TaxTMI 
TaxTMI 
2023 (8) TMI 630
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....f provision for bad and doubtful debts made during the year overlooking the specific directions of Hon'ble IT to follow the decision of Hon'ble ITAT Ahmedabad in the case of Sarvodaya Sahakari Bank where it was held that deduction should be allowed to the extent of provision made a available in the books of account, whether made in the current previous year or in 1 preceding previous years 2.1 Without prejudice to above, the Id. CIT(A) erred in not confirming the action of AO in considering the provision made for standard assets and restructured assets as provision bad and doubtful debts. 2. The assessee bank, in the return of income had claimed deduction under section 36(1)(viia) which was restricted by the Assessing Officer to the extent of the provisions made by the assessee for the year under consideration. The assessee filed appeal before the CIT(A), who upheld the order of the Assessing Officer. The assessee preferred further appeal before the Tribunal and the Tribunal vide order dated 17/12/2015 had held that - "15. Grievance raised vide ground No. 5 have been decided against the assessee and in favour of the Revenue by the Tribunal in assessee's own case in I....
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.... to provision of Rs. 555,29,90,156/- (excluding provision made for standard assets as per order dated 18.03.2015) 555,29,90,156/- Gross Income 1308,20,42,205/- Less : Deduction under Chapter VIA u/s 80G 3,38,81,500/- u/s 80LA 10,19,67,746/- 13,58,49,246/- Total Income 1294,61,92,959/- Total Income (rounded off) 1294,61,92,960/- 4. In the order giving effect the Assessing Officer has excluded the provision made for standard assets and accordingly restricted the amount allowable to Rs. 555,29,90,156/-. The CIT(A), on further appeal relied on the decision of Visakhapatnam Bench of the Tribunal in the case of ACIT vs Chaitainya Godavari Grameena Bank reported in (2018) 94 taxman.com 400 (Visakhapatnam - Trib) and upheld the amount disallowed by the Assessing Officer for the same reason that the provision made towards standard assets cannot be considered for deduction under section 36(1)(viia). Aggrieved, the assessee is in appeal before the Tribunal. 5. The Ld.AR submitted that in the order giving effect, the Assessing Officer has not complied with the directions of the Tribunal since the iss....
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....; Provision of section 36(1)(viia) 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 one-half per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) 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; 13. Thus, a reading of the above provisions will show that the distinction is very clear that the provision is required to be made but need not be in the same previous year for which the deduction u/s. 36(1)(viia) is claimed, since the words 'in the accounts for the previous year' does not appear in the said section, whereas, it specifically appears in relation to the deduction u/s. 36(1)(vii). Thus, it is clear that it is the intention of the legislature that the provision should be made speci....
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....laimed in respect of provisions made in any preceding previous year, the reserve created u/s. 33AC is allowable in the previous year in which the reserve was actually created in the books of account. Hence, in our considered view, the legislature, whenever it intended that there should be debit in the profit and loss account or an entry in the books of account in the relevant previous year, it specifically mentioned its intention in the section itself with specific words. 15. In the case of State Bank of Patiala (supra) the Hon'ble Punjab & Haryana High Court observed that as the bank was creating exact amount of provision as per section 36(1)(viia) of the Income Tax Act, 1961, in the particular year under appeal, there was no sufficient provision. The Hon'ble High Court held as under: "In the present case, the assessee has not made any provision in the books of account for the assessment year under consideration, i.e., 1985-86, by making supplementary entries and by revising its balance-sheet. The provision has been made in the books of account of the subsequent year." Further, it was observed by the Hon'ble Punjab & Haryana High Court that additional provisio....
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....iiia) merely for the reason that the provision made during the year under consideration only should be considered for the purpose of allowability of the deduction. It is therefore the argument of the ld AR that the Assessing Officer did not follow the directions of the Hon'ble Tribunal and the order thus passed should be quashed. 7. The Ld. DR, on the other hand, supported the order of the lower authority. 8. We heard the parties and perused the material on record. The assessee has in the first round of appeal contended the issue of restricting the deduction allowable under section 36(1)(viia) to the provision made during the previous year on the ground that the earlier year decision in assessee's own case (AY 2005-06) in which the decision of the Punjab and Haryana High Court in the case of State Bank of Patiala v. CIT [2005] 272 ITR 54/143 Taxman 196 has been followed cannot be applied since the said decision has been distinguished by the Ahmadabad Bench of the Tribunal in the case of Sarvodaya Sahakari Bank Ltd (supra) where the Hon'ble Tribunal has held that the deduction under section 36(1)(viia) should be allowed to the extent the provision for bad and doubtful ....