9911796707
TMI Blog2012 (11) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... was made in compliance with the regulations of regulatory authority. As per the assessee, if the provision made towards standard assets were also considered, the total provisions for bad and doubtful debts made exceeded the percentage mentioned in Section 36(1)(viia) of the Act and therefore, CIT erred in coming to a conclusion that the order of Assessing Officer was erroneous insofar as it was prejudicial to the interests of Revenue. 2. Facts apropos are that assessee, a public sector bank, had filed its return for impugned assessment year declaring income of Rs. 51,28,68,844/-. While completing assessment under Section 143(3) of the Act, Assessing Officer allowed deduction under Section 36(1)(viia) at 7.5% of gross total income and a fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it in accordance with Section 36(1)(viia) of the Act. As per the assessee, the actual provision for bad and doubtful debts came to Rs. 6,24,44,027/-. This amount was arrived at by aggregating the provision for bad and doubtful debts of Rs. 4,01,44,027/-with provision of Rs. 2.23 Crores on standard assets. Hence, according to it, the provision of Rs. 5,38,05,015/- allowed by the A.O. in the assessment was below the amount Rs. 6,24,44,027/-, and there was neither error in the order of the Assessing Officer nor any prejudice caused to the Revenue. Reliance was placed on the decision of Mumbai Bench of this Tribunal in the case of Syndicate Bank v. Dy. CIT [2001] 78 ITD 103 (Bang.). Argument of the assessee was that when Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure had resulted in assessment order being erroneous and prejudicial to the interests of Revenue. He, therefore, set aside the order of Assessing Officer and directed him to examine all relevant facts and pass a fresh order in accordance with law. 5. Now before us, learned A.R., strongly assailing the order of CIT, submitted that provision for standard assets was also a provision for bad and doubtful debts, since such provision was made in accordance with the prudential norms of RBI. According to him, 10% of standard assets was mandatorily required to be provided for, and if this was also taken into consideration, claim of assessee under Section 36(1)(viia) was well within the parameters laid down under the said section. Further, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en aggregated with 10% of rural advances coming to Rs. 2,72,65,099/-, resulted in the sum of Rs. 5,38,05,015/- being eventually allowed as deduction under Section 36(1)(viia) of the Act. In the books of the assessee, actual provision for bad and doubtful debts was only Rs. 4,01,44,027/-. Assessee had also made a provision of Rs. 2.23 Crores on its standard assets. If the provision for bad and doubtful debts alone was considered, then the total allowance under Section 36(1)(viia) was in excess of such provision. However, if the provision for standard assets was also considered as provision for bad and doubtful debts, then the total provision could go up to Rs. 6,24,44,027/-. Then of course, assessee's claim as finally allowed was well within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank itself has treated such assets as good and recoverable, any provision made on such assets cannot be considered as a provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm. This can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. There is always a possibility that an asset, which is fully recoverable, may not be so at future date. Nevertheless, possibility of happening of such a contingency cannot be a suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cryptic order of the Assessing Officer by itself may not show that there was no thought given by him on a claim of the assessee. However, here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue. As held by Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, "prejudicial to the interests of the Revenue" is a term of wide import and not confined to loss of tax. An order without application of mind is definitely prejudicial to the interests of the revenue. We are in agreement with ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
