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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHIR CHANDRA MOHAN GARG & SHRIB.M. BIYANI
आदेश/O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 27.02.2020passed by learned Commissioner of Income-Tax (Appeals)-I, Indore[“Ld. CIT(A)”], which in turn arises out of assessment-order dated 15.01.2016 passed by learned DCIT-1(1), Indore[“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year[“AY”] 2013-14, the assessee has filed this appeal on following effective ground:
“(1) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in maintaining the addition of Rs. 53,87,364/- as made by the assessing officer to the total income of the appellant on account of disallowance of claim of deduction of one time settlement amount without properly appreciating the facts of the case and submissions made before him.”
JilaSahakariKendriya Bank Maryadit ITA No.213/Ind/2020 Assessment year 2013-14 2. Heard the learned Representatives of both sides at length and case- records perused.
Briefly stated the facts leading to present appeal are such thatthe assessee is a co-operative bank. It filed return of relevant AY 2013-14 which was subjected to scrutiny-assessment by Ld. AO by issuing statutory notices u/s 143(2) / 142(1) of the act. Finally, the Ld. AO completed assessment after making a disallowance of Rs. 53,87,364/- debited by assessee to P&L A/c under the caption“one time settlement”. Aggrieved by action of Ld. AO, the assessee carried matter in first-appeal to Ld. CIT(A) but did not get any relief. Now the assessee has come in this appeal before us assailing the orders of lower authorities.
The sole controversy between parties relates to the deduction of Rs. 53,87,364/- claimed by assessee and disallowed by lower authorities.
The legal provisions as well as facts qua this addition can be fit in a narrow compass. On legal provisions, both sides agree that the assessee being a co-operative bank, is eligible for deduction u/s 36(1)(viia) on account of “Provision for bad-debt” as well as u/s 36(1)(vii) on account of “actual bad-debt”.However, they further agree to certain riders, viz. (i) the deduction of “Provision for Bad-debts” u/s 36(1)(viia) is allowable to the extent of maximum permissible limit to be computed in a manner prescribed in that section; and (ii) in terms of Proviso 1stto section 36(1)(vii) read with section 36(2)(v), the “actual bad-debt” shall be first adjusted against the balance available in “Provision for bad-debt” and thereafter only excess remainingunadjusted out of “actual bad-debt”, if any, shall only be allowable u/s 36(1)(vii). Turning to factual side, the lower authorities have observed that the assessee has debited two items in P&L A/c, viz. (i) Provision for bad-debt of Rs. 4,82,41,000/- (Page No. 49 of the Paper-Book); and(ii) Actual bad-debt (captioned as “one time settlement” in P&L A/c) of Rs. 53,87,364/- (Page No. 50 of the Paper-Book). Finding such twin-claims
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JilaSahakariKendriya Bank Maryadit ITA No.213/Ind/2020 Assessment year 2013-14 debited in P&L A/c, the lower authorities have framed a view that the assessee has directly debited actual bad-debt of Rs. 53,87,364/- to P&L A/c and claimed deduction as such instead of adjusting the same against the “Provision for Bad-debt” which is not in consonance with the legal provisions of Proviso 1stto section 36(1)(vii) as well as section 36(2)(v). Drawing such inference, the lower authorities have rejected the claim of actual bad-debt of Rs. 53,87,364/- to the assessee. Apparently, the lower authorities are justified in making such a conclusion and the Ld. DR vehemently supports their approach. But, however, during the course of hearing, the Ld. AR submits that although it is true that the assessee has debited two separate lineitems in P&L A/c but the aggregate claim is Rs. 5,36,28,364/- (Rs. 4,82,41,000/- + Rs. 53,87,364/-) or say Rs. 536.28 lacs. Ld. AR submits that during the course of assessment-proceeding, the assessee has filed a working-sheet of the maximum permissible limit of “Provision for bad-debt” allowable to assessee u/s 36(1)(viia) and a copy of the same is placed at Page No. 51 of the Paper-Book too, according to which the maximum limit came to Rs. 2,070.44 lacs. Ld. AR submits that assessee claimed deduction of Rs. 536.28 lacs only which is well within such permissible limit. According to Ld. AR, the assessee would have two options of presenting the data in P&L A/c. These two options, according to Ld. AR, would have been like this:
Option-1 (which is done by assessee): Provision for bad-debt 482.41 lacs Actual bad-debt 53.87 lacs Total 536.28 lacs
Option-2 (which is understood by lower authorities): Provision for bad-debt 536.28 lacs Actual bad-debt Nil
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JilaSahakariKendriya Bank Maryadit ITA No.213/Ind/2020 Assessment year 2013-14
Total 536.28 lacs
Ld. AR submits that in either case, the assessee would be entitled to Rs. 536.28 lacs and it is a mere difference of presentation in the P&L A/c which has led to mis-understanding on the part of lower authorities. Therefore, Ld. AR submits that the revenue-authorities have wrongly gained a conclusion that the assessee has claimed deduction of actual bad-debt of Rs. 53.87 lacs which is not allowable. Ld. AR prays to allow the claim of assessee.
We have taken note of legal provisions as well as facts cited above. After a careful consideration, we find weightage in the submission of Ld. AR. We observe that the assessee has claimed an aggregate deduction of Rs. 536.28 lacs which is apparent from the P&L A/c and also accepted by both sides. Now what remains to be checked is whether this claim of Rs. 536.28 lacs is within the maximum permissible limit as prescribed in section 36(1)(viia) or not. As mentioned earlier, the Ld. AR submits that during the course of assessment-proceeding, a working sheet of such calculation was filed to Ld. AO (Page No. 51 of the Paper-Book), according to which the permissible limit comes to Rs. 2,070.44 lacs, but on a careful scrutiny of the orders of lower authorities, we find that none of the lower authorities have made any whisper on this working. Thus, it is quite clear that the authorities have not examined this aspect at all. We observe that the deduction of Rs. 536.28 lacs presented in either way i.e. whether as Option- 1 or Option-2 narrated earlier, becomes allowable to the assessee only if the maximum permissible limit as per section 36(1)(viia) exceeds Rs. 536.28 lacs. Since the orders of lower authorities are silent on this working, there is a need of verification of this aspect at the level of Assessing Officer. Hence, at present we think it fit and appropriate to refer the matter back to the file of Ld. AO for a limited purpose of verification of the “maximum permissible limit”u/s 36(1)(viia). Needless to mention that the AO shall allow the total deduction of Rs. 536.28 lacs (which also includes the deduction of Rs. 53,87,364/- being agitated in present-appeal), subject to the “maximum
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JilaSahakariKendriya Bank Maryadit ITA No.213/Ind/2020 Assessment year 2013-14
permissible limit” computed by him. The present appeal is remanded back to Ld. AO accordingly.
In the result, this appeal of assessee is allowed for statistical purpose.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 20./12/2022.
Sd/- Sd/-
(CHANDRA MOHAN GARG) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore िदनांक/Dated : 20.12.2022 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY
Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation 7.12.22
Date of typing & draft order placed before the Dictating Member 7.12.22
Date on which the approved draft comes to the Sr. P.S./P.S. 7.12.22
Date on which the approved draft is placed before other Member
Date on which the fair order is placed before the Dictating Member for pronouncement 6. Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
Date on which the file goes to the Assistant Registrar for signature on the order
Date of dispatch of the Order
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