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TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 1721
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....ssee is engaged in banking business. While making the assessment for the AY 2013-14, the AO found that the assessee has not made any provision for bad and doubtful debts in its original return of income filed on 16.10.2014. However, in its revised return filed on 14.03.2016, the provision for bad and doubtful debts of Rs. 70.00 lakhs was made. During the course of assessment proceedings, the representative confirmed vide a letter dated 21.12.2016 that the assessee filed original return of income without making provision for Non-Performing Asset (in short "NPA") since the provision already made in the earlier year is adequate. Then by the advice of the auditor, the assessee filed the revised return by making a provision for NPA of Rs. 70.00 ....
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....created any reserve for bad and doubtful debts during the year. The fact is also evident from the statement of Break-up of the Details of income furnished in support of the original return of income which was signed by the Managing director and General Manager of the bank, wherein no such reserve (Rs.70,00,000/-) was created. These accounts of the bank were also audited by the charted accountant as required u/s. 44AB of the IT Act 1961 and copy of form No. 3GA & 3CD dated 24-09-2014 certified by the chartered accountant was also furnished. There is no omission or wrong statement in the original return of the income and as such the bank's claim of Rs. 1,87,21,431/- (restricted to Rs. 67,42,872/-) as deduction u/s. 36(l)(viia) made in the....
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....It is an admitted fact that the assessee has not created any provision for Bad and doubtful debt during the FY relevant for the assessment year 2014-15. The claim of the assessee that the deduction should be allowed u/s. 36(l)(viia) even though no provision for bad and doubtful debt is created in the books of account is not in accordance with law. The claim of the assessee should be considered in the light of the provision of section 36(l)(viia) of the IT Act read with the CBDT instruction No,17/2008 dated 26.11.2008 in which it is clearly stated as follows: Quote: 'b) the deduction for provision for bad and doubtful debts should be restricted to the amount of such provision actually created in the books of the assessee in the relev....
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....jab & Haryana, referred to supra, and also the decision of the co-ordinate Bench of this Tribunal, referred to supra, the assessee's appeals may be dismissed. 6. We heard the rival submissions and gone through relevant material. It s clear from the decision of the Hon'ble High Court of Punjab & Haryana, supra, that making of provision equal to the amount claimed as deduction, in the account books is necessary for claiming deduction u/s. 36(1)(viia). Since the assessee has not made any provision in the books of accounts, as admitted by the assessee before the AO by its letters dated 21.12.2016, in the respective assessment years, the assessee is not entitled for the impugned deductions for the respective assessment years. Further, the relev....
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....pecified u/s. 36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act. This view is clarified by the CBDT in Circular No. 17/2008 which was relied upon by the Ld.CIT(A) in Para No. 4.2 which is re-produced hereunder: 4.2. The Assessing Officer has restricted the claim of the assessee Bank to the amount of provision made for the relevant assessment year. This restriction should be considered in light of the provisions of Section 36(1)(viia) of the IT Act read with the CBDT instruction No. 17/2008 dated 26.11.2006. In this Instruction it is clearly sta....