BANK OF BARODA, MUMBAI V. ADDL CIT RG 2(1), MUMBAI

ITA 9195/MUM/2010

• Counselvise Citation: 919519914 RSA 2010
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-05-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 31-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH
• Keywords: Bad and doubtful debts

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.9195 /MUM/2010 ( / ASSESSMENT YEAR : 2003-2004 BANK OF BARODA, C-26, G-BLOCK, BANDRA-KURLA COMPLEX, MUMBAI 400 051. / VS. ADDL. COMMISSIONER OF INCOME TAX 2(1), AAYAKAR BHAVAN, QUEENS ROAD, MUMBAI - 400020. ./ PAN : AAACB1534F ( # / APPELLANT ) .. ( $%# / RESPONDENT ) A PPELLANT BY SHRI C. NARESH R E SPONDENT BY : SHRI PREETAM SINGH ) * / DATE OF HEARING : 06-03-2014 ) * / DATE OF PRONOUNCEMENT : 09-04-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-4, MUMBAI DATED 22-10-2010 FOR A.Y. 2003-04 WAS EARLIE R DISPOSED OF BY THE TRIBUNAL VIDE ITS COMMON ORDER DATED 12-6-2013 ALON G WITH CROSS APPEAL FILED BY THE REVENUE BEING ITA NO. 9243/MUM/2010 AND THE ASSESSEES APPEAL BEING ITA NO. 9196/MUM/2010 FOR A.Y. 2004-05. IN I TS APPEAL FOR A.Y. 2003- 04, THE ASSESSEE HAD RAISED TWO ADDITIONAL GROUNDS BUT THE SAME HAD REMAINED TO BE ADJUDICATED BY THE TRIBUNAL WHILE DI SPOSING OF THE APPEAL OF THE ASSESSEE VIDE ITS COMMON ORDER DATED 12-6-2013. WHEN THIS INADVERTENT MISTAKE WAS POINTED OUT BY THE ASSESSEE BY FILING A N M.A., THE TRIBUNAL VIDE ITS ORDER DATED 5-3-2014 PASSED IN MA NO. 320/MUM20 13 ALLOWED THE SAID ITA 9195/M/10 2 M.A. AND POSTED THE MATTER FOR HEARING BEFORE THE R EGULAR BENCH ON 6-3-2014 FOR ADJUDICATING THE ADDITIONAL GROUNDS RAISED BY T HE ASSESSEE. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THE ISSUE RAISED IN THE ADDITIONAL GROUNDS NO. 1 & 2 AND ALSO PERUSED T HE RELEVANT MATERIAL ON RECORD. THE SAID ADDITIONAL GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-4, MU MBAI ERRED IN ALLOWING ONLY RS. 29,08,15,000/- U/S 36(1)(VII) INS TEAD OF RS. 434,17,95,000/- AS BAD DEBTS WRITE-OFF. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -4 MUMBAI STATED IN PARA 22 OF HIS APPELLATE ORDER THAT APPEL LANT IS ELIGIBLE FOR DEDUCTION U/S 36(1)(VII) AND 36(1)(VIIA) SEPARATELY . THIS IS CONFIRMED SUBSEQUENTLY BY THE SUPREME COURT IN CASE OF CATHOL IC SYRIAN BANK LTD. VS. CIT 248 CTR 7 (SC). 3. IN ITS RETURN OF INCOME, THE ASSESSEE HAD CLAIME D DEDUCTION ON ACCOUNT OF BAD DEBTS AMOUNTING TO RS. 434,17,95,000/- U/S 3 6(1)(VII) OF THE INCOME TAX ACT, 1961 WHICH WAS COMPRISING OF RS. 29,08,15, 000/- AS BAD DEBTS AND RS. 405,09,80,000/- AS AMOUNT WRITTEN OFF AS BAD DE BTS OUT OF G/L PROVISION FOR BAD DEBTS. THE A.O. DID NOT ALLOW THIS CLAIM O F THE ASSESSEE AS, ACCORDING TO HIM, THE ASSESSEE HAD NOT FULFILLED THE CONDITIO NS STIPULATED U/S 36(1)(VII) AS WELL AS 36(1)(VIIA) OF THE ACT. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BAD DEBTS ONLY TO THE EXTENT OF RS. 29,08,15,000/- U/S 36(1)(VII) OF THE ACT AFTER RECO RDING THE FOLLOWING OBSERVATIONS IN PARA 22 OF HIS APPELLATE ORDER. 