TaxTMI 
TaxTMI 
2018 (3) TMI 1100
X X X X Extracts X X X X
X X X X Extracts X X X X
....,904/- because the same has been reversed for the reason that Government of India and Government of Maharashtra has not given the amount to the assessee. But according to the AO, the reversal of this income has been subsequently made in FY 2010-11 and in view of this, there is no need to claim this deduction in the relevant FY 2009-10 relevant to this A.Y. 2010-11. According to AO, this will lead to double deduction. Accordingly, he disallowed the claim of deduction. 3. Aggrieved the assessee preferred the appeal before Ld.CIT(A). Ld.CIT(A) rejected the claim of deduction in the computation of income in respect of reversal of NPA interest credited to the P&L A/c. Aggrieved, now the assessee is in second appeal before the Tribunal. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that reversal of doubtful claim made with the Government for subvention of interests, the assessee has credited a sum of Rs. 17,16,80,205/- in the P&L A/c on estimate basis. The assessee enclosed the details of the same in its Paper Book at page 26, which are extracted hereunder for ready reference:- Sr. Particulars Amount Rs. 1. Kharif Season 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....credit was made on the basis that the assessee may receive the same from State Government and Central Government as per the Scheme of 2008 but actually as against demand of Rs. 9,80,70,904/-, the assessee received only a sum of Rs. 2,05,10,000/- from the Central Government and balance demand of Rs. 7,75,60,904/- was rejected. Similarly, a demand of 4% in respect of Punjabrao Deshmukh Interest Waiver Subvention Scheme was also rejected for an amount of Rs. 2.40 Crores. Therefore, the total comes to Rs. 10,15,60,904/- and this amount was reversed and debited to the P&L A/c for the relevant A.Y. 2011-12 and in the computation of income, same has been added because the claim has already been made in the return of income for A.Y. 2010-11. It was explained that this claim was made in A.Y. 2010-11 because it was subsequently pointed out by the Statutory Auditor in his Audit Report. It was explained that there is no claim of double deduction for this, he submitted the following details as under:- 1. Kharif Season 2009-10-4% Punjabrao Deshmukh Scheme & Interest Subvention up to 31.03.2010 on Rs. 60.00 Crores This amount is receivable by the Taluka Societies & therefore reversed. 24000000....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the returned loss was accepted u/s. 143(1) the I.T. Act, 1961. Therefore, the appellant bank is eligible for carry forward of assessed loss Rs. 5,01,70,770/- as per the return of income filed. In the subsequent assessment year A. Y. 2009-10 under appeal also the appellant has included its claim of loss of Rs. 5,01,70,770/- pertaining to A.Y. 2008-09 in its return of income filed In time. Therefore, apparently the claim of the appellant bank as regards to the brought forward loss of Rs. 5,01,70,770/- is found to be genuine. The AO is directed to give effect accordingly. This ground is allowed." 10. Further Ld. Counsel for the assessee drew our attention to the order given effect Ld.CIT(A) u/s 250 of the Act by AO vide order dated 04.05.2016 whereby the business loss and unabsorbed depreciation for A.Y. 2008-09 has been determined at Rs. 5,01,70,770/-. The relevant reads as under:- "As per CIT(A)'s decision on addition ground raised by assessee bank, the bank is eligible for carry forward of loss for A.Y. 2008-09 of Rs. 5,01,70,770/-. Therefore, Business loss and unabsorbed depreciation allowed to be carried forward in this case is as under:- A.Y. Business Loss Unabsorbed Dep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Rs. 14,40,90,700/- @ 10% of average advance made by the Rural Branch of the bank. According to the AO, the assessee is a Non-Scheduled Bank and hence deduction u/s 36(1)(viia) of the Act is to be allowed in terms of Rule 6ABA of the Income Tax Rules. According to the AO, the loss claimed by the assessee has been converted into income and he allowed deduction u/s 36(1)(viia) of the Act @ 7.5% of the total income and accordingly allowed only Rs. 41,42,952/- as against the claim made by the assessee at Rs. 14,40,90,700/-. Aggrieved, the assessee preferred appeal before Ld.CIT(A) who allowed the claim of the assessee @ 10% instead of 7.5% by observing in para 13 and 13.1 as under:- 13.0. "Considering the facts of the present case, it would be necessary to compute the income that is to be brought to tax being subvention of interest receivable from the Govt. Departments. The AR of the appellant was asked to explain and give justification for the claim made by the appellant for bad debts of Rs.l,44,90,700/-. The AO has elaborately discussed this issue in Para 4 of his assessment order and stated that on verification, the assessee's claim is not found to be In order in as much as t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... going through the material available on record. We find from the facts of the case that the claim for deduction was made under section 36(1)(viia) of the Act, which reads as under: "(viia) in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank [not being [* * *] a bank incorporated by or under the laws of a country outside India) or a non-scheduled bank [or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount [not exceeding seven and onehalf per cent} of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding [ten] per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner: Further Explanation for the purposes of this clause : (i) "non scheduled bank:" means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) which is not scheduled bank. (ii) "rural branch" means a branch of a scheduled bank [or a non scheduled bank} situated in a place which has a population of not more than ten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aimed Rs. 144090700/- which is much lesser than actual provision made. Therefore as per CBDT circular instructions and judicial pronouncements there should not be any reason to disallow the claim of the assessee. Assessee also drew our attention to one more item No. 17.3 of the CBDT Circular No. 421, dt. 12th June, 1985, which reads as under: "Having regard to the increasing social commitments of banks, section 36(1)(viia) has been amended to provide that in respect of any provision, for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of section 36(1)(viia) or a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such banks, whichever is higher, shall be allowed as a deduction in computing the taxable profits". 17. This further clarify the intention of Government that due to hardships in granting rural advances by banks, Government as an incentive wants to allow the ded....