M/s Railway Co-operative Bank Limited , Mysore V. Assistant Commissioner of Income Tax Circle-1(1), Mysore

ITA 905/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5437 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-09-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA BENGALURU
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Bad and doubtful debts; Set aside
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B, BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 9 0 5 / BANG / 20 19 ASSESSMENT YEAR : 2012-13 M/S. RAILWAY CO-OPERATIVE BANK LTD., SHESHADRI IYER ROAD, MYSURU. PAN AAAAT 0822 A VS. ACIT, CIRCLE 1(1), MYSURU. APPELLANT RESPONDENT APPELLANT BY : SHRI. S. V. RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI. PRIYADARSHI MISHRA, ADDL.CIT(DR)(ITAT), BENGA LURU DATE OF HEARING : 22.09.2021 DATE OF PRONOUNCEMENT : 22.09.2021 O R D E R PER SHRI B.R. BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 16 TH MARCH, 2015 PASSED BY LD CIT(A), MYSORE AND IT RELA TES TO THE ASSESSMENT YEAR 2012-13. THE GROUNDS URGED BY THE A SSESSEE GIVE RISE TO THE FOLLOWING TWO ISSUES:- (A) DISALLOWANCE OF AGM EXPENSES (B) DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS CLAIMED U/S 36(1)(VIIA) OF THE ACT. 2. THE ASSESSEE IS CARRYING ON BANKING BUSINESS . THE AO COMPLETED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION, INT ER ALIA, BY MAKING ABOVE SAID TWO DISALLOWANCES AND BOTH THE DISALLOWA NCES CAME TO BE CONFIRMED BY LD CIT(A). HENCE THE ASSESSEE HAS FIL ED THIS APPEAL BEFORE US. ITA NO.905/BANG/2019. PAGE 2 OF 5 3. WE HEARD THE PARTIES AND PERUSED THE RECORD . THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF AGM EXPENSES. THE A O NOTICED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.25,44,912/- AS GEN ERAL BODY EXPENSES AND THE SAME INCLUDED A SUM OF RS.20,24,925/-, BEIN G EXPENSES INCURRED TO BUY SWEETS FOR THE MEETING. THE AO TOO K THE VIEW THAT THE EXPENSE INCURRED ON PURCHASE OF SWEETS IS EXORBITAN T AND NOT INCIDENTAL TO THE BUSINESS OF THE ASSESSEE IN TERMS OF SEC. 37 (1) OF THE ACT. ACCORDINGLY, HE DISALLOWED THE ABOVE SAID SUM OF RS .20,24,925/-. THE LD CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING A S UNDER:- ...HOWEVER, THE APPELLANT COULD NOT SUBSTANTIATE I TS CLAIM WITH DOCUMENTARY EVIDENCES EVEN DURING THE APPELLATE PRO CEEDINGS, THEREFORE THIS GROUND IS NOT ALLOWED. 3.1 THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE AO AND THE AO HAS DISALLOWED THE CLAIM FOR THE REASON THAT THE EXPENDITURE IS EXORBITANT AND IS NOT INCID ENTAL TO THE BUSINESS OF THE ASSESSEE. ACCORDINGLY HE SUBMITTED THAT THE REASONING GIVEN BY LD CIT(A) FOR CONFIRMING DISALLOWANCE IS AGAINST TH E FACTS AVAILABLE ON RECORD. HE FURTHER SUBMITTED THAT THE AO HAD MADE IDENTICAL DISALLOWANCE IN AN EARLIER YEAR, BUT IT HAS BEEN AL LOWED BY LD CIT(A). HE ALSO SUBMITTED AN IDENTICAL ISSUE WAS REMANDED TO T HE FILE OF AO BY THE TRIBUNAL IN THE CASE OF M/S THE MYSORE CO-OP BANK L TD VS. ADDL CIT (ITA NO.904/BANG/2019 DATED 23.7.2021) WITH THE DIR ECTION TO ALLOW THE DEDUCTION TO THE EXTENT OF SUPPORTING BILLS PRODUCE D BEFORE THE AO. 3.2 THE LD D.R, ON THE CONTRARY, SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF LD CIT(A), SINCE THE ASSESS EE HAS CLAIMED TO HAVE FURNISHED BILLS BEFORE THE AO. 3.3 HAVING HEARD RIVAL SUBMISSIONS ON THIS ISS UE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH ADJUDICATION AT THE END OF LD CIT(A), SINCE THE LD CIT(A) HAS CONFIRMED THE DISALLOWANCE ON A D IFFERENT REASONING, ITA NO.905/BANG/2019. PAGE 3 OF 5 WHICH ACCORDING TO LD A.R IS AGAINST THE FACTS AVAI LABLE ON RECORD. FURTHER THE LD A.R ALSO CLAIMS THAT AN IDENTICAL CL AIM HAS BEEN ALLOWED BY LD CIT(A) IN ANOTHER YEAR. