Asst.CIT., Circle-1, Warangal V. M/s Andhra Pradesh Grameena Vikas Bank, Warangal

ITA 610/HYD/2013

• Counselvise Citation: 61022514 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: T UMAKANTH
• Keywords: Bad and doubtful debts; Revised return
• Section: 143(3); 139(5); 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 610/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 1, WARANGAL VS. M/S ANDHRA PRADESH GRAMEENA VIKAS BANK, RESPONDENT WARANGAL (PAN AAAJA1351N) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI T. UMAKANTH DATE OF HEARING : 05/08/2015 DATE OF PRONOUNCEMENT : 12/08/2 015 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AG AINST THE ORDER OF THE CIT(A)-VI, HYDERABAD, DATED 31/01/2013 FOR THE AY 2009-10. 2. FOR THE PURPOSE OF RECORD, WE WOULD LIKE TO OBSE RVE THAT THIS APPEAL OF ASSESSEE WAS DISPOSED OF BY ITA T VIDE ORDER DATED 13/03/2014. HOWEVER, THE DEPARTMENT FIL ED AN APPLICATION U/S 254(2) OF THE ACT SEEKING RECTIFICA TION OF THE ORDER PASSED BY THE TRIBUNAL ON THE GROUND THAT ITA T WHILE DECIDING DEPARTMENTS APPEAL HAS FAILED TO DECIDE G ROUND NO. 7 RELATING TO ALLOWANCE OF ASSESSEES CLAIM OF DEDU CTION U/S 2 610 /HYD/2013 M/S ANDHRA PRADESH GRAMEENA VIKAS BANK 36(1)(VIIA). ITAT AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES DISPOSED OF THE MISCELLANEOUS APPLICATION V IDE ORDER DATED 19/09/14 PASSED IN MA NO. 122/HYD/2014 RECALL ING THE ORDER PASSED IN ITA NO. 610/HYD/2013 FOR THE LIMITE D PURPOSE OF DECIDING GROUND NO. 7 RAISED BY DEPARTMENT. THUS , THE PRESENT APPEAL OF THE DEPARTMENT IS TAKEN UP ONLY F OR THE PURPOSE OF DECIDING GROUND NO. 7. 3. AS COULD BE SEEN IN GROUND NO. 7, DEPARTMENT HAS RAISED THE ISSUE RELATING TO ALLOWANCE OF ASSESSEE S CLAIM OF DEDUCTION U/S 36(1)(VIIA) MADE IN THE REVISED RETUR N OF INCOME. 4. BRIEFLY THE FACTS ARE, ASSESSEE FILED ITS ORIGIN AL RETURN OF INCOME FOR THE AY UNDER CONSIDERATION ON 30/09/2 009 DECLARING TOTAL INCOME OF RS. 103,23,92,640. SUBSEQ UENTLY, AS CLAIMED BY ASSESSEE, IT FILED A REVISED RETURN O F INCOME IN TERMS WITH SECTION 139(5) OF THE ACT CLAIMING DEDU CTION U/S 36(1)(VIIA). AO, HOWEVER, COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT IGNORING THE REVISED RETURN. ASSE SSEE, THEREFORE, FILED A PETITION U/S 154 OF THE ACT SEEK ING RECTIFICATION OF THE ASSESSMENT ORDER FOR HAVING NO T CONSIDERED THE REVISED RETURN. AO, HOWEVER, DISMISS ED THE PETITION FILED BY ASSESSEE VIDE ORDER DATED 13/01/2 012 STATING THEREIN THAT ASSESSEES REVISED RETURN WAS NOT AVAI LABLE ON RECORD AT THE TIME OF COMPLETION OF THE ORIGINAL AS SESSMENT. FURTHER, HE ALSO OBSERVED THAT AS ASSESSEE HAS NOT DEBITED THE PROVISION FOR BAD AND DOUBTFUL DEBTS TO THE P&L A/C, IT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 36(1)(VIIA). BE ING AGGRIEVED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE 3 610 /HYD/2013 M/S ANDHRA PRADESH GRAMEENA VIKAS BANK SUBMISSIONS OF ASSESSEE ALLOWED ASSESSEES CLAIM OF DEDUCTION U/S 36(1)(VIIA) BY HOLDING THAT ASSESSEE IS ELIGIBLE TO CLAIM SUCH DEDUCTION. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WE LL AS OTHER MATERIAL ON RECORD. THE SPECIFIC CONTENTION OF LD. DR BEFORE US IS, ASSESSEE HAVING NOT MADE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS RELATING TO RURAL ADVANCES IN ITS BO OKS OF ACCOUNT IT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 3 6(1)(VIIA). IN SUPPORT OF HIS CONTENTION, LD. DR RELIED UPON THE D ECISION OF THE HONBLE P&H HIGH COURT IN CASE OF STATE BANK OF PATIALA VS. CIT, 272 ITR 54 AND THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2010-11 IN ITA NO. 51/HYD/2015 DATE D 10/04/2015. LD. AR ON THE OTHER HAND SUBMITTED, FOR CLAIMING DEDUCTION U/S 36(1)(VIIA), NO PROVISION FOR BAD AND DOUBTFUL DEBT IS REQUIRED TO BE MADE IN BOOKS OF ACCOUNT. 