AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 31
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....sued to the assessee on 30-09-2009. During the impugned assessment year the assessee claimed depreciation of Rs. 2,90,38,695/- on investment made in Govt. Securities held under HTM category. The assessee claimed expenditure to the tune of Rs. 77,75,96,444/- on account of bad and doubtful advance reserve written back. The Assessing Officer disallowed both the above claims of the assessee. Aggrieved by the assessment order dated 27-12-2010, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) accepted the contentions of the assessee with respect to bad and doubtful advance reserve written back and rejected the contentions of the assessee in respect of amortization of premium on investment made in Govt. Securities held to maturity. Against the findings of Commissioner of Income Tax (Appeals), both, the assessee and the Revenue are in appeal before the Tribunal. ITA No. 831/PUN/2013 3. Shri Nikhil Pathak appearing on behalf of the assessee submitted that the Commissioner of Income Tax (Appeals) has erred in upholding disallowance in respect of investment in Govt. Securities held under HTM category. ....
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....ee for valuing its HTM securities at lower of cost or market price is a bonafide change and the assessee is entitled to the claim of depreciation on value of HTM securities. The loss arising on account of AFS and HFT securities have already been accepted by the Assessing Officer. Consequently, we direct the Assessing Officer to allow the claim arising on account of depreciation on value of HTM securities. However, the change in method of valuation in HTM securities and its effect on the computation of income would be verified by the Assessing Officer. Accordingly, we direct the Assessing Officer to consider the plea of the assessee and re-work the income in line with the observations of Tribunal in the case of ACIT Vs. Bank of Maharashtra (supra) vide para 24, which reads as under:- "24. In-principle, we have already upheld the stand of the assessee to value the stock of its investments / securities at lower of cost or market value. By application of such method of valuation of its stock of securities / investments in assessment year 2005-06 assessee claimed deduction for a loss of Rs. 359,24,58,508/-. The effect of the change in method of valuation on the computation of i....
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....me Tax (Appeals) by raising following grounds in appeal : 1. "The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in holding that the bad debts of Rs. 76,76,97,831/- (forming part of the disallowance of Rs. 77,75,96,444/- made in the assessment) claimed by the assessee is to be allowed as deduction u/s. 36(1)(vii) of the Incometax Act, 1961. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that the assessee had not proved on the basis of any evidence that the impugned debts or part thereof had been taken into account in computing the income of any previous year(s), which is a condition preceded as per the provisions of section 36(2)(i) for allowing deduction u/s.36(1)(vii). 4. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that the mere creation of a provision for bad debts does not by itself amount to fulfilment of the condition prescribed in section 36(2)(i). 5. The learned Commissioner of Income-tax (Appeals) oug....
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....e tune of Rs. 77.75 crores on account of bad debts in assessment year 2008-09. From assessment years 1985-86 to 2007-08 the assessee suo-moto made provision for bad and doubtful debts in respect of amounts not recovered. The opening balance of provisions for bad and doubtful debts as on 31-03-2007 is Rs. 1,86,76,16,006/-. The assessee did not claim any provisions for doubtful debts in the earlier assessment years. The assessee has complied with all the conditions laid down u/s. 36(1)(vii) r.w.s. 36(2) of the Act. The Assessing Officer has not allowed deduction u/s. 36(1)(vii a) to the assessee in any of the earlier assessment years. The ld. AR in support of his submissions placed reliance on the decision of Pune Bench of the Tribunal in the case of M/s. Bora Agro Foods Vs. Addl. Commissioner of Income Tax in ITA No. 1882/PN/2013 for the assessment year 2010-11 decided on 10-04-2015 and the decision of Hon'ble Supreme Court of India in the case of TRF Ltd. Vs. Commissioner of Income Tax reported as 323 ITR 397 (SC). 9. Controverting the submissions made by ld. AR, the ld. DR submitted that the assessee has never claimed deduction u/s. 36(1)(vii)(a) of the Act in the earlier asses....
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....sion for bad and doubtful debts in the past more than 20 years. The assessee had furnished a chart giving the details of the amount credited to the provision for bad and doubtful debts, write back of excess provision for bad and doubtful debts, amounts created to the provision for bad and doubtful debts by way of recovery of bad debts and actual bad debts written off by the assessee during the period relevant to the assessment years 1985-86 to 2008- 09. The Commissioner of Income Tax (Appeals) has further observed that the opening balance in the provision for bad and doubtful debts as on 31-03-2007 stood at Rs. 1,86,76,16,006/-. An amount of Rs. 95,22,106/- was added to the provision during the year and the amount written back from the provision and credited to the profit and loss accounts is Rs. 76,76,97,831/-, which is the amount under dispute. Thus, the closing balance in the provision for bad and doubtful debts as on 31-03-2008 was Rs. 1,10,94,40,281/-. Thus, the contention of the revenue that no specific provision was created by the assessee is against the documents on record. The Commissioner of Income Tax (Appeals) has made reference to Annexure 4 attached with statement of ....