2020 (5) TMI 295

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....ative Bank engaged in the business of banking. The assessee electronically filed its return of income for A.Y. 2013-14 on 25.09.2013 declaring total income at Rs. 2,98,18,427/-. The case was taken up for scrutiny and thereafter, assessment was framed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') vide order dated 27.01.2016 and the total income was determined at Rs. 3,22,87,370/-. Aggrieved by the order of Assessing Officer, assessee carried the matter before Ld.CIT(A), who vide order dated 30.01.2017 (in appeal No.Nsk/CIT(A)-1/686/2015-16,) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : On facts and in ....

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....on for bad and doubtful debts for the purposes of allowing deduction u/s 36(1)(viia) of the Act. 5] The learned CIT(A) erred in not appreciating that in the banking business, every advance carries some amount of risk of non-recovery and this fact has been specifically acknowledged by the RBI and hence, considering the quantum of risk of non-recovery involved in each type of advance, the RBI has prescribed different rates at which provision has to be made against each type of advance and therefore, the provision for standard assets made @ 0.40% of the standard advances in accordance with the mandatory RBI Guidelines must have been considered as part and parcel of the provision for bad and doubtful debts for the purposes of section 3....

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....ion u/s 36(1)(viia) of the Act is not allowable with respect to the provision in respect of standard assets as according to him, it was good and recoverable and provision made on such assets cannot be considered to be a provision for bad and doubtful debts. He accordingly, allowed only the provision made with respect to the debts other than standard assets and accordingly made disallowance of Rs. 20,46,467/-. Aggrieved by the order of Assessing Officer, assessee carried the matter before the CIT(A), who upheld the order of Assessing Officer. 5. Aggrieved by the order of CIT(A), the assessee is now in appeal before us. Before us the ld. AR reiterated the submissions made before the CIT(A) and further submitted that the assessee is governe....

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.... debts. We find that an identical issue arose before the Hon'ble High Court of Karnataka in the case of Bellad Bagewadi Urban Souhard Sahakari Bank Niyamit Vs. CIT & Anr. (supra), wherein substantial question of law before the Hon'ble High Court was as under:- "Whether in the facts and circumstances of the case and in law, the authorities were justified in denying deduction for provision of bad debts made for standard assets of Rs. 15,00,000/- during the assessment year 2011-12 under Section 36(1)(viia) of the Income Tax Act, 1961 on the ground that the assessee has failed to furnish the details of deduction?" 8. Thereafter, the Hon'ble High Court held as under:- "5. We have heard the learned counsel appearing for the p....