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The Kangra Co-Operative Bank Ltd. Versus JCIT, ACIT, New Delhi

2015 (11) TMI 270 - ITAT DELHI

Disallowance of claim for deduction of bonus paid - Held that:- There is no bar to entertain new claim either by Commissioner of Income Tax (Appeals) or Income Tax Appellate Tribunal". Accordingly, we direct the Assessing Officer to allow this claim after due verification, whether the bonus has been paid during the previous year under consideration, and whether the interest claim of ₹ 2,55,233/- is tax free or not. Accordingly, this ground of appeal is set aside to the file of the Assessin .....

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the deduction claimed under Section 36(1)(viia) is more than the deduction claimed under Section 36(1)(vii) of the Act. The reasoning of the Assessing Officer does not stand test of the law laid down by the Hon'ble Apex Court in the case of Catholic Syrian Bank Ltd. (2012 (2) TMI 262 - SUPREME COURT OF INDIA). Further, it is not in dispute that the amounts claimed as bad debts were actually written off in the books of account and in the light of the fact that the provisions for bad debts was no .....

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o the income returned. To the same effect, the decision of a coordinate bench of ITAT, Jabalpur, in the case of Ravindra Pratap Thareja Vs. ITO [2015 (10) TMI 1487 - ITAT JABALPUR]. Accordingly, the grounds of appeal is set aside to the file of the Assessing Officer for due verification after affording reasonable opportunity of being heard to the assessee. Hence, the appeal is partly allowed for statistical purposes. - ITA No. 840/Del/2013, ITA No.1432/Del/2012 - Dated:- 16-10-2015 - Inturi Rama .....

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appeal in ITA No. 840/Del/2013 for AY 2009-10: i. That the impugned order u/s 250(6) of the Income Tax Act, 1961 dated 28.12.2012 passed by the Ld. Commissioner of Income Tax (Appeals)- XXVIII, New Delhi is bad in law and against the facts of the case. ii. On the facts & circumstances of the case, the Ld. CIT(Appeals)-XXVII, New Delhi has erred in upholding the assessment order u/s 143(3) dated 29.112.2011 for the AY 2009-10, passed by the Ld. Assessing Officer, Range 38, New Delhi in reject .....

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account of bad debts actually written off to party accounts. iv. On the facts & circumstances of the case, the Ld. CIT(Appeals)-XXVIII, New Delhi has erred in upholding the assessment order u/s 143(3) dated 29.12.2011 for the AY 2009-10, passed by the Ld. Assessing Officer, Range 38, New Delhi in additions of ₹ 7,03,654/- on account of difference of interest income shown by the appellant and reported in AIR. v. That the appellant craves leave for reserving the right to amend, modify, .....

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lding the assessment order u/s 143(3) dated 24.12.2010 for the AY 2008-09, passed by the Ld. Assessing Officer, Range 38, New Delhi in disallowance of deduction of ₹ 23,00,268/- on account of bad debts actually written off to party accounts. iii. That the appellant craves leave for reserving the right to amend, modify, alter and/or forego any ground(s) of appeal at any time before or during the hearing of this appeal. ITA No. 840/Del/2013 for AY 2009-10: 3. For the sake of clarity and conv .....

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80/-. While doing so, the Assessing Officer disallowed the bad debts written off of ₹ 20,24,842/- on the ground that the assessee bank is an urban cooperative bank which enjoyed the 7.50% of the total income under the provisions of Section 36(1)(viia) of the Act and therefore the Assessing Officer was of the opinion that any further deduction towards bad debts was not allowable. The Assessing Officer also made addition of ₹ 7,03,654/- on account of alleged difference in the interest .....

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t of Hon'ble Supreme Court in the case of Goetz India Ltd Vs. CIT, 284 ITR 323. Being aggrieved, an appeal was filed before the learned CIT(A) who vide order dated 28th December, 2012 dismissed the appeal. Hence, the assesee is before us with the present appeal. 4. We shall now take up the appeal ground-wise. The first ground is general in nature and does not require any adjudication. 5. The second ground of appeal relates to the disallowance of deduction claimed of ₹ 19,49,792/- under .....

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ing year was claimed as deduction on payment basis under the provisions of Section 43b of the Act. The appellant further claimed exemption on tax free interest of ₹ 2,55,233/- which was by oversight offered to tax. Ld. CIT(A) also confirmed the addition by holding that the claim cannot be made without revising the return of income. Being aggrieved, the appellant is before us with the present appeal. 5.1 Ld. counsel for the appellant submitted that the bonus amount of ₹ 19,49,792/- de .....

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items were claimed as deduction by filing revised computation. The Assessing Officer had denied the deduction following the decision of Hon'ble Supreme Court in the case of Goetz India Ltd. Vs. CIT (Supra) and held that the assessee was not entitled for deduction, he had not made these claims by filing revised return of income. On appeal before the CIT(A) also, the CIT(A) confirmed the same by holding that the Assessing Officer had no power to entertain the claim made otherwise by way of rev .....

