TMI Blog2017 (3) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... .f. April 1, 1989 for claiming deduction in relation to bad debts, it is not necessary for the assessee to establish that debt in fact has become irrecoverable. The deduction is allowable if bad debts are written off as irrecoverable in the account of the assessee. One of the objection raised by the revenue against writing off of bad debts reserve is that the income of the assessee was exempt up to assessment year 2006-07 on account of deduction u/s. 80P of the Act. As is evident from the impugned order the assessee had suo-moto created a provision for bad and doubtful debts since 1985-86 on regular basis. While computing the income the assessee claimed entire amount as exempt u/s. 80P up to assessment year 2006-07. Merely because the assessee had claimed the benefit of deduction u/s. 80P it cannot be inferred that the benefit of section 36(1)(vii) is not available to the assessee in the subsequent years when the assessee is not eligible to claim deduction u/s. 80P of the Act. The Revenue has not placed on record any material to show that the provision created by the assessee on account of bad and doubtful debts during the period when the assessee was eligible to claim deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M category. The ld. AR submitted that similar issue had come up for adjudication before the Tribunal in assessee s own case in ITA No. 21/PN/2014 for the assessment year 2005-06 and ITA Nos. 522 523/PN/2013 for assessment years 2007-08 and 2009-10, respectively. The Tribunal after considering the decision rendered in the case of Addl. Commissioner of Income Tax Vs. Bank of Maharashtra in ITA No. 1505/PN/2008 for assessment year 2005-06 decided on 17-09-2014 remitted the issue back to the file of Assessing Officer to verify the claim of assessee and thereafter allow the deduction in line with the directions given in the aforesaid case. The ld. AR furnished a copy of the order of Tribunal dated 25-02-2015 in assessee s own case common for the assessment years 2005-06, 2007-08 and 2009-10. 4. On the other hand Shri T. Bhaskar Reddy representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in confirming the addition in respect of depreciation claimed by the assessee on investment in securities. However, the ld. DR fairly admitted that the issue raised by the assessee in appeal has been adjudicated by the Tribunal in assessee s own case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of income for the purposes of income tax is a matter of factual appreciation, which is liable to be verified by the Assessing Officer appropriately. For the aforesaid purpose, we therefore direct the Assessing Officer to consider the stand of the assessee stated aforesaid and thereafter re-work the income of the assessee accordingly. Needless to mention, the assessee shall provide necessary workings to the Assessing Officer, including the Investment Trading Account and / or such other workings which would enable the Assessing Officer to rework the income of the assessee in accordance with our decision in the earlier paragraphs. The Assessing Officer shall allow the assessee an appropriate opportunity of being heard and thereafter re-work the computation of income as per law and keeping in mind the aforesaid directions. Thus, on Ground of Appeal No.1 assessee succeeds. 43. In view of the directions of the Tribunal in the case of ACIT Vs. Bank of Maharashtra (supra), in order to give the effect of the change in the method of valuation on the computation of income, the Assessing Officer is directed to verify the claim of the assessee after considering the factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to have appreciated that the burden of proving compliances with the provisions of section 36(2)(i) was on the assessee who had not discharged the said burden in any manner. 6. For these and such other grounds as may be urged at the time of the hearing, the order of the learned Commissioner of Income-tax(Appeals) may be vacated and that of the Assessing officer be restored. 7. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of the appellate proceedings before the Hon'ble Tribunal. 7. The ld. DR submitted that the Commissioner of Income Tax (Appeals) has erred in accepting the claim of the assessee with respect to provision for bad debts written back to profit and loss accounts u/s. 36(1)(vii) of the Act. The ld. DR contended that the assessee is a Cooperative Bank. The provision of section 36(1)(vii a) squarely applies to the Co-operative Banks. The assessee has not followed the mandatory provisions for writing off of provisions for bad debts. Before claiming benefit of section 36(1)(vii a), in the first instance the assessee has to create specific provision for bad and doubtful debts. Thereafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years, therefore, there was no question of allowing or disallowing the said claim of assessee by the Assessing Officer. 10. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The Assessing Officer disallowed writing off of bad and doubtful debts reserve primarily on five counts: i. The assessee has not furnished supporting documentary evidence for the financial years 1985-86 to 2001-02, therefore it is not possible to verify whether the provision was indeed added back in the computation of income in the said years. ii. The assessee has furnished copy of two Board Resolutions i.e. Resolution No. 506 dated 15-01-2008 and Resolution No. 384 dated 05-11-2007 for writing off of bad debts. The amount involved in the aforesaid resolution is ₹ 63,44,88,144/-. However, no supporting evidence has been furnished to show that the conditions set out in the said Board Resolutions are complied with. iii. The Board Resolutions furnished by the assessee does not give absolute authority to the assessee to write off. There is rider to recover the amount in future, if possible. iv. One of the loan writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A breakup of the same has been reproduced by the Commissioner of Income Tax (Appeals) in para 4.4.3 and 4.4.4 of the impugned order. The Commissioner of Income Tax (Appeals) has observed that the Assessing Officer has completely overlooked Annexure 4 while dealing with the issue during the assessment proceedings. A perusal of the Annexure 4 shows that the amount written off during the year was ₹ 76,79,59,796/-. 13. A further perusal of the impugned order shows that the assessee had filed necessary documents to show that the conditions laid down by the Board of Directors while allowing the written off of bad debts were duly complied with. The ledger accounts of each individual account holder/company whose outstanding loan amount have been written off during the relevant period were filed before the Assessing Officer during the remand proceedings. The Assessing Officer in remand report instead of verifying the same has reiterated his objection that the Board Resolutions have not granted absolute mandate to write off the bad debts to the assessee, and has laid a condition that the bank has right to recover the amount in future, if possible. The Revenue has not brought on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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