MORADABAD ZILA SAHKARI BANK LTD,MEERUT vs. DCIT, CIRCLE-1, MORADABAD

Brief facts of the case are that the assessee is a Co-operative Society and carried the business of banking. The return of income for the year under appeal was filed on 29.03.2013 declaring total loss of Rs.1,29,33,056/-. The case was selected for scrutiny and in terms of the order passed u/s 143(3) dated 16.03.2016, various disallowance were made and the total income assessed at Rs. 2,67,70,289/-.

Against the said order, the assessee preferred the appeal before the Ld. CIT(A) who vide impugned order dated 13.01.2026 has partly allowed the appeal of the assessee.

Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various grounds of the appeal.

Ground of appeal No. 1 raised by the assessee challenging the disallowance of Rs. 10,90,621/- made u/s 43B of the Act on account of non-payment of provision of bonus. The Ld. AR submits that the assessee has made provision of bonus and the amount remained payable was reversed in succeeding assessment year i.e. in Assessment Year 2014-15 and due taxes were paid, therefore, if the same is again disallowed in the year under appeal, it would be double taxation and, therefore, requested for deletion of the same.

Heard both the parties and perused the materials available on record. It was the claim of the assessee that excess provision of bonus was reversed in immediately succeeding assessment year thus no further disallowance to be made in this year. When the provision for bonus is charged to Profit and Loss account for the year under appeal, any disallowance for non-payment of the same should be made u/s 43B of the Act in this year only even though the same was offered for tax in succeeding assessment year which is not correct. Therefore, we find no error in the orders of the lower authorities in making disallowance of the same in the year under appeal. However, an income cannot be taxed twice and therefore, the AO is directed to verify whether the same was offered for tax in succeeding assessment year and if so, the same be reduced from the total income of the assessee, otherwise it would be double taxation of an income. With this directions, this ground of appeal of the assessee is partly allowed.

Ground of appeal No.2 of the assessee is against the disallowance made u/s 36(1)(viia) of the Act of the provisions made for Standard Assets.

Heard both the parties and perused the materials available on record. It is observed that this issue has been settled by the judgment of Special Bench of ITAT, Chandigarh Bench in the case of Malwa Gramin Bank Vs DCIT, Circle Sangrur (Punjab) reported in TS-687-ITAT-2026 (Chandigarh) wherein the Hon’ble Special

Ground of appeal No.3 of assessee is with respect to disallowance of Rs.16,99,500/- made of the provisions for Income Tax claimed in the Profit & Loss Account.

Before us, it is the claim of the assessee that it had already added back the amount of provisions for Income Tax to the total income as could be seen from the computation of income filed and, therefore, disallowance made for the same tantamount to double addition. For this our attention is invited to the computation of income placed at PB page 2 filed by the assessee.

On the other hand, the Ld. CIT-DR requested that the matter may be sent back to the file of the verification from the facts.

Heard both the parties and perused the materials available on record. On careful perusal of the facts and the documents filed before us in the shape of computation and return of income, it is observed that the amount of Provision for Income Tax debited in the profit and loss account of Rs.16,99,000/- has already been added back by the assessee while computing the total income as per computation of income placed at PB page 2. Once the assessee has already added back the same in the total income and computed the loss accordingly, there is no occasion for the Revenue to again

In the result, the appeal of the assessee is partly allowed.

Ground of appeal No.1 is with respect to not allowing the set off of brought forward unabsorbed depreciation of Rs.1,11,84,638/- pertaining to AY 2013-14.

Heard both the parties and perused the material available on record. It is observed that in immediately preceding assessment year i.e. in AY 2013-14, assessee has claimed carried forward of unabsorbed deprecation, however, the AO has made various disallowance and, accordingly, total income of the assessee was computed at Rs. 2,67,70,290/-, therefore, their remained no loss to be carried forward to the next year. However, the disallowance so made were challenged and part of the disallowance were deleted by Ld. CIT(A) and for the remaining disallowance, an appeal is preferred before the Tribunal wherein in ITA No.273/Del/2026, we have further allowed relief to the assessee. Under these circumstances, AO is directed to re- compute the total income of the assessee for AY 2013-14 after giving effect to the order of Tribunal and, thereafter, the loss/unabsorbed deprecation, if any, remains, the assessee would be entitled to carry forward the same and set off against the total income for the year under appeal. With these directions, this grounds of appeal of the assessee is allowed for statistical purposes.

Heard both the parties and perused the materials available on record. It is observed that the AO has made the disallowance by holding that the assessee has made excess provision of bonus whereas it was the claim of the assessee that the bonus amounting to Rs. 33,59,228/- pertaining to the year under appeal was paid on or before the due date for filing of return. The remaining amount of Rs.18,56,561/- relate to the excess provision of bonus made in earlier years for which the disallowance have already been made in preceding years, therefore, no further disallowance should be made. While deciding the appeal of the assessee for Assessment Year 2013-14 in ITA No.2633/Del/2026, we have already directed the AO to disallow the excess bonus provisions claimed in Assessment Year 2013-14 and reduced the said amount from the income of the assessee year under appeal i.e. in the year 2014-15 where the assessee has offered the said amount of excess provision of bonus to the income. The bonus being part of such disallowance therefore, the same is hereby deleted. This ground of appeal of the assessee is allowed.

Ground of appeal No.3 raised by the assessee is with respect to the disallowance of Rs.37,33,455/- made u/s 43B on account of payment of Ex-gratia payment.

Heard both the parties and perused the materials available on record. It is observed that the AO has disallowed the payment of Ex-gratia by invoking the provisions of section 43B of the Act. The Ld. CIT(A) though has observed that provisions of section 43B are not applicable on Ex-gratia payment however, observed

Heard both the parties and perused the materials available on record. This issue is squarely covered by the judgment of Special Bench of ITAT, Chandigarh in the case of Malwa Gramin Bank (supra). Therefore, by respectfully following the said order, we have already deleted the disallowance made in assessee’s own case for Assessment Year 2013-14 in ITA No.2733/Del/2026 hereinabove, thus, by following the said observations, the disallowance made is hereby deleted. The ground of appeal No.4 of the assessee is allowed.

In the result, both appeals of the assessee are partly allowed. Order pronounced in the open Court on 10.07.2026. Sd/- Sd/- - (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 10.07.2026. *PK, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI