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2016 (2) TMI 158 - ITAT CHENNAI

2016 (2) TMI 158 - ITAT CHENNAI - TMI - Revision u/s 263 - in the assessment order deduction u/s. 36(1)(viia) was allowed to the extent of ₹ 14,47,40,656/- as against restricting it to the extent of eligible amount of reserve for Non-performing assets or provisions for bad & doubtful debts shown in the Balance Sheet as on 31.03.2007 at ₹ 68,20,002 - claim of the Ld. A.R. was that the provisions made as per Section-36(1)(viia) has to be allowed though debited under different name such .....

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cided in favour of assessee for statistical purposes - ITA No. 1217/Mds./2015 - Dated:- 11-12-2015 - N. R. S. Ganesan, JM And A. Mohan Alankamony, AM For the Appellant : Mr R Vijayaraghavan, Adv For the Respondent : Mr Jayaram Raipura, CIT-DR ORDER Per A. Mohan Alankamony, Accountant Member This appeal is filed by the Assessee, aggrieved by the order of the Learned Commissioner of Income Tax-8, Chennai dated 25.03.2015 in C.No.865/10/CIT-8/15-15 passed under Sec.263 read with section Sec. 250 of .....

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shown in the balance sheet as on 31.03.2007 at ₹ 68,20,002/-. 3. The Commissioner of Income Tax erred in holding that assessee had not created the necessary reserve/provision towards bad and doubtful debts before making any deduction u/s.36(1)(viia) of the Act. 4. The Commissioner of Income Tax ought to have appreciated that assessee made provision for bad & doubtful debts during the previous year 2006-07 of ₹ 18,62,76,751/- under a different nomenclature which will not disentit .....

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3,30,06,621/- 6. The Commissioner of Income Tax ought to have appreciated that the provision for overdue interest represents interest on doubtful category advances which was unrealized but taken into account on accrual basis. Hence provision was made for overdue interest doubtful of recovery and hence is a provision for bad and doubtful debt. 7. The Commissioner of Income Tax ought to have appreciated that reserve for NPA represents provision for bad and doubtful debts where he installments and .....

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by following the 263 order dt 1103.2013 for the earlier ÀY 2008-09 in spite of the same being quashed by the Hon'ble Tribunal vide order in ITA No.914/Mds/2013 dt 17.07.2013. 10. The Commissioner of Income Tax erred in not following the order of the Tribunal for A Y 2008-09 in ITA No.914/Mds/2013 dt 17.07.2013 wherein it has been held that creation of reserve for NPA is same as creating provision towards bad and doubtful debts and assessee being a Non-Scheduled Bank is entitled to cla .....

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3) was completed after considering the books of accounts, details produced and revised return of income wherein assessee has restricted the deduction u/s.36(1)(viia) to 10% of average advances granted by its Rural branches as against gross advances. Hence the assessment order cannot be termed as erroneous and prejudicial to the interest of revenue. 13. Appellant craves leave to adduce additional grounds at the time of hearing. 3. The brief facts of the case are that the assessee is a cooperative .....

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sment u/s.143(3) r.w.s. 147 of the Act was completed on 22.06.2012 wherein the ld. Assessing Officer allowed the deduction u/s.36(1)(viia) of the Act to the extent of ₹ 14,47,40,656/-. Subsequently, the Ld.CIT had issued show-cause notice U/s.263 of the Act on 13.01.2015, the relevant portion of the same is extracted herein below for reference:- For the assessment year 2007-08, you have filed your return of income on 28/10/2007 admitting total loss of ₹ 17,81,64,980/-.and subsequentl .....

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4,47,40,6561- as against restricting it to the extent of eligible amount of ₹ 68,20,002/- This Indicates lack of application of mind by the Assessing Officer on this issue. 3. In the circumstances, the order passed dated 22/06/2012 is held to be erroneous and prejudicial to revenue, and therefore it is proposed to rectify the same u/s 263 of the Income-tax Act, 1961 as the facts and circumstances of the case deem it fit. Hence, your are hereby given an opportunity to file your written subm .....

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rder dated 22.06.2012, since the order of the Ld. Assessing Officer was erroneous and prejudicial to the interest of the Revenue for the following reasons:- "In the assessment order deduction u/s. 36(1)(viia) was allowed to the extent of ₹ 14,47,40,656/- as against restricting it to the extent of eligible amount of reserve for Non-performing assets or provisions for bad & doubtful debts shown in the Balance Sheet as on 31.03.2007 at ₹ 68,20,002." 4. At the outset, the L .....

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duced before us the decision of the Tribunal. The Ld. DR could not controvert to the submissions of the Ld. AR. 5. We have heard the rival submissions and carefully perused the material on record. Before us, the claim of the Ld. A.R. was that the provisions made as per Section-36(1)(viia) has to be allowed though debited under different name such as "Reserved for NPA account" instead of debiting under the Head "Provisions towards bad & doubtful debts". It was further subm .....

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e head under which such provision is made. Ld. D.R also magnanimously agreed for such verification. We find merit in the contention of the Ld. A.R. On the earlier occasion, the Tribunal in the assessee's own case cited supra had accepted the above prayer of the assessee. The relevant portion of the order is reproduced herein below for reference:- "8. Now, the second question which arises for determination before us is whether the assessee has created any reserve/provision for bad and do .....

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