Parshwanath Co.op. Bank Ltd., Kolhapur V. Income-tax Officer,

ITA 674/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1540 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Bad and doubtful debts

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 674 /PN/201 5 / ASSESSM ENT YEAR : 20 09 - 1 0 PARSHWANATH CO - OP BANK LTD., 669, E WARD, SHAHUPURI, 3 RD LANE, KO LHAPUR . / APPELLANT PAN: A AAAP0356M VS. THE INCOME TAX OFFICER , WARD 2 ( 2 ), KOLHAPUR . / RESPONDENT / APPELLA NT BY : NONE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 1 9 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 22 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASS ESSEE IS AGAINST THE ORDER OF CIT (A) - 1&2 , KOLHAPUR , DATED 09 . 03 .20 1 5 RELATING TO ASSESSMENT YEAR 20 09 - 1 0 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 674 /PN/20 1 5 PARSHWANATH CO - OP. BANK LTD. 2 2 . THE APPEAL WAS ADJOURNED FOR HEARING TO 19.07.2016 AT THE REQUEST OF THE ASSESSEE. HOWEVER, ON THE APPOINTED DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS FILED FOR ADJOURNMENT. HENCE, IT IS PROCEEDED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPR ESENTATIVE FOR THE REVENUE AS THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDERS OF PUNE BENCH OF TRIBUNAL. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED A. O. HAS ERRED IN LAW AND ON MERIT IN MAKING ADDITION OF RS.18,79,285/ - AS EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS. 2. ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED A.O. HAS ERRED IN LAW AND ON MERIT IN LEVYING INTEREST UNDER SECTION 234A, B & C OF THE ACT. 3. ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED A.O. HAS ERRED 3. ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED A.O. HAS ERRED IN LAW AND ON MERIT IN INITIATING PENAL PROCEEDING UNDER SECTION 271(1)(C) OF THE ACT. 4 . THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST EXCESS PROVISION MADE FOR B AD AND DOUBTFUL DEBTS AMOUNTING TO RS.18,79,285/ - . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS A COOPERATIVE BANK. THE ASSESSEE DURING THE YEAR HAD DEBITED SUM OF RS.1,17,50,000/ - UNDER THE HEAD PROVISION FOR BAD & DOUBTFUL DEBT. THE ASSESSE E HAD ADDED BACK SUM OF RS.7,000/ - UNDER THE NARRATION EXCESS PROVISION FOR BAD AND DOUBTFUL DEBT. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY BALANCE SUM OF RS.1,17,43,000/ - SHOULD NOT BE ADDED TO THE TOTAL INCOME. THE ASSESSEE IN REPLY, FURNISHED THE DETAILED WORKING OF CLAIM OF PROVISION UNDER SECTION 36(1)(VII) AND 36(1)(VIIA) OF ITA NO. 674 /PN/20 1 5 PARSHWANATH CO - OP. BANK LTD. 3 THE ACT, WHICH IS TABULATED UNDER PARA 9.2 AT PAGE 5 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER RE - WORKED THE DEDUCTION TO BE ALLOWED TO THE UNDER SECTION 36(1)(VII) A ND 36(1)(VIIA) OF THE ACT, IN VIEW OF THE RESPECTIVE PROVISIONS OF THE ACT. THE SAID TABULATION IS AVAILABLE AT PAGE 6 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS FOUND TO HAVE MADE AN EXCESS CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT AMOUNTIN G TO RS. 18,79,285/ - , WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. 6. BEFORE THE CIT(A), THE CLAIM OF ASSESSEE WAS THAT THE SAID PROVISION WAS MADE IN ACCORDANCE WITH RESERVE BANK OF INDIA GUIDELINES. THE CIT(A) VIDE PARA 8 HELD AS UNDER: - 8. FROM THE FACTS OF THE CASE IT IS SEEN THAT THE ISSUE IS NOT WHETHER OR NOT THE PROVISION CREATED BY THE APPELLANT IS AS PER RBI GUIDELINES. THE ISSUE IS THAT AS PER COMPUTATION OF THE ALLOWABLE PROVISION AS PRODUCED IN THE ASSESSMENT ORDER, AN EXCESS CLAIM OF RS.1 8,79,285/ - WAS MADE. AS PER THE COMPUTATION, 7 % OF GROSS INCOME WORKS OUT TO BE RS.2,44,646/ - AS AGAINST APPELLANTS CLAIM OF RS.1,59,938/ - . BAD DEBTS WRITTEN OFF OF RS.1,42,118/ - IS NOT APPELLANTS CLAIM OF RS.1,59,938/ - . BAD DEBTS WRITTEN OFF OF RS.1,42,118/ - IS NOT ALLOWABLE AS THE CLAIM WAS ALREADY INCLUDED IN TOTAL AMOUNT OF R S.5,52,000/ - UNDER THIS HEAD. ASSESSEE HAS NOT POINTED OUT ANY DISCREPANCY IN THE COMPUTATION MADE BY THE ASSESSING OFFICER. THEREFORE, DISALLOWANCE MADE BY ASSESSING OFFICER IS SUSTAINED AND GROUND TAKEN BY THE APPELLANT IS REJECTED. 