DEPUTY COMMISSIONER OF INCOME TAX, CIR-2(1)(1), BARODA vs. THE BHARUCH DIS CENT CO-OP BANK LTD., BHARUCH

ITA 296/SRT/2022Status: DisposedITAT Surat09 January 2023AY 2013-14Bench: SHRI PAWAN SINGH (Judicial Member), DR. ARJUN LAL SAINI (Accountant Member)20 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the creation of a statutory bad debts reserve by a cooperative bank, as mandated by the Gujarat State Cooperative Act, constitutes an appropriation of profit and is eligible for deduction under Section 36(1)(viia). The Tribunal also found that the CIT(A)'s previous decision against the assessee for AY 2008-09 was factually incorrect regarding the specific issue of the 15% statutory debt reserve.

What were the facts?

The Revenue appealed against the CIT(A)'s decision to allow deduction under Section 36(1)(viia) for bad debt reserves for a cooperative bank. The Assessing Officer had disallowed the deduction, arguing that the bank did not qualify for the higher deduction rates applicable to rural branches of scheduled and non-scheduled banks and had not made adequate provisions in its books.

What were the issues?

Whether a cooperative bank is eligible for a higher deduction under Section 36(1)(viia) for provisions made towards statutory bad debts reserve, and whether the treatment in the books of account is decisive for such deductions.

Which sections of the Income-tax Act were involved?

Section 36(1)(viia),Section 67A

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IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 296 to 298/Srt/2022 (Assessment Years: 2013-14, 2016-17 & 2017-18) (Physical hearing) D.C.I.T.,Circle- (1)(1), The Bharuch Dis Cent Co-op Bank Ltd., Baroda. Jawahar Bhavan, Station Road, Vs. Bharuch-392001. PAN No. AAABT 0073 E Appellant/ assessee Respondent/ revenue

Department represented by Shri Ashok B Koli, CIT-DR with Shri Vinod Kumar, Sr.DR Assessee represented by Shri Manish J Shah, AR Date of hearing 05/01/2023 Date of pronouncement 09/01/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER:

1.

These three appeals by the Revenue are directed against the separate orders of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A) all dated 16/08/2022 for the Assessment years (AY) 2013-14, 2016-17 and 2017- 18 respectively. In all these appeals, the revenue has raised certain common grounds of appeal. Facts in all these years are almost similar, except various of disallowance under Section 36(1)(viia) of the Income Tax Act, 1961 (in short

The order continues below.

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