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eturn of income was filed, as it is the duty of the Assessing Officer only to compute the correct taxable income under the provisions of the Act. 5.3 On the other hand, the ld. DR relied on the orders of the lower authorities. 5.4 We heard the rival submissions and perused the material on record. The Assessing Officer disallowed this claim for deduction of bonus paid of ₹ 19,49,792/- which was disallowed for the assessment year 2009-10 on payment basis during the year under appeal on the g .....

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the minds of the Courts in numerous occasions. 31. In the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 the Supreme Court noted with approval observation of the Court in the case of CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 to the effect that "The Appellate Assistant Commissioner, therefore, has plenary powers in disposing of appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him .....

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Assistant Commissioner is co-terminus with that of the Income-tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority .....

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an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer." 32. In case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) when the question of law was raised for the first time before the Tribunal though facts were already on record, the Supreme Court observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the rele .....

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ground that the same pertained to the power of the Tribunal under section 254 of the Act to entertain a point of law for the first time and commented that such decision does not relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the process the Supreme Court recognized that a new claim could not be entertained by the assessing officer without the assessee revising the return. While doing so it was clarified that:- "4 .....

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to the Tribunal arose in the matter and for just decision of the case. 35. In case of CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336/208 Taxman 498/23 taxmann.com 23 (Bom.) the Bombay High Court considered the issue at considerable length and held that Commissioner (Appeals) as well as the Tribunal have the jurisdiction to consider the additional claim and not merely additional legal submissions. The appellate authorities have discretion to permit such additional claims. .....

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nature. With these observations Court confirmed the view of the Tribunal reversing the decision of the assessing officer rejecting the claim of the assessee on the ground that no revised return was filed. 37. In case of CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj.), Full Bench of this Court held that merely because a ground has not been raised though it could have been raised in support of the relief sought in the appeal, it cannot be said that such ground cannot be raised b .....

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Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd.(supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only .....

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neous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the assessing officer." 5.5 Thus, in the above cases, it has been held that new claims can always be made at any stage of appellate proceedings. The law laid down by Hon'ble Apex Court in the case of Goetz India Ltd (supra) is not applicable to the claim made either befor .....

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s been paid during the previous year under consideration, and whether the interest claim of ₹ 2,55,233/- is tax free or not. Accordingly, this ground of appeal is set aside to the file of the Assessing Officer to allow the claim, in the aforesaid terms. 6. The next ground relates to the disallowance of deduction of ₹ 20,24,842/- on account of bad debts. The Assessing Officer disallowed the bad debts written off of ₹ 20,24,842/- on the ground that the amount of deduction claimed .....

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viia) of the Act. The relevant provisions of the Act are reproduced as under: "Section 36(1) (vii): subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exce .....

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ier previous year on the basis of income computation and disclosure standards notified under sub-section (2) of section 145 without recording the same in the accounts, then, such debt or part thereof shall be allowed in the previous year in which such debt or part thereof becomes irrecoverable and it shall be deemed that such debt or part thereof has been written off as irrecoverable in the accounts for the purposes of this clause. [Explanation 1].-For the purposes of this clause, any bad debt o .....

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elate to all types of advances, including advances made by rural branches;] 36(1)(viia) in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank [not being a bank incorporated by or under the laws of a country outside India or a non-scheduled bank or a cooperative 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 bef .....

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assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent of the amount of such assets shown in the books of account of the bank on the last day of the previous year: Provided further that for the relevant assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, the provisions of the first proviso shall have effect as if for the words "five per cent", the words "ten per c .....

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rn of income under the head "Profits and gains of business or profession." Explanation.- For the purposes of this sub-clause, "relevant assessment years" means the five consecutive assessment years commencing on or after the 1st day of April, 2000 and ending before the 1st day of April, 2005; (b) a bank, being a bank incorporated by or under the laws of a country outside India, an amount not exceeding five per cent of the total income (computed before making any deduction und .....

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sessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, of an amount not exceeding ten per cent of the amount of such assets shown in the books of account of such institution or corporation, as the case may be, on the last day of the previous y .....

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y of the previous year; (ii) "scheduled bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1 .....

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ustrial investment corporation" means a Government company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956), engaged in the business of providing long-term finance for industrial projects and eligible for deduction under clause (viii) of this sub-section; (vi) "co-operative bank", "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" shall have the meanings respectively assigned to them .....

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isions of Section 36(1)(viia) but once the bad debt is actually written off as irrecoverable and the requirements of the provisions of Section 36(2) of the Act are satisfied then it will not be permissible to deny such deduction on the apprehension of the double deduction under the provisions of Section 36(1)(viia) and the proviso to section 36(1)(vii) of the Act. The proviso to Section 36(1)(vii) only limits its application to the case of bank to which clause 36(1)(viia) applies. The proviso is .....

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proviso to Section 36(1)(vii) of the Act, what is allowed as a provision for bad and doubtful debts under the provisions of Section 36(1)(viia) cannot be allowed under the provisions of Section 36(1)(vii). In the case in hand, the Assessing Officer denied the deductions under Section 36(1)(vii) solely on the ground that the bad debts which were written off were pertaining to the period when the income was exempt under the provisions of Section 80P of the Act and also on the ground that the dedu .....

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