7. THE ASSESSEE I S IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF AFORESAID ADDITION OF RS. 18,79,285/ - . AS PER PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT, COMPUTATION OF ALLOWABLE DEDUCTION IS CARRIED OUT BY THE ASSES SING OFFICER AS PER PARA 9.4 AT PAGE 6 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THE CLAIM OF ASSESSEE UNDER SECTION 36(1)(VII) OF THE ACT ALSO INCLUDED AMOUNT OF RS.1,42,118/ - , WHICH WAS WRITTEN OFF AS BAD DEBTS BY ITS RURAL BRANCH. FURT HER, THE ASSESSEE HAD DEBITED SUM OF RS.5,52,000/ - BEING PROVISION FOR ITA NO. 674 /PN/20 1 5 PARSHWANATH CO - OP. BANK LTD. 4 BDDR OF RURAL BRANCH, FOR WHICH SEPARATE DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT AT 10% OF AVERAGE RURAL ADVANCES AMOUNTING TO RS.5,52,000/ - WAS CLAIMED BY THE ASSESSEE BANK. TH EREFORE, IT WAS HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT ELIGIBLE FOR SEPARATE DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT FOR SUM OF RS.1,42,118/ - AS PER THE PROVISO TO SAID SECTION. FURTHER, THE ALLOWANCE OF DEDUCTION UNDER SECTION 36(1 )(VIIA) OF THE ACT WAS DEPENDENT ON THE GROSS TOTAL INCOME, BEFORE MAKING ANY DEDUCTION UNDER THE SAID CLAUSE AND UNDER CHAPTER VIA OF THE ACT. IN VIEW THEREOF, THE COMPUTATION OF DEDUCTION UNDER SECTION 36(1)(VII) AND 36(1)(VIIA) OF THE ACT WAS RE - WORKED BY THE ASSESSING OFFICER AS UNDER: - GROSS TOTAL INCOME AS PER ASSESSEES COMPUTATION OF INCOME 5,86,022 ADD: (1) PROVISION FOR BDDR 1,17,50,000 LESS: ALREADY ADDED BACK BY THE ASSESSEE IN COMPUTATION 7,000 1,17,43,000 ADD: (2)PROVISION FOR RURAL B DDR 5,52,000 1,22,95,000 1,28,81,022 LESS: DEDUCTION ALLOWABLE U/S 97,61,187 LESS: DEDUCTION ALLOWABLE U/S 36(VII) AS DISCUSSED ABOVE 97,61,187 LESS : BAD DEBTS WRITTEN OFF BY RURAL BRANCHES NOT ALLOWABLE AS DISCUSSED ABOVE 1,42,118 96,19,069 96,19,069 GROSS TOTAL INCOME FOR THE PURPOS E OF COMPUTING DEDUCTION U/S 36(1)(VIIA) 32,61,953 LESS: DEDUCTION U/S 36(1)(VIIA) 7 OF G.T.I. 2,44,646 10% OF AVERAGE RURAL ADVANCES RESTRICTED TO THE ACTUAL PROVISION MADE 5,52,000 7,96,646 GROSS TOTAL INCOME AFTER DEDUCTION U/S 36 24,65, 307 LESS: GROSS TOTAL INCOME AS PER COMPUTATION OF INCOME 5,86,022 DISALLOWANCE OF EXCESS CLAIM OF DEDUCTION 18,79,285 9. THE PUNE BENCH OF TRIBUNAL IN SHRI MAHALAXMI CO - OP. BANK LTD. VS. ITO IN ITA NO.1658/PN/2011, RELATING TO ASSESSMENT YEAR 20 08 - 09, VIDE ORDER DATED 29.10.2013 HAD HELD THAT WHERE THE ASSESSEE HAS NOT MADE A PROVISION ITA NO. 674 /PN/20 1 5 PARSHWANATH CO - OP. BANK LTD. 5 FOR BAD AND DOUBTFUL DEBTS IN THE BOOKS OF ACCOUNT EQUAL TO THE AMOUNT OF DEDUCTION SOUGHT TO BE CLAIMED UNDER SECTION 36(1)(VIIA) OF THE ACT, THEN THE DEDUCTION I S TO BE RESTRICTED UNDER SECTION 36(1)(VIIA) OF THE ACT. 10. IN VIEW THEREOF, WHERE THE DISALLOWANCE UNDER SECTION 36(1)(VIIA) OF THE ACT HAS BEEN WORKED OUT AS PER THE PROVISIONS OF THE ACT AND THE ASSESSEE HAS NOT CONTROVERTED THE SAME, THERE IS NO MERI T IN THE CLAIM OF THE ASSESSEE IN THIS REGARD AND THE ADDITION CONFIRMED BY THE CIT(A) IS UPHELD. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 22 ND DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 22 ND JU LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDEN T; 3. ( ) / THE CIT(A) - 1&2 , KOLHAPUR ; 4. / THE CIT - I/II, KOLHAPUR/CIT (CENTRAL), PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE