The DCIT, Circle -4, Ahmedabad V. Gujarat State Financial Corporation, Gandhinagar

ITA 994/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7877 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO. 994/AHD/2015 DCIT VS. GUJARAT STATE FINANCIAL CORN ASSESSMENT YEAR: 2011-12 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO. 994/AHD/2015 ASSESSMENT YEAR: 2011-12 THE DY. COMMISSIONER OF INCOME-TAX ............ ......APPELLANT CIRCLE-2(1)(1), AHMEDABAD VS. GUJARAT STATE FINANCIAL CORPORATION ...........................RESPONDENT 1 ST FLOOR, BLOCK NO.10, UDHYOG BHAVAN, GANDHINAGAR-382 025 [PAN : AABCG 2924 M] APPEARANCES BY: SAURABH SINGH FOR THE APPELLANT PF JAIN FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 13.07.2018 DATE OF PRONOUNCING THE ORDER : 16.07.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 30.01.2015, PASSED BY THE LEARNED C IT(A)-2, AHMEDABAD FOR THE ASSESSMENT YEAR 2011-12, ON THE FOLLOWING GROUND: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE DISALLOWANCE AMOUNTING TO RS.3,89,90,537/- MADE BY AO ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY ASSESSEE. 2. AT THE TIME OF HEARING BEFORE US, LEARNED REPRE SENTATIVES FAIRLY AGREE THAT THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IN THE AP PEAL IS COVERED, IN FAVOUR OF THE ASSESSEE, BY A DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 (ITA NO. 335/AHD/2011; ORDE R DATED 27.10.2016) WHEREIN THE CO-ORDINATE BENCH HAS OBSERVED AS FOLLOWS:- 6. WE FIND THAT SO FAR DEDUCTION OF ACTUAL BAD DEB TS WRITTEN OFF, OF RS.36,11,57,536/-, ARE CONCERNED, IT IS NOT IN DISP UTE THAT AMOUNTS HAVE ACTUALLY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT O F THE ASSESSEE. THE ASSESSEE HAS SQUARED UP THE INDIVIDUAL ACCOUNTS TO THE DEBIT OF BAD DEBTS. IN THIS VIEW OF THE MATTER, AND IN THE LIGHT OF HONBL E SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT (323 ITR 397) WHICH HOLDS T HAT A MERE WRITE OFF OF THE BAD DEBTS IN THE BOOKS OF ACCOUNT, AS IRRECOVERABLE , IS SUFFICIENT TO CLAIM DEDUCTIONS AS BAD DEBTS. LEARNED CIT(A) WAS, THERE FORE, QUITE JUSTIFIED IN GRANTING RELIEF TO THE ASSESSEE ON THIS ISSUE. AS FAR PROVISION OF RS.88,38,79,657/- IS CONCERNED, UNDOUBTEDLY THERE I S NOTHING ON RECORD TO SHOW, OR EVEN INDICATE, THAT THESE AMOUNTS HAVE ACT UALLY BEEN WRITTEN OFF BY SQUARING UP INDIVIDUAL ACCOUNTS OF THE DEBTORS, BUT WHAT IS NOT IN DISPUTE THAT ITA NO. 994/AHD/2015 DCIT VS. GUJARAT STATE FINANCIAL CORN ASSESSMENT YEAR: 2011-12 PAGE 2 OF 3 THE PROVISION IN QUESTION HAS BEEN DEBITED TO THE P ROFIT AND LOSS ACCOUNT, AND THE AMOUNT OF PROVISION IS REDUCED FROM THE LOANS A ND ADVANCES APPEARING IN THE BALANCE SHEET. WITH THESE FACTS HAVING BEEN VE RIFIED BY US WITH RESPECT TO MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE JURISDICTIONAL HIGH COURTS JUD GEMENT IN THE CASE OF CIT VS. NAWANAGAR CO-OPERATIVE BANK LIMITED (TAX APPEAL NO.549 OF 2014; JUDGEMENT DATED 30.06.2014), WHICH HAS OBSERVED AS FOLLOWS :- 5. WE HAVE HEARD MR. PRANAV G. DESAI LEARNED ADVO CATE APPEARING ON BEHALF OF THE APPELLANT-REVENUE. WE HA VE ALSO PERUSED THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE LEARN ED TRIBUNAL. THE LEARNED TRIBUNAL, WHILE ALLOWING THE CLAIM OF THE A SSESSEE OF DEDUCTION OF RS.2,18,05,3927- U/S. 36(1)(VII) OF THE ACT, AS BAD DEBTS, THE LEARNED TRIBUNAL HAS HEAVILY RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VIJAYA BANK V. CIT, REPORTED I N (2010) 323 ITR 166. WE HAVE ALSO CONSIDERED THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF VIJAYA BANK VS. CIT (SUPRA). THE QUE STION WHICH IS PROPOSED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VIJAYA BAN K V. CIT (SUPRA). IN THE CASE OF VIJAYA BANK V. CIT (SUPRA), THE HON' BLE SUPREME COURT HAS OBSERVED AND HELD THAT WHERE ASSESSEE BANK HAD WRITTEN OFF IMPUGNED BAD DEBT IN ITS BOOKS BY WAY OF A DEBIT TO PROFIT AND LOSS ACCOUNT, SIMULTANEOUSLY REDUCING CORRESPONDING AMOU NT FROM LOANS AND ADVANCES TO DEBTORS DEPICTED ON ASSETS SIDE IN BALANCE SHEET AT CLOSE OF YEAR, THE ASSESSEE - BANK WAS ENTITLED TO DEDUCTION UNDER SECTION 36(1)(VII) AND FOR THAT PURPOSE, IT WAS NOT NECESSARY FOR IT TO CLOSE INDIVIDUAL ACCOUNT OF EACH OF ITS DEBTORS IN ITS BOOKS. WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARN ED TRIBUNAL. WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED JUDGME NT AND ORDER PASSED BY THE LEARNED TRIBUNAL. 7. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARIN G IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH. 4. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINA TE BENCH DECISION DATED 27.10.2016 (SUPRA), IN ASSESSEES OWN CASE FOR ASSE SSMENT YEAR 2006-07, WE DECLINE TO UPHOLD THE PLEA OF THE ASSESSING OFFICER . ACCORDINGLY, RELIEF GRANTED BY THE CIT(A) STANDS CONFIRMED AND APPROVED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16 TH JULY, 2018 SD/- SD/- MAHAVIR PRASAD PRAMO D KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 16 TH DAY OF JULY, 2018 **BT ITA NO. 994/AHD/2015 DCIT VS. GUJARAT STATE FINANCIAL CORN ASSESSMENT YEAR: 2011-12 PAGE 3 OF 3 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .......16.07.2018 COVERED CASE.... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 16.07.2018..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 16.07.2018....... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: .. . 16.07.2018..... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 17.07.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......