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Income Tax Appellate Tribunal, “B”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by assessee against the order of CIT(A)-3, Mumbai dated 23/11/2015 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the IT Act. 2. Grounds raised by the assessee reads as under:-
1. On the facts & in the circumstances of the case the Ld. Comm. of Income Tax (Appeals) - 3 erred in sustaining the disallowance of the amount of Rs. 13,05,0337- out of the total deduction claimed u/s 36(l)(viia) of the Income Tax Act 1961 of Rs. 23,05,033/- without understanding the facts & circumstances of the case & the reasons assigned for doing so are wrong & contrary to the provisions of the Income tax Act & the rules made there under 2. The appellant craves Have to add, alter, amend and/ or modify all or any of the above ground of appeal on or before the date of hearing.
The Naval Dockyard Co-op Bank Ltd., 3. Rival contentions have been heard and record perused.
Facts in brief are that the assessee is engaged in the business of banking. The assessee had e-filed its return of income on 29.09.2011 declaring total income of Rs. 2,79,91,750/-. The assessee case was selected for scrutiny assessment. The assessee has claimed the deduction of Rs. 23,05,033/- being 7 1/2% of the total income (computed before making any deduction under this clause and chapter VIA) as per the provision of Sec 36(l)(viia) of the Income Tax Act 1961. However, the Ld. Assessing Officer passed the order & made addition of Rs.13,05,033/- without asking for any clarifications & without understanding the facts. The Ld Assessing Officer disallowed the claim of the assessee of Rs. 13,05,033/- stating that the provision of Sec 36(1)(viia) are very clear that provision for bad & doubtful debts is allowable in respect of Provision for Bad & Doubtful Debt made and the words used are provision made by the assesses and the same are restricted to 7.5%.
By the impugned order CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.
We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that the Ld. Assessing Officer never asked for any details or clarification in respect of deduction u/s 36(1)(viii) of Rs. 1,30,000/-. Therefore, the assessee was under the bonafide belief that the Ld. Assessing Officer has been satisfied with the details submitted.
The Naval Dockyard Co-op Bank Ltd., 7. As per the provisions of Sec 36(l)(viii) of IT Act 1961, a specified entity can claim the deduction of an amount not exceeding 20% of the profits derived from eligible business. Accordingly, the assessee bank being an specified entity engaged in the eligible business of providing long term finance for development of housing in India had created special reserve as per the provision of Sec 36(I)(viii) & claimed the deduction of Rs. l,30,000/-. The Ld Assessing Officer disallowed the aforesaid amount stating that no further claim under the head 36(1) can be allowed as the assessee has been allowed the deduction u/s 36(1)(viia) of Rs.10,00,000/-.
As per material placed on record, provision in books under Section 36(1)(viia) in the A.Y.2007-08 to 2011-12 was as under:- A.Y. Opening Balance Provision in Books Deduction claimed Excess Provision u/s.36(l)(viia) in ITR u/s 36(1) Closing Balance (viia) 2007-08 - 459,554,19 - 459^554.19 2008-09 459,554.19 4,500,000.00 - 4,959,554,19 2009-10 4,959,554.19 8,964,000.00 2,737,574.85 11,185,979.34 2010-11 11,185,979.34 - 2,390,583.00 8,795,396.34 2011-12 8,795,396.34 1,000,000.00 2,305,033.00 7,490,363.34