TMI Blog2013 (3) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act, 1961 (in short 'the Act') for the impugned Assessment Years, whereas assessee in its cross objections is aggrieved that CIT(A) did not consider its claim regarding provision for investment depreciation reserve. 2. Facts apropos are that assessee, a Co-operative Bank, had filed its return for the impugned Assessment Years on 28.12.07 and 29.09.09 declaring total income of ₹ 33,22,860/- and ₹ 46,17,960/- respectively. During the course of assessment proceedings, it was noted by the Assessing Officer that assessee had claimed deduction towards certain provisions. Such claims appearing in its profit and loss account were as under: For the A.Y.2007-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10% of the aggregate average advances given by its rural branch under section 36(1)(vii)(a) of the Act. As per assessee, it had two branches, one at Kancheepuram Town and one at Ayyempettai. The branch at Ayyempettai was a rural branch. Therefore, as per assessee, it was entitled for deduction of the following provision under section 36(1)(vii)(a) of the Act calculated as per Rule 6ABA of the Income Tax Rule,1962:- For A.Y.2007-08: 7.5.% of Total Income 445682 10% aggregate average advances 2470154 Total Provision allowable 2915836 For A.Y.2007-08: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Assessing Officer. Though Ld. CIT(A) had noted in his order that such clarification was given by the assessee during the time of the assessment proceedings, this was not borne out of records. Reliance was placed on the decision of Hon'ble Punjab and Haryana High Court in the case of State Bank of Patiala Vs. CIT 272 ITR 54 and that of a Co-ordinate Bench of Tribunal in the case of Bharat Overseas Bank Ltd. [2012] 139 ITD 154. Ld. D.R. submitted that CBDT Instruction No.17/08 dt.26.11.08 was clear in that unless and until provision for bad and doubtful debts were made in the accounts, deduction could not be allowed under Sec. 36(1)(viia) of the Act. 5. Per contra, Ld. Authorised Representative of assessee submitted that the CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer a fresh claim at this stage of the proceedings. 7. We have perused the orders of the lower authorities and heard the rival contentions. There is no doubt that assessee is a Co-operative Bank. Section 36(1)(viia) is a provision for allowance of bad and doubtful debts claimed by a scheduled bank or co-operative bank other than primary agricultural credit society. The said section is reproduced hereunder:- Sec.36(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 - (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going provisions, for an amount not exceeding the income derived from redemption of securities in accordance with a scheme framed by the Central Government: Provided also that no deduction shall be allowed under the third proviso unless such income has been disclosed in the return 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;] A reading of the above clearly show that for an allowance to be given under that Section, there has to be a provision for bad and doubtful debts. In the case of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered for an allowance Sec. 36(1)(viia) is ₹ 5,74,000/- for A.Y.2007-08 and ₹ 87,232/- for A.Y. 2009-10. Even if accept the claim of Revenue, that assessee had not pointed out to the A.O. that its branch at Ayyempettai was a rural one, still it cannot be disputed that claim Sec. 36(1)(viia) was available to it, if its claim in this regard were true. 8. Now, coming to the submission of the assessee that provision for investment depreciation Reserve and provision for investment fluctuation Reserve, had to be allowed to it, since there were only provisions for diminution in value of investment, no doubt, this was never preferred by the assessee before the Assessing Officer. However, it is also noticed that Assessing Officer had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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