22. I FIND THAT ASSESSEE IS ELIGIBLE FOR CLAIM OF BAD DEBT U/S. 36(1)(VII) SUBJECT TO PROVISIONS OF SECTION 36(2)(V) SEPARATEL Y. IN THIS CASE THE ASSESSEE HAS CLAIMED BAD DEBT OF RS.29,08,15,000/ U /S. 36(1)(VII) OUT OF THE PROVISION FOR BAD AND DOUBTFUL DEBT MADE IN EARLIER YEARS WHICH IS MORE THAN THE CLAIM OF THE ASSESSEE IN THIS YEAR . HENCE, THIS CLAIM IS ALLOWABLE U/S. 36(1)(VII). THE ASSESSEE IS ALSO ELIGIBLE FOR PROVISION FOR BAD AND DOUBTFUL DEBTS IN RESPECT OF RURAL ADVANCES SEPARATELY. THE ASSESSEE HAS CLAIMED RS.337,83,46,734/ AS PROVISION FOR BAD AND DOUBTFUL DEBTS IN RESPECT ITA 9195/M/10 3 OF RURAL ADVANCES WHICH IS ALSO ALLOWABLE U/S. 36(1 )(VIIA). THE A.O. HAS COMBINED BOTH THE CLAIMS OF BAD DEBTS AND PROVISION FOR BAD DEBTS AND ARRIVED AT THE FIGURE OF RS.405,09,80,000I-. HE HAS DEDUCTED THE AMOUNT OF PROVISION OF RS.337,83,46,7341- AND WRONG LY ALLOWED RS.196,84,48,266/- WHICH SHOULD BE ONLY RS.96,84,48 ,266/. AS HELD BY THE HONBLE ITAT IN ASSESSEES OWN CASE FOR A.Y. 20 00-01, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 36(1)(VII) AND 36(1) (VIIA) SEPARATELY. HENCE, THE ASSESSEE IS ELIGIBLE FOR CLAIM OF BAD DEBT OF R S.29,08,15,000/- U/S. 36(1)(VII) AND PROVISION FOR BAD DEBT OF RS.337,83, 46,734/- U/S. 36(1)(VIIA) SEPARATELY. THE A.O. ISIRETE,1 TO DELET E THIS ADDITION. THIS GROUND OF APPEAL IS ALLOWED. 4. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES AT THE TIME OF HEARING BEFORE US, THE ISSUE RAISED IN THE ADDITION AL GROUNDS IS SQUARELY COVERED IN PRINCIPLE BY THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF CATHOLIC SYRIAN BANK VS. CIT (2012) 248 CTR 1 (SC) WHEREIN IT WAS HELD THAT PROVISION OF SS. 36(1)(VII) AND 36(1)(VIIA) ARE DIS TINCT AND INDEPENDENT ITEMS OF DEDUCTION AND OPERATE IN THEIR RESPECTIVE FIELDS. IT WAS HELD THAT PROVISO TO SECTION 36(1)(VII) OPERATES ONLY IN CASES FALLING U NDER CL. (VIIA) TO LIMIT THE DEDUCTION TO THE EXTENT OF DIFFERENCE BETWEEN THE D EBT OR PART THEREOF WRITTENOFF IN THE PREVIOUS YEAR AND THE CREDIT BALA NCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS MADE UNDER CLAUSE (VIIA). IT WA S HELD THAT THE SCHEDULED AND NON SCHEDULED COMMERCIAL BANKS ARE ENTITLED TO FULL BENEFIT OF WRITE OFF OR IRRECOVERABLE DEBTS U/S 36(1)(VII) IN ADDITION TO T HE BENEFIT OF DEDUCTION OF PROVISION FOR BAD AND DOUBTFUL DEBTS U/S 36(1)(VIIA ). KEEPING IN VIEW THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CA THOLIC SYRIAN BANK (SUPRA), THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE RAISED IN THE ADDITIONAL GROUNDS OF THE APPEAL OF T HE ASSESSEE SHOULD BE SENT BACK TO LD. CIT(A) FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE APEX COURT AFTER VERIFYING THE RELEVANT FACTS. ACCORDINGLY WE REMIT BACK THIS ISSUE TO THE FILE OF THE LD. CIT (A) FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (SUPRA) AFTER VERIFYING THE RE LEVANT FACTS AND FIGURES FROM THE RECORD. THE ADDITIONAL GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSE. ITA 9195/M/10 4 5. IN THE RESULT, APPEAL OF THE ASSESSEE FOR A.Y. 2 003-04 BEING ITA NO. 9195/MUM/2010 STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH APRIL, 2014. . ) 0 1 09-04-2014 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 0960462014 [ .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. : () / THE CIT(A)4 MUMBAI. 4. : / CIT 2 MUMBAI 5. $> , * > , / DR, ITAT, MUMBAI B BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI