TaxTMI 
TaxTMI 
2016 (2) TMI 158
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....s appeal as follows:- 1. The order of Commissioner of Income Tax is contrary to law, facts and circumstances of the case. 2. The Commissioner of Income Tax erred in assuming jurisdiction u/s.263 of the Act for the reason that assessing officer has allowed deduction u/s.36(1)(viia) to the extent of Rs. 14,47,40,656/- as against restricting it to the extent of eligible amount of reserve for NPA or provision for bad a doubtful debts shown in the balance sheet as on 31.03.2007 at Rs. 68,20,002/-. 3. The Commissioner of Income Tax erred in holding that assessee had not created the necessary reserve/provision towards bad and doubtful debts before making any deduction u/s.36(1)(viia) of the Act. 4. The Commissio....
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....imbalances represents provision for bad and doubtful advances in respect of Loan made to Primary Agricultural Coop Banks which remained irrecoverable. 9. The Commissioner of Income Tax erred in setting aside the assessment order for fresh consideration by following the 263 order dt 1103.2013 for the earlier ÀY 2008-09 in spite of the same being quashed by the Hon'ble Tribunal vide order in ITA No.914/Mds/2013 dt 17.07.2013. 10. The Commissioner of Income Tax erred in not following the order of the Tribunal for A Y 2008-09 in ITA No.914/Mds/2013 dt 17.07.2013 wherein it has been held that creation of reserve for NPA is same as creating provision towards bad and doubtful debts and assessee being a Non-Scheduled Ba....
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....taken up for scrutiny and the assessment u/s.143(3) r.w.s. 147 of the Act was completed on 22.06.2012 wherein the ld. Assessing Officer allowed the deduction u/s.36(1)(viia) of the Act to the extent of Rs. 14,47,40,656/-. Subsequently, the Ld.CIT had issued show-cause notice U/s.263 of the Act on 13.01.2015, the relevant portion of the same is extracted herein below for reference:- For the assessment year 2007-08, you have filed your return of income on 28/10/2007 admitting total loss of Rs. 17,81,64,980/-.and subsequently filed revised return of loss on 24/08/2011 of Rs. 3,26,40,337/- This case was taken up for scrutiny and an order us! 143(3) r.w.s.147 of the Income-tax Act 1961 dated.22/0612012 was passed reducing the loss to Rs....
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.... was allowed to the extent of Rs. 14,47,40,656/- as against restricting it to the extent of eligible amount of reserve for Non-performing assets or provisions for bad & doubtful debts shown in the Balance Sheet as on 31.03.2007 at Rs. 68,20,002." 4. At the outset, the Ld. AR submitted before us that the Tribunal has decided the issue in the case of the assessee's own case for the assessment year 2008-09 reported in (2013) 145 ITD 0129(Chennai) in their favour wherein it has been held that the creation of reserve for NPA is same as creating provision towards bad and doubtful debts and assessee being a Non-Scheduled Bank is entitled to claim benefit of provisions of the section 36(1)(viia) of the Act and accordingly relief may be grant....
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....and doubtful debts? The AR has contended that the assessee has created provisions for bad and doubtful debts under the nomenclature 'Reserve for NPA'. The terminology 'Reserve for NPA' has been used by the assessee in accordance with the RBI directions. As is evident from the assessment order, the assessee has indeed created 'Reserve for NPA'. For claiming benefit under the provisions of Section 36(1)(viia)(a) the conditions to be satisfied is: that provision for bad and doubtful debts should have been made by the bank eligible to claim such deduction. Cooperative Banks do not strictly follow the provisions of Banking Regulation Act for the purpose of maintaining their Books of Account. In our considered opi....