TMI Blog2012 (11) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm but this can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law - against assessee. As here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue as confirmed by CIT. - IT APPEAL NO. 1191 (MDS.) OF 2012 - - - Dated:- 28-8-2012 - ABRAHAM P. GEORGE AND VIKAS AWASTHY, JJ. C. Naresh for the Appellant. Smt. Anupama Shukla for the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 36(1)(viia) had to be limited to such amount. Assessing Officer having given a deduction of Rs. 5,38,05,015/-, such order was erroneous and prejudicial to the interests of Revenue. 3. To the notice issued on the above lines, reply of the assessee was that provisions were made by it in accordance with Section 36(1)(viia) of the Act. As per the assessee, the actual provision for bad and doubtful debts came to Rs. 6,24,44,027/-. This amount was arrived at by aggregating the provision for bad and doubtful debts of Rs. 4,01,44,027/-with provision of Rs. 2.23 Crores on standard assets. Hence, according to it, the provision of Rs. 5,38,05,015/- allowed by the A.O. in the assessment was below the amount Rs. 6,24,44,027/-, and there was neither error in the order of the Assessing Officer nor any prejudice caused to the Revenue. Reliance was placed on the decision of Mumbai Bench of this Tribunal in the case of Syndicate Bank v. Dy. CIT [2001] 78 ITD 103 (Bang.). Argument of the assessee was that when Assessing Officer had taken a view which was possible in law, provisions of Section 263 could not be invoked. In any case, as per the assessee, any provision made for bad and doubtful deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 36(1)(viia) of the Act. Assessing Officer had taken a lawful view and therefore, CIT could not substitute his view with that of Assessing Officer. The order of A.O. was not at all erroneous. A.O. had considered the claim of the assessee under Section 36(1)(viia) and accepted such claim. Therefore, according to him, the order of CIT was liable to be quashed. 6. Per contra, learned D.R. supported the order of CIT (Appeals). 7. We have perused the orders and heard the rival submissions. The original claim, which was allowed by the Assessing Officer under Section 36(1)(viia) of the Act, was as follows:- 7.5% of Gross Total Income : Rs. 5,74,07,362 10% of Rural Advances (Rs. 27,26,50,990/-) : Rs. 2,72,65,099 Rs. 8,46,72,461 Thereafter, assessee had moved in appeal against some of the additions made by the Assessing Officer on other issues and pursuant to the relief granted in such appeal, the gross total income which earlier stood at Rs. 76,54,31,493/- came down to Rs. 35,38,65,546/-. As a result of the reduction in gross total income, deduction under Section 36(1)(viia) was also scaled down from Rs. 5,74,07,362/- to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm. This can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law. If the provision for standard assets is not considered as provision for bad and doubtful debts, the actual provision for bad and doubtful debts made by the assessee in its books Rs. 4,01,44,027/- fall much below the sum of Rs. 5,38,05,015/- allowed by the Assessing Officer. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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