TMI Blog2020 (6) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2002-03, is directed against the order passed by the Commissioner of Income Tax (Appeal)-20, Kolkata, in appeal no. CIT(A)/Kolkata-20/10092/2007-08, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147 / 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 19/01/2007. 2. At the time of hearing none appeared on behalf of assessee in spite of issuance of notice for hearing more than one occasion and Ld. Departmental Representative(DR), was present for the appellant Revenue. In the absence of any appearance by the assessee, the appeal is being disposed of ex parte qua the assessee, after hearing Ld. DR for the Revenue on merits in terms of Rule 24 of the Income Tax Appellate, Tribunal, Rules, 1963. 3. The grounds of appeal raised by the Revenue are as follows: 1. Whether on the facts and in the circumstances of the case, ld. CIT(A) has erred by deleting the disallowance holding that section 36(1)(viia) contains provisions for Schedule Bank, whereas there is no such provision for NBFC. 2. Whether on the facts and in the circumstances of the case, the ld. CIT(A) has erred by deleting the disallowance holding that if a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Aggrieved by the order of the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the followings: 5.3.1. The Hon ble ITAT had in appellant s own case for the A.Ys 1997-98, 1998-99, 1999-2000 upheld the ld. CIT(A) decision granting relief to the appellant. 5.3.2 The Hon ble ITAT Kolkata had many other occasions to adjudicate on the issue of provision for NPA by NBFCs. The most elaborate decision is as pointed out by the ld. A.R. in a very recent decision 29.05.2009 also, the Jurisdictional Kolkata Tribunal in the case of ACIT vs. Spot Light Vanijya Ltd. in ITA No. 442/Kol/2008 held that provision for NPA is allowable as a deduction. The Tribunal in this case considered the various decisions rendered by the co-ordinate Benches as well as the decision of the Special Bench in the case of New India Industries Ltd. vs. ACIT dated 26.10.2007. The Tribunal also considered the various orders of the Calcutta High Court dismissing the appeals filed by the Revenue u/s 260A. The Tribunal also considered the issue of binding precedent of the decision of the jurisdictional Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s specified in the directions issued by the Reserve bank of India in terms of Non-Banking Financial companies Prudential Norms ( Reserve Bank) Directions, 1998. Therefore, provision for NPA debited to the Profit Loss Account of the assessee company has been claimed as an admissible deduction. The issue of allowability of provision for NPA came up for consideration before the ITAT, Kolkata in the assessee s own case for A.Y. 1998-99 in an appeal preferred by the Department in ITA No. 1566/Kol/2004. The Tribunal in its order dated 31.05.2007 has held that the assessee is registered with RBI as an NBFC and therefore the prudential norms of RBI were binding on the assessee. The Tribunal followed the earlier decisions of the Co-ordinate Benches of the Tribunal and confirmed the deletion of disallowance made by the ld. CIT(A) in respect of provision for NPA and dismissed the ground taken by the Department. Further, the Tribunal in an appeal by the assessee in A.Y. 1999-2000 in its order dated 31.05.2007 in ITA No. 2529/Kol/2004 followed the order of the Tribunal in the assessee s own case for A.Y. 1998-99 and directed the A.O. to allow the deduction for Provision for Non-performing ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Facts of the issue are that during the year under consideration, the company has made a provision of ₹ 1,371 lakhs towards provision for non performing assets (NPA) as per the Prudential Norms of the Reserve Bank of India (RBI). The said provision has been claimed as deduction in computing the total income. The Supreme Court in a recent case of Southern Technologies Ltd. vs. JCIT (320 ITR 577- SC) has held that Provision for NPA made in terms of the RBI directions does not constitute expense for purposes of section 36(1)(vii) and thus the same is not allowable. Further, the Supreme Court has also ruled that deduction can also not be claimed u/s 37(1) of the Act. In view of the aforesaid decision of the Supreme Court, provision for NPA of ₹ 1,371 lakhs was added back by AO in the computation of total income. We note that Ground No.2 of the assessee s appeal and question no. (iii) of High Court s order is in relation to disallowance of Provision for Non-performing assets (NPA) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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