6. ON A REFERENCE TO THE PROVISIONS OF SECTION 3 6(1)(VIIA) OF THE ACT, IT IS VERY MUCH CLEAR THAT FOR CLAIMING DE DUCTION UNDER THE SAID PROVISION, ASSESSEE HAS TO CREATE A PROVISION FOR BAD AND DOUBTFUL DEBTS IN ITS BOOKS OF ACCOUNT. THEREFORE, CONTENTION OF LD. AR THAT THERE IS NO NEED FOR MAKI NG ANY PROVISION FOR BAD AND DOUBTFUL DEBTS FOR CLAIMING DEDUCTION U/S 36(1)(VIIA) IS NOT ACCEPTABLE. THE HONBLE P&H HIGH COURT IN CASE OF STATE BANK OF PATIALA VS. CIT (SUPRA) WH ILE EXAMINING THE PROVISIONS OF SECTION 36(1)(VIIA) HEL D THAT FOR CLAIMING DEDUCTION UNDER THE SAID PROVISION, ASSESS EE BANK HAS TO MAKE A PROVISION FOR BAD AND DOUBTFUL DEBTS IN ITS BOOKS OF ACCOUNT AND DEDUCTION U/S 36(1)(VIIA) IN R ESPECT OF RURAL ADVANCES CAN ONLY BE ALLOWED TO THE EXTENT O F THE 4 610 /HYD/2013 M/S ANDHRA PRADESH GRAMEENA VIKAS BANK PROVISION MADE. THE COORDINATE BENCH IN ASSESSEE S OWN CASE FOR AY 2010-11 IN ITA NO. 51/HYD/2015 DATED 10/04/2015, WHILE DEALING WITH IDENTICAL ISSUE, HAS HELD AS UNDER: IT IS OBSERVED THAT THE ASSESSEE IN THE PRESENT C ASE, BEING ELIGIBLE BANK, IS ENTITLED TO CLAIM DEDUCTION AS PER THE MAIN PROVIS ION CONTAINED IN CLAUSE (A) OF S.36(1)(VIIA), IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS TO THE EXTENT OF AN AMOUNT NOT EXCEEDING 7.5% OF THE TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION UNDER S.36(1)(VIIA) AN D CHAPTER VIA AND AN AMOUNT NOT EXCEEDING 10% OF THE AGGREGATE AVERAGE ADVANCES MADE BY THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCR IBED MANNER. A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT(A) HOWEVE R, SHOWS THAT IT WAS STATED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) T HAT NO PROVISION WAS MADE TOWARDS AVERAGE RURAL ADVANCES. IF IT IS SO, IT IS NOT CLEAR AS TO WHAT IS THE BASIS ON WHICH THE PROVISION OF RS.22.40 CRORE S (RS.5.38 CRORES IN RESPECT OF URBAN ADVANCES AND RS.17.02 CRORES IN R ESPECT OF RURAL ADVANCES) WAS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. MOREOVER, ALL THESE FACTS AND FIGURES WERE FURNISH ED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) FOR THE FIRST TIME AND THE ASSE SSING OFFICER THEREFORE, DID NOT HAVE ANY OPPORTUNITY TO VERIFY THE SAME. THE CLAIM OF THE ASSESSEE OF HAVING ADJUSTED THE AMOUNT OF RS.22.24 CRORES TOW ARDS BAD DEBTS WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION AG AINST THE OPENING BALANCE OF THE PROVISION OF RS.40.13 CRORES WAS AL SO MADE BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LEARNED CIT (A), AND THE ASSESSING OFFICER DID NOT HAVE ANY OPPORTUNITY TO VERIFY TH E SAME. HAVING REGARD TO ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND PROPER AND IN THE INTERESTS OF JUSTICE TO RESTORE THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTI ON UNDER S.36(1)(VIIA) TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH, IN ACCORDANCE WITH THE PROVISION OF S.36(1)(VIIA) AFT ER GIVING PROPER AND SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER VERIFYING ALL THE RELEVANT FACTS AND FIGURES. WE ORDER ACCORDING LY. THIS APPEAL OF THE REVENUE IS ACCORDINGLY TREATED AS ALLOWED FOR STAT ISTICAL PURPOSES. KEEPING IN VIEW OF THE AFORESAID ORDER OF THE COORD INATE BENCH, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER VERIFYING THE FACT WHE THER ASSESSEE HAS CREATED ANY PROVISION FOR BAD AND DOUB TFUL DEBTS IN ITS BOOKS OF ACCOUNT IN TERMS WITH SECTION 36(1) (VIIA). IN CASE IT IS FOUND THAT ASSESSEE HAS MADE A PROVISION FOR BAD AND DOUBTFUL DEBTS IN ITS BOOKS OF ACCOUNT, THEN, D EDUCTION 5 610 /HYD/2013 M/S ANDHRA PRADESH GRAMEENA VIKAS BANK U/S 36(1)(VIIA) CAN BE ALLOWED TO ASSESSEE. IN CAS E IT IS FOUND THAT ASSESSEE HAS NOT MADE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS IN ITS BOOKS OF ACCOUNT, THEN, ASSES SEE WOULD NOT BE ELIGIBLE FOR ANY DEDUCTION U/S 36(1)(VIIA) I N VIEW OF THE RATIO LAID DOWN BY THE HONBLE P&H HIGH COURT IN CA SE OF STATE BANK OF PATIALA VS. CIT(SUPRA). WITH THE AFORESAID OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE O F AO FOR DECIDING AFRESH AFTER DUE OPPORTUNITY OF BEING HEAR D TO ASSESSEE. GROUND RAISED BY THE DEPARTMENT IS ALLOWE D FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF DEPARTMENT IS ALLOWED F OR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJI T DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 12 TH AUGUST, 2015 KV COPY TO:- 1) ACIT, CIRCLE 1, HYDERABAD. 2) M/S ANDHRA PRADESH GRAMMEENA VIKAS BANK, 2-5-8/1, OLD BUS DEPOT ROAD, RAMNAGAR, HANUMKONDA, WARANGAL. 3) CIT(A)-VI, HYDERABAD 4) THE CIT-VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A. T., HYDERABAD.