BANK LTD. 8 (1) THE APPELLANT: ASST. CIT, HOSHIARPUR CIRCLE, HOSHIARPUR. (2) THE RESPONDENT: THE HOSHIARPUR CENTRAL CO-OP. BANK LTD., RAILWAY ROAD, HOSHIARPUR. (3) THE CIT(APPEALS)-1, JALANDHAR (4) THE CIT CONCERNED (5) THE SR. D.R., I.T.A.T. TRUE COPY BY ORDER