ACIT, HUBLI vs. THE ARYA VAISHYA CO-OPERATIVE BANK LTD., HUBLI

Per Shri Jason P Boaz, A.M. : This appeal by Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Hubli dt.29.1.2016 for Assessment Year 2012-13.

2.2 Aggrieved by the order of assessment dt.3.3.2015 for Assessment Year 2012-13, the assessee preferred an appeal before the learned CIT (Appeals). Te learned CIT (Appeals) disposed off the appeal vide order dt.29.1.2016 allowing the assessee partial relief. In the impugned order, the learned CIT (Appeals) had deleted the disallowance of Rs.90,14,185 on account of excess provision for bad and doubtful debts on the ground that taxing of the revenue written back is unwarranted and in doing so, followed the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Jains Co-operative Bank Ltd. in & 315/2012 dt.4.3.2014.

3.1 Revenue, being aggrieved by the order of the CIT (Appeals) dt.29.1.2016 for Assessment Year 2012-13 has filed this appeal before the Tribunal wherein it has raised the following grounds :

“ 1. Whether the CIT (Appeals) is right in not appreciating the fact and the law that the expense allowed as bad and doubtful debts in the P & L account without actually writing off the same from the books and, therefore, is kept as a reserve in the balance sheet. Therefore, any reduction of such provision has to be treated as cessationof liability of accretion of a benefit

Section 41, in respect of liability allowed in earlier years. 2. The appellant craves leave to add, alter, amend and delete any of the grounds of appeal.”

3.2 The sole issue raised by Revenue in the grounds of appeal ((supra) which is before us for consideration is with respect to revenue’s challenging the action / finding of the learned CIT (Appeals) in deleting the disallowance made by the Assessing Officer of excess provision for bad and doubtful debts amounting to Rs.90,14,185.

3.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. The facts of the matter as emanate from a perusal of the record before us is that in the course of assessment proceedings, the Assessing Officer noticed that the assessee had credited an amount of Rs.90,14,485 to the profit and loss account as excess provision for bad and doubtful debts. On being queried by the Assessing Officer as to how the said figure was computed, the assessee furnished its explanation in the matter. The Assessing Officer on examination of the same, observed that the assessee was not able to explain how it had arrived at the excess provision for bad and doubtful debts or from where this provision had accumulated. The Assessing Officer was of the opinion that the aforesaid provision for bad and doubtful debts, represents provision was made in the profit and low account in the earlier previous years on which the assessee had already claimed deduction. In that view

Assessing Officer proceeded to disallow the assessee's claim.

3.3.2 On appeal, the learned CIT (Appeals) deleted the aforesaid disallowance of Rs.90,14,185 made by the Assessing Officer on account of excess provision for bad and doubtful debts, after duly examining the facts of the matter, considering the submissions of the assessee and following the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Jains Co-operative Bank Ltd. in & 315/2012 dt.4/3/2014. In the impugned order the learned CIT (Appeals) has dealt with this issue as under :

3.3.3 Before us, Revenue has not controverted either the findings rendered by the learned CIT (Appeals) while deleting the disallowance made by the Assessing Officer on account of write back of excess provisions of bad and doubtful debts or in differentiating the applicability

Hon'ble High Court of Delhi in the case of Jain Co- operative Bank Ltd. (supra) to the case on hand. We, therefore, find no reason to interfere with or deviate from the findings of the learned CIT (Appeals). Respectfully following the decision of the Hon'ble High Court of Delhi in the case of Jain Co-operative Bank Ltd. (supra), which had considered and decided similar issue as to that in the case on hand and is therefore squarely applicable to the case on hand, we uphold the impugned order of the learned CIT (Appeals) in deleting the excess provision for bad and doubtful debts as unwarranted. Consequently, the grounds raised by Revenue are dismissed.

4. In the result, Revenue’s appeal for Assessment Year 2012-13 is dismissed. Order pronounced in the open court on the 10th day of Nov. 2017.