TMI Blog2015 (3) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... rking as per Rule 6ABA. It is not in dispute that the working is as per Rule 6ABA but the Assessing Officer seems to have interpreted the provision not warranted by law. - computation made by the assessee is as per law and the Commissioner of Income-tax(Appeals) has rightly upheld the computation made by the assessee against the deduction towards provision for bad and doubtful debts - Decided against Revenue. Treatment of the reserve brought down by the assessee and credited in its profit and loss account - much amount of reserve was not necessary to be retained - Held that:- at the first instance when the amounts were transferred to reserve as well as at the second instance when such amounts are taken out of the reserves and brought bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax to prove that the amounts transferred to the reserve account have already been suffered tax and the assessee has not claimed any deduction for such amount in computing the taxable income of the respective assessment years. For this limited purpose of verification of details, the file is remitted back to the Assessing Officer. - Matter remanded back - Decided in favour of assessee. - ITA Nos. 1714, 1715 & 1716/Mds/2014, ITA Nos. 1511 & 1512/Mds/2014 - - - Dated:- 2-9-2014 - Dr. O.K.NARAYANAN AND SHRI VIKAS AWASTHY. JJ. For The Department : Shri Durges Sumrott, IRS, CIT For The Assessee : Shri N.V.Balaji, Advocate ORDR PER Dr.O.K.NARAYANAN, VICE-PRESIDENT This is a bunch of five appeals; three appeals are filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Revenue, and Shri N.V.Balaji, the learned counsel appearing for the assessee. 6. This issue of computing the deduction towards the provision for bad and doubtful debts under Rule 6ABA of the I.T.Rules, 1962, was considered by the ITAT, Chennai C Bench in the case of M/s. City Union Bank Ltd. in ITA Nos.1485/Mds/2007 and 1507/Mds/2007 through their order dated 30th October, 2009. In paragraph 8 of the said order, the Tribunal has concluded on the issue in the following manner: We have duly considered the rival contentions and the material on record. We have perused Rule 6ABA of the Income-tax Rules, 1962. As per the said rule, the aggregate average advances made by the rural branches have to be computed by taking the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account every year. He explained that these reserves debited in the profit and loss account have not been claimed by the assessee as deduction. Therefore, the reserves appropriated by the assessee have already been suffered tax. The assessee reverses the entries and brings back the amount transferred to the reserve account as and when it is found that those reserves are not required any more. The reserves are brought back to the working account of the assessee bank by crediting the profit and loss account. The Assessing Officer held that the credits by way of reversal made by the assessee bank are taxable, as its income for the concerned assessment year. This finding has been confirmed by the Commissioner of Income-tax(Appeals), as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable income of the assessee bank either at the time of first appropriation or at the time of second appropriation. Therefore, the view taken by the lower authorities that the credits found in the profit and loss account, as a result of reversal of the reserves is in the nature of taxable income, is not correct. It is not sustainable in law. In that way, the lower authorities are proposing to tax an amount, which has already been suffered tax. It results in double taxation, which is not permissible in law. 11. But the lower authorities have made a finding that the assessee bank has not placed before them the appropriate details regarding the transfer and re-transfer out of the reserves and they were not in a position to verify the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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