TaxTMI 
TaxTMI 
2021 (6) TMI 817
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....ssee herein is a cooperative bank. The original assessment for the year under consideration was passed u/s 143(3) of the Income-tax Act,1961 ['the Act' for short] on 16.3.2015. Subsequently, the A.O. reopened the assessment by issuing notice u/s 148 of the Act on 9.3.2016. The reasons for reopening are recorded as under: "In the return of income filed the assessee claimed deduction of Rs. 2,50,00,000/- u/s 36(1)(viia). However, the assessee debited only Rs. 2,00,00,000/- to the profit and loss account towards provision for bad and doubtful debts. The assessee considered provision for standard assets of Rs. 50,00,000/- also for claiming deduction u/s 36(1)(viia) which is not allowable. Hence the deduction was excess claimed by Rs.....
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....s provision for bad and doubtful debts, while it has claimed deduction of Rs. 2.50 crores u/s 36(1)(viia) of the Act. The Ld. A.R. submitted that the above said observation of the A.O. is not correct and is contrary to the facts available on record. He submitted that the assessee has debited the profit & loss account with a provision of Rs. 2.50 crores only. In support of the same, the ld. A.R. invited our attention to the page Nos.21 & 36 of the paper book. Page No.21 is the profit & loss account, wherein a sum of Rs. 6.30 crores is debited towards "provision for NPA and others". Page No.36 contains details of Rs. 6.30 crores, which shows that the provision made for NPA is Rs. 2.50 crores and it is reported as under:- Provision for NPA:- ....
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....ld that reopening of assessment on mere change of opinion is unconstitutional. 6. The Ld. D.R. on the contrary, submitted that the deduction is allowed u/s 36(1)(viia) of the Act only in respect of provision made for bad & doubtful debts. However, the assessee has made provision of Rs. 50 lakhs for standard assets, i.e., the debts which are not bad & doubtful. Hence the provision made on standard assets is not allowable u/s 36(1)(viia) of the Act. In this case, the assessee has claimed the deduction under the above said section on the provision made on standard assets and the same has resulted in escapement of income. The Ld. D.R. accordingly submitted that the reopening of assessment cannot be called to be on account of mere change of opi....
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....ted the claim made u/s 36(1)(viia) of the Act. There is no dispute on these facts. 9. From the reasons recorded by the AO for reopening of assessment, we notice that the A.O. has expressed the view that the "Provision for Standard assets" cannot be claimed u/s 36(1)(via) of the Act. The provisions of 36(1)(viia) of the Act read as under:- (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 laws of a country outside India or a non-scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount not exceeding 42[eight and one-half per cent] of the total ....
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.... made between doubts debts and good debts, since a business man would always take full efforts to collect debts fully. 10. The ld. D.R. placed her reliance on the decision rendered by Pune benches of Tribunal in the case of Cosmos Co-operative Bank Ltd. (supra). We notice that the Tribunal has rendered its decision in the above said case in the context of section 36(1)(vii) of the Act, which deals with the deduction of bad debts actually written off in the books of accounts. We notice that the decision rendered in the case of Cosmos Cooperative Bank Ltd. (supra) was followed in the case of The Beed District Central Co-operative Bank Ltd. (supra). In the instant case, we are concerned with the claim made u/s 36(1)(viia) of the Act and hence....