Adarniya P.D. Patilsaheb Sahakari Bank Ltd., Satara V. Assistant Commissioner of Income-tax, Satara

ITA 801/PUN/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4982 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 04-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.801/PUN/2017 / ASSESSMENT YEAR : 2013-14 ADARNIYA P.D. PATILSAHEB SAHAKARI BANK LTD., 15/3/C, MANGALWAR PETH, TILAK ROAD, KARAD, SATARA-415110. PAN : AAAJS0147E ....... / APPELLANT / V/S. ACIT, SATARA CIRCLE, SATARA. / RESPONDENT ASSESSEE BY : SHRI M. K. KULKARNI REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 18.11.2019 / DATE OF PRONOUNCEMENT : 19.11.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-4, PUNE DATED 23.01.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE A. O. OF RS. 4,40,000/- ON ACCOUNT OF REJECTION OF CLAIM OF DEDUCTION OF PROVISION FOR DEPRECIATION ON STANDARD ASSETS (BDDR). SUCH PROVISIONS ARE BEING ANNUALLY MADE AS PER MANDATORY DIRECTIONS OF THE RESERVE BANK OF INDIA ISSUED UNDER S. 45E? OF THE RBI ACT, 1934. THE DIRECTION ARE FOR TO COMPENSATE THE SUDDEN EROSION OF THE ASSETS OF THE BANK WITH A VIEW TO IMPROVE THE FINANCIAL HEALTH OF THE BANKS. THE CLAIM BE ALLOWED TO THE ASSESSEE. 2 ITA NO.801/PUN/2017 3. FROM THE ABOVE EXTRACTED GROUND, IT IS EVIDENT THAT THIS IS A CASE WHERE THE CLAIM OF THE ASSESSEE IS WITH REGARD TO A PROVISION MADE BY THE ASSESSEE BY WAY OF DEBIT TO PROFIT AND LOSS ACCOUNT OF RS.4,40,000/- UNDER THE HEAD PROVISIONS FOR DEPRECIATION ON STANDARD ASSET. EXPLAINING THE SAID CLAIM, IT WAS STATED BEFORE THE ASSESSING OFFICER THAT A PROVISION IS MADE IN THE ACCOUNT BOOKS AGAINST A CONTINGENCY WHICH MIGHT OCCUR IN FUTURE WITH REGARD TO NON-PERFORMING ASSETS (NPAS). IT WAS SOUGHT TO BE CANVASSED THAT THE PROVISION HAS BEEN MADE IN LINE WITH THE RBI GUIDELINES AND, THEREFORE, ACCORDING TO THE ASSESSEE, THE SAME WAS AN ALLOWABLE DEDUCTION WITHIN THE MEANING OF SECTION 36(1)(VIIA) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT IT WAS ONLY A CONTINGENT LIABILITY WHICH CANNOT BE ALLOWED. THE CIT(A) ALSO SUSTAINED THE DISALLOWANCE FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JCIT, (2010) 320 ITR 577 (SC). 4. ON HEARING BOTH THE SIDES, WE FIND IT IS UNDISPUTED FACT THAT THE IMPUGNED CLAIM IS DISALLOWABLE CONTINGENT PROVISION MADE ON THE BASIS OF A PERCENTAGE ON THE VALUE OF STANDARD ASSETS. THE PROVISION DOES NOT REFLECT ANY PARTICULAR DEBT WHICH IS DOUBTFUL OR BAD AND IT IS ONLY A GENERAL AND NON-SPECIFIC PROVISION AND IT HAS BEEN RIGHTLY CLASSIFIED AS A CONTINGENT PROVISION BY THE INCOME-TAX AUTHORITIES. IN-FACT, THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE TIME OF HEARING, FAIRLY MENTIONED THE CONTINGENT NATURE OF THE PROVISION. THEREFORE, THE LOWER AUTHORITIES MADE NO MISTAKE IN DISALLOWING THE SAME IN VIEW OF THE JUDGMENT OF THE 3 ITA NO.801/PUN/2017 HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA). 5. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION, THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 19 TH DAY OF NOVEMBER, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH SEPTEMBER, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-4, PUNE. 4. THE PR. CIT-3, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.