TaxTMI 
TaxTMI 
2021 (8) TMI 1043
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....he Income Tax Act, 1961. During the assessment proceedings, it was noticed by the AO that in the computation of income for the year under consideration, the assessee bank has deducted Rs. 2,69,68,337/- on account of transfer from MMC Bank Investment Fund. According to the AO, since the deduction is not allowable under section 36(1)(vii) of the Act, the assessee was show caused as to why this transfer from MMC Bank Investment Fund should not be disallowed and added to the total income of the assessee. It was explained by the assessee that the assessee-bank had parked surplus money with Madhupura Merc.Co-op. Bank, which was gone into liquidation, the amount of Rs. 2,69,68,337/- deposited with that bank could not be recovered by the assessee-bank. The assessee has written off Rs. 2,69,68,337/- as irrecoverable in the accounts by debiting P&L account as the same represented the amount lent in the ordinary course of business. Both the conditions of section 36(1)(vii) of the Act are satisfied, viz. the amount requires to be written off as irrecoverable in the accounts of the assessee, and the outstanding amount represented money lent in the ordinary course of business. The assessee has a....
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....Thereafter, "MMC Bank FD Deprecation Fund" has been created from the "Investment Depreciation Fund". This was only adjustment and did not affect profit of the assessee-bank in a particular year. To further support his case, the ld.counsel for the assessee also relied upon two decisions of Tribunal in the cases of The Kalupur Commercial Co-op. Bank Ltd. Vs. DCIT in ITA No.770/Ahd/2017 and others order dated 14.10.2019 of ITAT, Ahmedabad Benches and the decision of Mumbai Benches in the case of DCIT Vs. The Kapol Co-op. Bank Ltd., in ITA No.487/Mum/2015 order dated 10.7.2019. He placed on record copies both the decisions on record. He accordingly prayed for upholding of order of the ld.CIT(A) and dismissal of appeal of the Revenue. 6. We have considered rival submissions and gone through the orders of the Revenue authorities. We have also perused the orders of the ITAT, Ahmedabad Benches and Mumbai Benches passed on similar issue. The issue before us is that whether the loss on account of FDR's maintained with MMCBL, which was under liquidation, and written off of the same is eligible for deduction under the head business and profession. It is pertinent to observe that the MMC....
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....nnot be exceeded too. Since, the assessee has not filed any corroborative evidence or justification regarding such write off amounting to Rs. 23,88,83,704/-, the same has been added on account of fixed deposit write off debited in the Profit and Loss account and added to the total income of the assessee, which was, in turn, confirmed by the Learned CIT(A). Hence, the instant appeal before us. 7. Heard the respective parties, perused the relevant materials available on record. It appears that on 13.01.2016 the assessee submitted as follows: With reference to assessment proceeding for A.Y.20J3-14, and in compliance to your above referred notices we are submitting the details as under (I) Kindly refer to Para two of your show cause notice wherein your good self have conveyed that ^ Assessee has not filed any corroboratory evidence regarding the claim. ^ RBI is in favor of revival of said bank. ^ RBI has not stated for writing off. It is respectfully clarified that content are not correct and out of context. Towards the corroboratory evidence regarding the claim of write off, in addition to earlier submission enclo....
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....hus as per the resolution of Board of Directors passed in the meeting dated 29!/' march.2013 same has been written off. Copy of RBI letter, circular of the Department and copy of resolution was appended in our previous submission therefore the same has not been repeated. Moreover Reserve Bank of India has cancelled the license of The Madhavpura Mercantile Cooperative bank Ltd. by giving a press release on 07TH June,2012. In its press release it observed that: * The MMCB itself has admitted about its precocious financial position * The MMCB accepted that the Reconstruction scheme failed due to nonfulfillment of commitment ofUCB * The MMCB accepted all its irregularities/ deficiency observed in the SCN issued for cancellation of licence * The deposits of bank has been eroded fully. The RBI then concluded that, From the facts and circumstances mentioned above it is observed that: i) The co-operative bank is not complying with the provision of Sections 11(1) and 22(3) (a) & (b) of the Act. There is no revival plan or merger proposal pending with RBI. ii) There is no likelihood of the co-operat....
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....ssee is a letter to all Urban Cooperative banks to make full provision against their exposure to Madhupura Mercantile Bank as on 31/03/2010.However the assessee has not produced any other evidence or justification regarding write off or any other directions issued by the Reserve Bank of India. ii) It is also noticed on verification of the Return of income filed by the Madhupura Mercantile Co-operative Bank for the Assessment Year 2013-14 that the bank is having Cash and Bank Balances amounting to Rs. 654.89Cr. The assessee has not produced any evidence regarding any correspondence made with the Madhupura Mercantile Co-operative Bank or any legal action taken against the bank before the write off. 8. In view of the above discussion the reply given by the assessee is not acceptable and additions on account of fixed deposit write of amounting to Rs. 238883704/- debited in the profit and loss account is disallowed and added back to the total income of the assessee. The penalty proceedings under section 271 (l)(c) of the I. T. Act are being initiated for furnishing inaccurate particulars of income and concealment of particulars of income." 8. The Learned CIT(A....