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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHADHURY
आदेश / ORDER PER R.S.SYAL, VP :
This appeal by the assessee is arising out of the order passed by the CIT(A) on 15-09-2016 in relation to the assessment year 2012-13. 2. The second ground was not pressed by the ld. AR, which is hereby dismissed.
2 ITA No.2647/PUN/2016 The Nashik Road Deolali Vyapari Sahakari Bank Ltd.,
The first ground is against the confirmation of disallowance
of Rs.44,94,267/- claimed by the assessee u/s. 36(1)(viia) of the
Income-tax Act, 1961 (hereinafter also called as ‘the Act’).
Briefly stated, the facts of the case are that the assessee bank
claimed deduction of Rs.44,94,267/-, inter alia, on account of
provision for bad and doubtful debts @7.5% of the total income in
terms of section 36(1)(viia) of the Act. The AO observed that the
assessee did not create provision for such bad debts in its accounts
as per the mandate of section 36(2)(v) of the Act. He, therefore,
made the disallowance of this sum, which came to be upheld in the
first appeal.
We have heard both the sides and gone through the relevant
material on record. Section 36(1)(viia) provides for granting
deduction in respect of any provision for bad and doubtful debts
made, inter alia, by a Co-operative Bank at the given percentage.
Section 36(2)(v) provides that where provisions of section
36(1)(viia) apply, ‘no such deduction shall be allowed unless the
assessee has debited the amount of such debt or part of debt in that
previous year to the provisions for bad and doubtful debts account
made under that clause’. It becomes apparent from the mandate of
3 ITA No.2647/PUN/2016 The Nashik Road Deolali Vyapari Sahakari Bank Ltd.,
section 36(2)(v) that the making of a provision for bad and
doubtful debts is sine qua non for claiming deduction
u/s.36(1)(viia) of the Act. Pages 14 to 16 of the paper book are a
copy of assessee’s Profit and loss account, which shows that the
assessee made a `Provision against standard assets’ for a sum of
Rs.20 lakhs. In the computation of total income, whose copy has
been placed at page 8 of the paper book, the assessee suo motu
added back the amount of such provision for the purposes of
computation of total income. It, therefore, becomes apparent that
the assessee did make a provision of Rs.20 lakhs in its books of
account, even though it was characterized as having been made for
‘standard assets’, for which no separate deduction was claimed.
The statute requires creation of provision as a mandatory pre-
condition for claiming deduction u/s. 36(1)(viia). Merely because
a different nomenclature was given to the provision of Rs.20 lakhs,
for which no separate deduction was claimed, the same does not
shed the character of a provision relating to the debts of the
assessee bank meant for the purpose of section 36(1)(viia). In our
considered opinion, the assessee cannot be debarred from claiming
deduction u/s.36(1)(viia) to the extent of such provision made in
the books of account to the tune of Rs.20 lakhs. We, therefore,
4 ITA No.2647/PUN/2016 The Nashik Road Deolali Vyapari Sahakari Bank Ltd.,
direct to grant deduction, being a sum of provision created in the books of account for a sum of Rs.20.00 lakhs, as against the deduction claimed in the computation of income at Rs.44,94,267/-.
In the result, the appeal is partly allowed.
Order pronounced in the Open Court on 20th December, 2018.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 20th December, 2018 सतीश आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. आयकर आयु�(अपील) / The CIT (Appeals)-1, Nashik 4. The Pr.CIT -1, Nashik िवभागीय �ितिनिध, आयकर अपीलीय 5. अिधकरण, पुणे “बी” / DR ‘B’, ITAT, Pune; 6. गाड� फाईल / Guard file. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No.2647/PUN/2016 The Nashik Road Deolali Vyapari Sahakari Bank Ltd.,
Date 1. Draft dictated on 20-12-18 Sr.PS 2. Draft placed before author 20-12-18 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *