TaxTMI 
TaxTMI 
2014 (3) TMI 396
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....orrectness of the view expressed by the Tribunal with regard to the deletion of the sum of Rs. 28,75,204/- made by the Assessing Officer who had disallowed the claim for bad debts. 2. The facts in brief are that the assessee, a Co-operative Bank in its return for AY 2007-08 claimed deduction to the tune of Rs. 77,73,715/- on account of deduction of reversal of NPA provision credited to the profit and loss account. The assessee is engaged in banking activities and had reversed NPA provisions. The assessee in the proceedings before the AO argued that the provision (for bad debts) was made due to its reflecting the NPA in terms of the Reserve Bank of India guidelines on bad debts and though such provision was made, there was no claim for dedu....
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....g access provision for NPA. 4. The relevant findings of the ITAT in the impugned order are as follows: - "5. Now, coming to the appeal filed by the Revenue, the only issue for consideration relates to deleting the disallowance of Rs.28,75,204/- on account of bad debts. The facts relating to this ground of appeal are that the Assessing Officer during the course of assessment proceedings noted that the assessee had claimed deduction u/s 36 (1) (vii) of the Act in respect of bad debts of Rs.28,75,204/-. On a query raised by the Assessing Officer, it was submitted that the amount of Rs.28,75,204/- was written off under one time settlement scheme of RBI. This amount was not debited to the P&L A/c, but was debited to unrealized interest provisi....
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....bt unless as debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year or represents money lent in the manner the course of business of banking for money lending which is carried on by the assessee. The assessee is engaged in the business of banking or money lending. This fact is not in dispute. The assessee has written off of the account of the parties on account of one time settlement. The interest income earned has been included in the income of the earlier years which got exempt by virtue of deduction u/s 80P of the Act to which the assessee was eligible. Therefore, the interest income has be....
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....excess provision for doubtful debts amounting to Rs.17,133/- which has been written back, the finding of the CIT (A) that the provision was never allowed as a deduction in the earlier years. Since the finding that the provision was not allowed in the earlier year as a deduction is not under challenge, the amount cannot be added under Section 41 (1) when it is written back in the accounts. The decision of the Tribunal is upheld." Likewise in Lal Textile Finishing Mills' matter (supra), the Punjab and Haryana High Court observed as follows: - "The answer to the question posed is provided by the judgment of this court in Commissioner of Income-tax vs Haryana Co-operative Sugar Mills Ltd. (1985) 154 ITR 751, where it was held that an amount c....
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.... on the one hand are applicable and the Section 41 (4) would not apply in the circumstances of the case. 8. With regard to the contention of the Revenue with respect to Section 80P, this Court is of the opinion that the said provision gives general relief to a class of assessees by way of mandatory deduction of certain categories of income. The circumstance that the provision for bad debts was either added back or not added back would be irrelevant, since the deduction is with reference to the income from the activities listed in Section 80P (2) which is part of the gross total income. In this view, this Court is fortified by the judgment of the Bombay High Court in Commissioner of Income Tax vs. Nagpur Zilla Krishi Audyogik Sahakari Sangh....
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....d category. The Tribunal was thus in error in holding that the original intention at the time of purchase of items was the deciding factor and not their ultimate disposal. The correct approach would be to grant exemption to the whole amount of profits and gains attributable only to actual sales of specified commodities to members, irrespective of the original intention at the time of purchase. 6. XXX XXX XXX Section 80A which is the first section in that Chapter mentions that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U. section 80B(5) gives the definition of the term "gross....