ACIT, Hubli V. The Arya Vaishya Co-Operative Bank Ltd., Hubli

ITA 963/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7273 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: M D PUKHALE
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I.T . A. NO. 963 /BANG/20 16 (ASSESSMENT YEAR : 20 12 - 13 ) ASST. COMMISSIONER OF INCOME TAX, NAVANAGAR, HUB BALLI - 580 025 . APPELLANT. VS. THE ARYA VAISHYA CO - OPERATIVE BANK LIMITED, ADMN. OFFICE, HOSUR, HUBBALLI - 580 021 .. RESPONDENT. APPELLANT BY : SHRI B. R. RAMESH, JCIT (D.R) R E SPONDENT BY : SHRI M.D. PUKHALE, ADVOCATE. DATE OF H EARING : 31.10.2017. DATE OF P RONOUNCEMENT : 10 .11 .201 7 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), HUBLI DT.29.1.2016 FOR ASSESSMENT YEAR 2012 - 13. 2. BRIEFLY STATED, THE FACTS OF THE CASE RELEVANT FOR THIS A PPEAL, AS UNDER : 2.1 THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012 - 13 ON 28.9.2012 DECLARING INCOME OF RS.15,18,332. THE RETURN WAS 2 IT A NO. 963 /BANG/201 6 PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') AND THE CASE WAS SUB SEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.3.3.2015, WHEREIN THE ASSESSEE'S INCOME WAS DETERMINED AT RS.1,21,12,850, WHICH, INTER ALIA, INCLUDED A DISALLOWANCE ON ACCOUNT OF EXCESS PROVISION S FOR BAD AND DOUBTFUL DEBTS MADE IN EARLIER YEARS AMOUNTING TO RS.90,14,185. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.3.3.2015 FOR ASSESSMENT YEAR 2012 - 13, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (APPEALS). TE LEARNED CIT (APPEALS) DISPOSED OFF THE APPEAL VIDE ORDER DT.29.1.2016 ALLOWING THE ASSESSEE PARTIAL RELIEF. IN THE IMPUGNED ORDER, THE LEARNED CIT (APPEALS) HAD DELETED THE DISALLOWANCE OF RS.90,14,185 ON ACCOUNT OF EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS ON THE GROUND TH AT TAXING OF THE REVENUE WRITTEN BACK IS UNWARRANTED AND IN DOING SO, FOLLOWED THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAINS CO - OPERATIVE BANK LTD. IN ITA NO.314 & 315/2012 DT.4.3.2014. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) DT.29.1.2016 FOR ASSESSMENT YEAR 2012 - 13 HAS FILED THIS APPEAL BEFORE THE TRIBUNAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER THE CIT (APPEALS) IS RIGHT IN NOT APPRECIATING THE FACT AND THE LAW THAT THE E XPENSE ALLOWED AS BAD AND DOUBTFUL DEBTS IN THE P & L ACCOUNT WITHOUT ACTUALLY WRITING OFF THE SAME FROM THE BOOKS AND, THEREFORE, IS KEPT AS A RESERVE IN THE BALANCE SHEET. THEREFORE, ANY REDUCTION OF SUCH PROVISION HAS TO BE TREATED AS CESSATIONOF LIABI LITY OF ACCRETION OF A BENEFIT 3 IT A NO. 963 /BANG/201 6 TAXABLE UNDER SECTION 41, IN RESPECT OF LIABILITY ALLOWED IN EARLIER YEARS. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND DELETE ANY OF THE GROUNDS OF APPEAL. 3.2 THE SOLE ISSUE RAISED BY REVENUE IN THE GR OUNDS OF APPEAL ((SUPRA) WHICH IS BEFORE US FOR CONSIDERATION IS WITH RESPECT TO REVENUE S CHALLENGING THE ACTION / FINDING OF THE LEARNED CIT (APPEALS) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF EXCESS PROVISION FOR BAD AND DOUBTFUL DE BTS AMOUNTING TO RS.90,14,185. 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. THE FACTS OF THE MATTER AS EMANATE FROM A PERUSAL OF THE RECORD BEFOR E US IS THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CREDITED AN AMOUNT OF RS.90,14,485 TO THE PROFIT AND LOSS ACCOUNT AS EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS. ON BEING QU E RIED BY THE ASSESSING OF FICER AS TO HOW THE SAID FIGURE WAS COMPUTED, THE ASSESSEE FURNISHED ITS EXPLANATION IN THE MATTER. THE ASSESSING OFFICER ON EXAMINATION OF THE SAME, OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN HOW IT HAD ARRIVED AT THE EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS OR FROM WHERE THIS PROVISION HAD ACCUMULATED. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE AFORESAID PROVISION FOR BAD AND DOUBTFUL DEBTS, REPRESENTS PROVISION WAS MADE IN THE PROFIT AND LOW ACCOUNT IN THE EARLIER PREVIOUS YEARS O N WHICH THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION. IN TH AT VIEW 4 IT A NO. 963 /BANG/201 6 OF THE MATTER THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE ASSESSEE'S CLAIM. 3. 3 .2 ON APPEAL, THE LEARNED CIT (APPEALS) DELETED THE AFORESAID DISALLOWANCE OF RS.90,14,185 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS, AFTER DULY EXAMINING THE FACTS OF THE MATTER, CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAINS CO - OPERATIVE BANK LTD. IN ITA NO.314 & 315/2012 DT.4/3/2014. IN THE IMPUGNED ORDER THE LEARNED CIT (APPEALS) HAS DEALT WITH THIS ISSUE AS UNDER : 5 IT A NO. 963 /BANG/201 6 6 IT A NO. 963 /BANG/201 6 7 IT A NO. 963 /BANG/201 6 8 IT A NO. 963 /BANG/201 6 3. 3 .3 BEFORE US, REVENUE HAS NOT CONTROVERTED EITHER THE FINDINGS RENDERED BY THE LEARNED CIT (APPEALS) WHILE DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF WRITE BACK OF EXCESS PROVISIONS OF BAD AND DOUBTFUL DEBTS OR IN DIFFERENTIATING THE APPLICABILITY 9 IT A NO. 963 /BANG/201 6 OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF JAIN CO - OPERATIVE BANK LTD. (SUPRA) TO THE CASE ON HAND. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE FINDINGS OF THE LEARNED CIT (APPEALS). RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN T HE CASE OF JAIN CO - OPERATIVE BANK LTD. (SUPRA), WHICH HAD CONSIDERED AND DECIDED SIMILAR ISSUE AS TO THAT IN THE CASE ON HAND AND IS THEREFORE SQUARELY APPLICABLE TO THE CASE ON HAND, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) IN DELETING TH E EXCESS PROVISION FOR BAD AND DOUBTFUL DEBTS AS UNWARRANTED. CONSEQUENTLY, THE GROUNDS RAISED BY REVENUE ARE DISMISSED. 4. IN THE RESULT, REVENUE S APPEAL FOR ASSESSMENT YEAR 2012 - 13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10TH DAY OF NOV. 201 7 . SD/ - ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER SD/ - ( JASON P BOAZ ) JUDICIAL MEMBER BANGALORE, DT. 10 .11.2017. *R EDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.