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2021 (6) TMI 288 - AT - Income TaxExemption u/s 80P - Addition made being excess of Bad and Doubtful Debts Recoverable (BDDR) - HELD THAT:- Assessee claimed to have its income exempt u/s 80P(2)(a)(i) upto the assessment year 2006-07 and also creating a provision for bad debts in its accounts. We note that during the year under consideration, the assessee passed on journal entry debiting BDDR balance of ₹ 3,03,50,000/- and reversed the excess provision of ₹ 5,00,000/-. According to assessee, it was not a taxable income as it was made out of earlier years income which was already offered to taxation. However, the CIT (A) was of the opinion that the assessee is also claiming its income as exempt income u/s 80P(2)(a)(i) of the Act upto 20.06.2007, therefore, the provision made as per RBI guidelines for BDDR attains no significance and it has to be treated as income being an excess provision in the year under consideration. As rightly pointed out by AR, the provision made under BDDR made out of earlier year’s income which was offered to tax in the earlier year. Therefore, we find force in the arguments of the Ld.A.R. when it was taxed in the earlier years, if the same is taxed in the current year it becomes double taxation. When it was taxed in the earlier year, the addition made by the Assessing Officer as confirmed by the ld.CIT(A) is not justified and it is liable to be dismissed.The order of ld.CIT(A) is not justified and is set aside. Thus, the sole ground raised by the assessee is allowed.
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