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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri P. M. Jagtap, AM & Shri K. Narasimha Chary, JM]
For the Appellant: Shri Sanjay Bhattacharya, FCA For the Respondent: Shri R. S. Biswas, CIT ORDER
Per Shri K. Narasimha Chary, JM:
This appeal by assessee is arising out of order of CIT(A)-VI, Kolkata vide Appeal No. 282/CIT(A)-VII/Cir-6/2011-12/Kol dated 14.01.2013. Assessment was framed by DCIT, Circle-6, Kolkata u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2009-10 vide his order dated 29.12.2011.
Brief facts of the case are that the assessee is an Industrial Investment Bank. For the AY 2009-10 it had filed revised return of income on 29.03.2010 declaring a loss of Rs.74,72,10,744/-. The AO disallowed bad debts written off to a tune of Rs.51,95,96,000/-. According to assessee, it had written back a sum of Rs.207,51,95,000/- out of provision made for doubtful debts and reduced the same while computing book profit u/s. 115JB of the Act. Challenging the disallowance of Rs.51,95,96,000/- the assessee carried the matter in appeal before the Ld. CIT(A), who by way of impugned order dismissed the relevant ground on this issue and upheld the disallowance.
Aggrieved by the same, the assessee is in appeal before us on the following grounds: “
1. That the CIT(A) was wrong in confirming the action of the Assessing Officer in disallowing Rs.51,95,96,000/- being Bad Debts Written off.
2. That without prejudice to the contention raised in Ground No. 1 above, the CIT(A) failed to appreciate that due to writing back of provision to the extent of Rs.124,69,89,000/- in the Assessment Year 2004-05, the balance in the account of Provision for Doubtful Debts had been substantially reduced and thus he erred in holding that the Bad Debts Written Off would not exceed the balance in the account of Provision for Doubtful Debts.”
Industrial Investment Bank of India Ltd., AY 2009-10 4. At the time of hearing Ld. AR did not press ground no. 2 and hence, the same is dismissed being not pressed.
In respect of ground no. 1, it is the argument of the Ld. AR that the account referred to in proviso to section 36(1)(vii) of the Act is the account that had been made under clause (viia) of section 36(1) of the Act and not the account of the provision for bad and doubtful debts as appearing in the financial account. It is his further argument that unless a relationship between the bad debts written off and the provisions which was allowed earlier is made out, proviso to section 36(1)(vii) of the Act has no application.
Ld. DR, on the other hand, vehemently relied on the orders of the authorities below and urged before the bench to confirm the order of Ld. CIT(A) in this regard.
We have heard rival submissions and gone through facts and circumstances of the case. Under section 36(1)(viia)(c) of the Act, a State Industrial Investment Corporation shall be allowed deductions in respect of any provision for bad and doubtful debts made by it, an amount not exceeding 5% of the total income computed before making any deduction under that particular clause and Chapter VIA. Proviso to section36(1)(vii) of the Act states that to the assessee to whom clause (viia) of the Act applies, the amount of bad debt or part thereof which is written off as irrecoverable in the account of the assessee for the previous year, the amount of the deduction relating to any such debt or part thereof shall be limited to the amounts by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause (viia) of section 36(1) of the Act.
In the instant case, we found that it is an admitted fact that the assessee made provision for Rs.126,67,12,600/- in his books and claimed as deduction in the AY 2003-04 u/s. 36(1)(viia)(c) of the Act. Out of said provision the assessee has periodically writing of various amounts as follow:
Bad debts written off disallowed: AY Amount 2003-04 70,15,873 2004-05 1,42,48,266 2005-06 8,20,27,924 2006-07 9,71,69,000 2007-08
Industrial Investment Bank of India Ltd., AY 2009-10 2008-09 19,59,35,000 2009-10 51,95,96,000 After writing off the aforesaid amounts till 2009-10 to a tune of Rs.91,59,92,063/- the unabsorbed portion still left with the assessee works to Rs.35,22,62,228/-. The Ld. AR submitted that a sum of Rs.12,95,83,000/- was also disallowed for AY 2007-08 and it should also be considered. Even in that event also there is a credit balance of more than Rs.21 cr.
Admittedly the amounts written off as stated above includes a sum of Rs. 51,95,96,000/- relating to the assessment year 2009-10 which the assessee claims as deduction under section 36(1)(vii) . We find that if this deduction is allowed, then it would amount to double deduction granted to the assessee, in view of the fact that the assessee has already granted deduction under section 36(1) (viia)(c) of the Act in view of making provision in the year 2003-04. Since the bad debts written off in the current assessment year do not exceed credit balance in the provision for bad and doubtful debts account, the authorities below have rightly disallowed the amount claimed as deduction by the assessee, inasmuch as the intention of the legislature was to see that deductions for bad debts in respect of the very same amount covered by clause (viia) of the Act is not again claimed under clause (vii) of the Act. With this view of the matter, we do not find any merits in the contention of the Ld. AR. Hence, we find that the orders of the authorities below do not warrant any interference and the same are hereby upheld. This ground of appeal of assessee is dismissed.
In the result, the appeal of assessee is dismissed.
Order is pronounced in the open court on 28.09.2016.