TMI Blog2014 (1) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... , under Section 143(3) of the Income-tax Act, 1961 (in short "the Act"), pertaining to the assessment year 2008-09. 2. In this appeal, the first issue raised by the assessee is with regard to the action of the lower authorities in restricting the deduction allowable under Section 36(1)(viia) of the Act to the actual amount of Provision made in the books of account for bad and doubtful debts of Rs.50,00,000/- as against the assessee's claim for deduction of Rs.79,04,346/-. 3. In brief, the relevant facts are that assessee is a Co-operative Bank engaged in the business of banking. In terms of Section 36(1)(viia) of the Act, assessee is entitled to claim as a deduction in respect of any Provision for bad and doubtful debts made on account of aggregate average advances made by the rural branches of such bank. The section provides that such deduction shall not exceed 7.5% of the total income (computed before making any deduction under this clause and Chapter VI-A of the Act) and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank. In terms of the said Section 36(1)(viia) of the Act, assessee being a Co-operative Bank, worked out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corpn. Ltd. vs. JCIT, (2006) 10 SOT 190 (Del); and, (iv) Cochin Special Bench of the Tribunal in the case of DCIT vs. Catholic Syrian Bank Ltd., (2004) 88 ITD 185 (Coch)(SB). 6. Further, the learned counsel pointed out that absence of entries in the books of account is no bar for allowance of a deduction which is otherwise allowable under the Act and for the aforesaid proposition he referred to the judgement of the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT, (1971) 82 ITR 363 (SC). The learned counsel further pointed out that the deduction under Section 36(1)(viia) of the Act is similar to the standard deduction allowable under Section 24(1)(a) of the Act relating to repairs allowable while computing income from house property. It was pointed out that the deduction under Section 24(1)(a) of the Act while computing income from house property is allowable on account of repairs whether or not such expenses are actually incurred; and, on the same analogy it is sought to be made out that the deduction under Section 36(1)(viia) of the Act is allowable in respect of the advances made by rural branches of such bank regardless of the fact whether assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 VIA) 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 : 10. A bare perusal of aforesaid section clearly brings out that the deduction specified therein is in "respect of any provision for bad and doubtful debts made by........" an eligible assessee. The presence of the aforesaid expression in the section supports the plea of the Revenue, which is to the effect that the deduction allowable under Section 36(1)(viia) of the Act is in respect of the provision "made" by the assessee. In our considered opinion, the judgement of the Hon'ble Punjab Haryana High Court in the case of State Bank of Patiala (supra) clearly covers the controversy in favour of the Revenue and belies the interpretation sought to be canvassed by the assessee. In the case before the Hon'ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves to be repelled. We reproduce hereinafter the relevant portion of the order of the Hon'ble High Court, which reads as under :- "5. Sec.36(1)(viia) of the Act as applicable to the asst. yr. 1985-86, reads as under : "in respect of any provision for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of cl.(viiia) or a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) or an amount not exceeding two per cent of the aggregate average advances made by the rural branches of such bank, computed in the prescribed manner, whichever is higher." 6. A bare perusal of the above shows that the deduction allowable under the above provisions is in respect of the provision made. Therefore, making of a provision for bad and doubtful debts equal to the amount mentioned in this section is a must for claiming such deduction. The Tribunal has rightly pointed out that this issue stands further clarified from the proviso to cl.(vii) of s.36(1) of the Act, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the claim of deduction under Section 36(1)(viia) of the Act is not linked to making of a Provision in the account books. At the outset, we may observe that the decisions relied upon by the assessee are of various Benches of the Tribunal and not of any High Court. Therefore, the judgement of the Hon'ble High Court in the case of State Bank of Patiala (supra), which is contrary to the decisions of the Tribunal relied upon by the assessee; and being solitary judgement of a High Court, is required to be applied, having regard to the established norms of judicial discipline. For the said reason, we refrain from discussing each of the decisions of the Tribunal relied by the assessee before us. 13. The other plea of the assessee was that the contents of the CBDT Circular dated 26.11.2008 (supra) is contrary to the provisions of Section 36(1)(viia) of the Act and therefore the same should be disregarded. In our view, the following explanation in respect of Section 36(1)(viia) of the Act rendered by the CBDT in Circular dated 26.11.2008 (supra) by way of para 2(iii)(b) as under :- "(b) The deduction for provision for bad and doubtful debts should be restricted to the amount of such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the CBDT Circular dated 26.11.2008 but the said claim could not be raised before lower authorities, though the appropriate facts were on record. The learned counsel submitted that the aforesaid issue, now being raised, does not require any fresh investigation of facts, and is a question of law and therefore the Additional Ground be admitted for adjudication in the light of the judgement of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC) and also the judgement of the Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers Shareholders (P) Ltd., (2012) 349 ITR 336 (Bom). 18. On the other hand, the learned Departmental Representative appearing for the Revenue submitted that the said relief was neither claimed in the return of income and nor during the assessment proceedings and therefore there was no justification to consider the claim at the present stage. 19. We have carefully considered the rival submissions. It is a trite law that an assessee is entitled to raise an Additional Ground in appeal proceedings, which was not earlier claimed in the return of income filed by him. Apart from other decisions, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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