JILA SAHAKARI KENDRIYA BANK MARYADIT,MANDSAUR vs. DEPUTY COMMISSIONER OF INCOME TAX, RATLAM

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ITA 562/IND/2017Status: DisposedITAT Indore23 October 2018AY 2013-144 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the provision for overdue interest was allowable as it was covered by a previous ITAT decision. However, the special reserve was not allowable as it was covered by a previous ITAT decision against the assessee.

What were the facts?

The assessee bank made a provision for overdue interest of Rs. 7,48,50,000 and a special reserve of Rs. 2 crores. The Assessing Officer and CIT(A) disallowed these amounts, considering them not deductible under the Income Tax Act.

What were the issues?

Whether provision for overdue interest and special reserve created by a bank as per RBI norms are deductible expenses under the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii),Section 36(1)(viia),Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Appellant: Shri S.S. Deshpande, CA, Shri Lal Chand, CIT
Hearing: 11.10.2018Pronounced: 23.10.2018

per the RBI norms cannot be treated as deductible expenditure u/s

36(1)(vii) or (viia) of the I.T. Act. The Reserve Bank norms have nothing

to do with computation of taxable income under I.T. Act. Therefore, the

assessee is before us.

3.

Before us, the ld. Counsel for the assessee submitted that this

issue on similar facts and circumstances has already been decided

against the Revenue by this very Bench in the case of The District

Central Co-operative Bank Ltd. vs. ACIT vide order dated 26.9.2018 in

ITA No.47/Ind/2014 (copy of the order has been filed before us). On the

other hand, ld. CIT/DR conceded the fact that the issue is covered vide

aforesaid order of the ITAT against the Revenue.

4.

Considering the rival submissions and the fact that the issue on

identical facts and circumstances is covered vide our order dated

26.9.2018 (supra) against the Revenue, we direct the Assessing Officer

to delete the addition. Accordingly, this ground of appeal of the assessee

is allowed.

5.

So far as ground no.2 with regard to confirmation of the addition of

Rs.2 crores being the special reserve created by the assessee is

3 Jila Sahakari Kendriya Bank ITA No.562 of 2017

concerned, the brief facts giving rise to the ground are that the

Assessing Officer and ld. CIT(A) were of the view that the expenditure

claimed by the assessee as special provision amounting to Rs.2 crores

cannot be treated as expenditure in the normal course of the business.

There is no provision of allowability u/s 36 or u/s 37 of the I.T. Act. The

provision and expenses in the P & L account as per RBI norms cannot

be treated as deductible expenditure u/s 36(1)(viia) of the I.T. Act. The

section 36(1)(viia) allow the deduction of actual bad debts only not on

the basis of provision. Being aggrieved, the assessee is before us.

6.

Before us, the ld. Counsel for the assessee submitted that this

issue on similar facts and circumstances has already been decided

against the assessee by this very Bench in assessee’s own case for the

assessment year 2012-13 vide order dated 17.8.2018 in ITA

No.386/Ind/2017 (copy of the order has been filed before us). On the

other hand, ld. CIT/DR conceded the fact that the issue is covered vide

aforesaid order of the ITAT against the assessee.

7.

Considering the rival submissions and the fact that the issue on

identical facts and circumstances is covered in assessee’s own case for

the assessment year 2012-13 vide our order dated 17.8.2018 (supra)

against the assessee, we confirm the order of the ld. CIT(A) on this

issue. Accordingly, this ground of appeal of the assessee is dismissed.

4 Jila Sahakari Kendriya Bank ITA No.562 of 2017

Finally, the appeal of the assessee is partly allowed.

Order was pronounced in the open court on 23.10.2018.

Sd/- Sd/- (MANISH BORAD) ( KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 23.10.2018 !vyas! Copy to: Assessee/Respondent/CIT(A)/CIT/DR, Indore

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