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO HIS FILE FOR ADJUDICATING IT AFRESH. 4. THE NEXT ISSUE CONTESTED BY THE ASSESSEE RELA TES TO THE DISALLOWANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS CLAIMED BY THE ASSESSEE U/S 36(1)(VIIA) OF THE ACT. THE ASSESSEE CLAIMED A SUM OF RS.15,72,361/- U/S 36(1)(VIIA) OF THE ACT TOWARDS PROVISION FOR BAD AN D DOUBTFUL DEBTS. THE AO TOOK THE VIEW THAT THE ASSESSEE HAS NOT DEBITED THE PROFIT AND LOSS ACCOUNT WITH PROVISION FOR BAD AND DOUBTFUL DEBTS . ACCORDINGLY, HE DISALLOWED THE SAME BY OBSERVING THAT THE ASSESSEE HAS NOT CREATED ANY PROVISION IN THE BOOKS OF ACCOUNT FOR THE ABOVE SAI D AMOUNT. THE LD CIT(A) CONFIRMED THE SAME BY OBSERVING THAT THE LD A.R, WHO APPEARED BEFORE HIM, DID NOT PRESS THE GROUND RELATING TO TH IS DISALLOWANCE. 4.1 THE LD A.R APPEARING BEFORE US SUBMITTED TH AT THE AUTHORISED REPRESENTATIVE, WHO APPEARED BEFORE LD CIT(A), HAS ACTUALLY MADE ORAL SUBMISSIONS ON THE ABOVE SAID GROUND. HE THEN SIGNE D THE ORDER SHEET ENTRY WITHOUT ACTUALLY PERUSING WHAT IS WRITTEN THE RE. ACCORDINGLY THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ACTUALLY PRE SSED THIS GROUND BEFORE LD CIT(A). HE SUBMITTED THE ASSESSEE HAS FI LED BEFORE THE TRIBUNAL AN AFFIDAVIT OBTAINED FROM THE EARLIER COU NSEL, WHO HAS STATED THAT HE HAS ACTUALLY PRESSED THE GROUND BEFORE LD C IT(A). THE LD A.R FURTHER SUBMITTED THAT THE ASSESSEE HAS ACTUALLY MA DE PROVISION FOR BAD AND DOUBTFUL DEBTS IN PROFIT AND LOSS ACCOUNT FOR A LOWER AMOUNT AND HENCE THE CLAIM U/S 36(1)(VIIA) IS ALLOWABLE TO THE EXTENT OF PROVISION SO CREATED. HE SUBMITTED THAT THE TAX AUTHORITIES HAV E NOT EXAMINED THE FINANCIAL STATEMENTS OF THE ASSESSEE AND ACCORDINGL Y PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF LD CIT(A) FOR ADJUDICATING THIS GROUND AFRESH. ITA NO.905/BANG/2019. PAGE 4 OF 5 4.2 WE HEARD LD D.R AND PERUSED THE RECORD. T HE CLAIM MADE BY THE ASSESSEE U/S 36(1)(VIIA) IS ALLOWABLE TO THE EXTENT OF PROVISION AMOUNT DEBITED TO THE PROFIT AND LOSS ACCOUNT FOR BAD AND DOUBTFUL DEBTS. WHEN AN ASSESSEE HAS CREATED PROVISION FOR BAD AND DOUBT FUL DEBTS, IN OUR CONSIDERED VIEW, THERE IS NO REASON FOR NOT PRESSIN G THE GROUND RELATING TO CLAIM U/S 36(1)(VIIA) OF THE ACT BEFORE LD CIT(A ). IT IS THE SUBMISSION OF LD A.R THAT THE PROVISION FOR BAD AND DOUBTFUL D EBTS IS CREATED FOR A LESSER AMOUNT AND HENCE THE DEDUCTION U/S 36(1)(VII A) IS ALLOWABLE TO THE EXTENT OF THE PROVISION SO CREATED. WE HAVE NOTIC ED THAT THE AO HAS DISALLOWED THE CLAIM FOR THE REASON THAT THE ASSESS EE HAS NOT CREATED ANY PROVISION FOR BAD AND DOUBTFUL DEBTS, WHICH FAC T IS BEING DISPUTED BY THE ASSESSEE. IN ANY CASE, THIS GROUND HAS NOT BEEN ADJUDICATED BY LD CIT(A). ACCORDINGLY, WE ARE OF THE VIEW THAT TH IS GROUND REQUIRES ADJUDICATION BY LD CIT(A). ACCORDINGLY, WE SET ASI DE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO HIS FILE FOR ADJUDICATING IT AFRESH BY DULY CONSIDERING THE FINANCIAL STATEMENTS , INFORMATION AND EXPLANATIONS THAT MAY BE FURNISHED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (N.V. VASUDEVAN) VICE PRESIDENT (B.R. BASKARAN) ACCOUNTANT MEMEBR BANGALORE, DATED : 22.09.2021. /B. VENUGOPAL/ ITA NO.905/BANG/2019. PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.