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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 1, Nagpur [‘the CIT(A)’] dated 08.05.2017 for the assessment year 2013-14.
Briefly, the facts of the case are that the appellant is a Co- operative Society registered under the Maharashtra Co-operative Societies Act, 1960. It is formed for the purpose of banking business. The Return of Income for the assessment year 2013-14 was filed on 22.09.2013 declaring total income of Rs.8,00,56,920/-.
2 Against the said return of income, the assessment was completed by the Asstt. Commissioner of Income Tax, Akola Circle, Akola (‘the Assessing Officer’) vide order dated 18.02.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.8,66,38,046/-. While doing so, the Assessing Officer made a disallowance of Rs.64,91,102/- u/s 36(1)(viia) of the Act on the ground that the appellant had not created provisions for bad and doubtful debts. The Assessing Officer also disallowed the depreciation on software of Rs.90,024/-.
Being aggrieved by the above disallowances, an appeal was filed before the ld. CIT(A), who vide impugned order after calling for the remand report, confirmed the disallowance rejecting the contention of the appellant that the provisions of Rs.40,00,000/- made on the standard advance should be considered as provisions for bad and doubtful debts. The ld. CIT(A) also confirmed the disallowance of depreciation of Rs.90,024/- after calling for the remand report.
Being aggrieved, the appellant is in appeal before us in the present appeal.
When the appeal was called on, none appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceed to dispose of this matter after hearing the ld. CIT-DR.
The first issue in ground of appeal
relates to the disallowance of provisions for bad and doubtful debts. The Assessing Officer had made the disallowance of provisions for bad and doubtful debts of Rs.64,91,102/- primarily on the ground that no provisions for bad and doubtful debts was created by the assessee. It is the contention of the assessee that provisions created on standard advance should be considered as provisions for bad and doubtful debts. It is settled position of law that debiting the Profits & Loss Account by provisions for bad and doubtful debts and reducing the same from the sundry debtors in the Balance Sheet constitutes write off in terms of the law laid down by the Hon’ble Apex Court in the case of Vijaya Bank (SC).
7. On mere reading of the orders of the lower authorities, it would reveal that addition was made on the ground that no provisions was created, which is contrary to the material on record. Therefore, we remit the matter back to the file of the Assessing Officer to decide the issue of allowability of bad and doubtful debts after due verification of the entries in the books of accounts keeping in view the law laid down by the Hon’ble Apex Court in the case of Vijaya Bank (SC). Thus, the first issue in ground of appeal stands partly allowed for statistical purposes.