THE MALKAPUR URBAN CO-OPT .BANK LTD,AKOLA vs. ASSISTANT COMMISSIONER OF INCOME TAX ALOLA CIRCLE,AKOLA, AKOLA

ORDER

PER INTURI RAMA RAO, AM:

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/-.

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.