2019 (6) TMI 593 - AT - Income Tax

Disallowance of provision of bad and doubtful debt u/s 36(1)(vii) - HELD THAT - We note that this tribunal in the own case of the assessee involving identical issue has confirmed the order of the learned CIT (A) for the assessment year 2011-12 in 2018 (7) TMI 1989 - ITAT AHMEDABAD The question is also squarely covered by the decision of Vijaya Bank v. CIT 2010 (4) TMI 46 - SUPREME COURT where it was held that where assessee bank had written off impugned bad debt in its books by way of a debit to profit and loss account, simultaneously reducing corresponding amount from loans and advances to debtors depicted on assets side in balance sheet at close of year, the assessee - bank was entitled to deduction under section 36(1)(vii) and for that purpose, it was not necessary for it to close individual account of each of its debtors in its books. The learned DR at the time of the hearing has not pointed out any material fact suggesting that there is a change in the facts and circumstances for the year under consideration viz a viz the immediate preceding assessment year. Therefore, respectfully following the order above of this tribunal, we find no reason to interfere in the order of the learned CIT-A. Hence the ground of appeal of the Revenue is dismissed. Disallowance u/s 14A - whether the disallowance u/s 14A read with rule 8D can exceed the amount of dividend income? - HELD THAT - As decided in SAGAR YESWANTRAI MEHTA VERSUS THE ACIT, CIRCLE-2 (1) (2) , AHMEDABAD 2019 (2) TMI 1642 - ITAT AHMEDABAD ends of justice would meet if we restrict the disallowance equivalent to the tax-free income shown by the assessee - Decided against revenue

Summary

Issues:
1. Deletion of addition for provision of bad debts
2. Deletion of addition under section 14A of the Act

Issue 1: Deletion of addition for provision of bad debts

The Revenue challenged the deletion of the addition of ?4,45,14,154 on account of disallowance of provision of bad debt. The AO disallowed the provision as a similar claim was disallowed in the preceding year. The CIT (A) deleted the addition, leading to the Revenue's appeal. The Tribunal noted a previous decision in the assessee's favor for the assessment year 2011-12. Following this precedent, the Tribunal upheld the CIT (A)'s decision, confirming the relief granted and dismissing the Revenue's appeal.

Issue 2: Deletion of addition under section 14A of the Act

The Revenue contested the deletion of the addition of ?36,08,45,107 under section 14A of the Act. The AO disallowed a higher amount under rule 8D compared to the disallowance made by the assessee. The CIT (A) deleted this addition, prompting the Revenue's appeal. The Tribunal considered whether the disallowance under section 14A with rule 8D could exceed the dividend income. Referring to a previous case, the Tribunal restricted the disallowance to the tax-free income shown by the assessee. Following this decision, the Tribunal upheld the CIT (A)'s order, dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT (A)'s decisions in both issues, dismissing the Revenue's appeals in both instances. The judgments were based on previous decisions and interpretations of relevant provisions, leading to the confirmation of relief granted to the assessee.