TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 787
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....ction 36(1)(vii)(a) of the Income Tax Act, 1961 (in short 'the Act') for the impugned Assessment Years, whereas assessee in its cross objections is aggrieved that CIT(A) did not consider its claim regarding provision for investment depreciation reserve. 2. Facts apropos are that assessee, a Co-operative Bank, had filed its return for the impugned Assessment Years on 28.12.07 and 29.09.09 declaring total income of ₹ 33,22,860/- and ₹ 46,17,960/- respectively. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had claimed deduction towards certain provisions. Such claims appearing in its profit and loss account were as under: For the A.Y.2007-08 1 Provisions for NSR (Non St....
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....5.% of Total Income 445682 10% aggregate average advances 2470154 Total Provision allowable 2915836 For A.Y.2007-08: 7.5.% of Total Income 950493 10% aggregate average advances 5708134 Total Provision allowable 6658627 Argument of the assessee was that Ayyempettai branch was classified as a 'rural branch'. Reliance was placed on the CBDT Circular No.17/2008 dated 26.11.08. Ld. CIT(A) accepted the contentions and directed the Assessing Officer to allow further reduction of 24,70,154/- for A.Y.2007-08 and of 57,08,134 for A.Y.2009-10 in addition to what was already allowed under section 36(1)(vii)(a) of the Act by the Assessing Officer. 4. Now before us, D.R. strongly assailing the order of CIT(A) submitted that provisio....
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....ction relied on by Ld. D.R, clearly mentioned at sub-clause(b) of clause(iii) that deduction had to be allowed to the assessee at the amount calculated as per section 36(1)(viia) or the amount of provision actually debited in the books. Further, according to him, just because a different nomenclature in the accounts was given to the provisions in the accounts would not by itself mean that such provisions were not for bad and doubtful debts. Provision for NPA & standard assets, was nothing but provisions for bad and doubtful debts. The terminology used in the accounts did not affect the substance of the claim. Further, according to Ld. A.R, the CIT(A) failed to adjudicate on the claim of assessee that provision for investment depreciation an....
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....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 one-half 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 : [Provided that a scheduled bank or a non-scheduled bank referred to in this sub-clause shall, at its option, be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of....
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....btful debts. In the case of assessee, provision which can be termed as provision for bad and doubtful debts are provision for standard assets and provision for non-performing assets. Such provision for A.Y. 2007-08, came to ₹ 5,74,000/- and for A.Y. 2009-10, came to ₹ 87,232/-. Therefore, assessee cannot say that it had to be given anything more than these amounts under Sec. 36(1)(viia) of the Act, whatever be the mode of computation provided under that Section. A look at sub clause(b) of clause(c) and CBDT Instruction No.17/08 dated 26.11.08 will clarify the issue further. These are reproduced hereunder:- "(b) The deduction for provision for bad and doubtful debts should be restricted to the amount of such provision actu....
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....noticed that Assessing Officer had never verified the claim of the various provisions made by the assessee in the proper perspective. A global view was taken by the Assessing Officer that no provision provided in the P&L a/c was eligible for deduction. Assessing Officer never verified whether such provisions could be allowed considering the nature of each provision vis-à-vis the law in relation to such provisions. When a provision represented actual diminution in value of assets, it had to be considered in the proper perspective. Legitimate allowance due to an assessee cannot be denied just for a reason that assessee's representative had agreed, otherwise. 9. Taking the entire gamut of facts and circumstances, we are of the opin....