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Kancheepuram Central Co-Operative Bank Ltd. Versus Deputy Commissioner of Income-Tax

2016 (11) TMI 1238 - ITAT CHENNAI

Disallowance of provision created towards non-performing asset under section 36(1)(vii) - Held that:- As per the decision of the hon'ble apex court in the case of Vijaya Bank v. CIT reported in [2010 (4) TMI 46 - SUPREME COURT ] it has been held that if an assessee debits an amount of doubtful debt to "profit and loss account" and credits "sundry debtors account" the same should be allowed as a deduction. This decision being the law of land has to be meticulously followed by all the relevant aut .....

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ith respect to computation of deduction under section 36(1)(viia) of the Act is also remitted back for fresh consideration. Further, since the assessee has raised an additional issue in regard to the claim of deduction under section 80P of the Act for the first time, the issue is also remitted back to the file of the learned Assessing Officer for de novo consideration. - I. T. A. No. 670/Mds/2016 - Dated:- 7-9-2016 - N. R. S. Ganesan (Judicial Member) and A. Mohan Alankamony (Accountant Member) .....

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es of the issues are as follows : "(i) The learned Commissioner of Income-tax (Appeals) has erred in sustaining the disallowance amounting to ₹ 31,15,08,410 made by the learned Assessing Officer being provision created towards non-performing asset under section 36(1)(vii) of the Act. (ii) The learned Commissioner of Income-tax (Appeals) has erred in confirming the quantum of aggregate average advances adopted by the Assessing Officer for the purpose of giving relief under section36(1) .....

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admitting the income of ₹ 5,89,61,130. The case was selected for scrutiny and notice under section 143(2) was issued to the assessee on August 30, 2011. Thereafter, the assessment was completed by the learned Assessing Officer on March 7, 2013, under section 143(3) of the Act wherein he has made certain additions/disallowances amongst which one of the addition was provision created towards non-performing asset amounting to ₹ 31,15,08,410. 5. During the course of assessment proceedin .....

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ce : The assessee has claimed deduction with regard to bad debts under section 36(1)(vii) and not under section 36(1)(viia). Bad debts need not be proven to be irrecoverable under section 36(1)(viia). There was no omission/error in calculating the income. The assessee has written off in the profit and loss account as per the working given below : Bad debts as at 31-3-2010 ₹ 120,32,58,741 Bad debts as at 31-3-2009 ₹ 89,17,50,325 Bad debts debited to the profit and loss account ₹ .....

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sing Officer by agreeing with the observations made by the learned Assessing Officer. 7. We have heard the rival submissions and carefully perused the materials available on record. Since the assessee is a co-operative society carrying on banking business, it is eligible for deduction under section 36(1)(viia) of the Act towards certain provision made for bad and doubtful debts in accordance with the provisions of the Act. When such provision is allowed as deduction, the actual bad debt of the a .....

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