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TMI Blog2018 (3) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted to Buldhana District, having 106 branches in rural areas. The loans and advances are given to farmers residing in rural areas. - Decided in favour of assessee - ITA No.127 & 128/NAG/2015, ITA No.135/NAG/2015 - - - Dated:- 6-3-2018 - SH. G.D.AGRAWAL, HON BLE PRESIDENT AND SH. MAHAVIR SINGH, JUDICIAL MEMBER Appellant by Sh. K.B.Lohiya, Adv. Sh. Shailesh Agrawal, CA Respondent by Sh. Gitesh Kumar, Sr. DR O R D E R PER BENCH ITA No.127/NAG/2015 The first issue in this appeal of the assessee is against the order No.CIT(A)-I/311/2013-14 of Ld.CIT(A)-1, Nagpur dated 27.01.2015 rejecting the claim of deduction in respect of reversal of NPA interest credited to the P L A/c. For this, the assessee has raised the following ground:- 1. The Learned Commissioner of Income Tax (Appeals) erred in rejecting the claim of deduction in the computation of income in respect of reversal of NPA interest credited to Profit Loss Account. 2. Briefly stated facts are that the AO during the course of assessment proceedings noted that the assessee has made claim of deduction of ₹ 10.15,60,904/- because the same has been reversed for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that out of the total credit of ₹ 17,16,80,205/-, the assessee claimed deduction of ₹ 10,15,60,904/- because the said amount has been included in the income wrongly by the assessee and this came to his knowledge when this was pointed out by the Statutory Auditor in his Audit Report and, therefore, the same was claimed in the computation of income submitted alongwith the return of income. Ld. Counsel for the assessee drew our attention to page 34 of the assessee s Paper Book wherein Auditor s Report dated 06.09.2010, the estimate is given as under:- 1. CONTINGENT BOOKING OF INTEREST RECEIVABLE ON ESTIMATED BASIS: In the case of interest earned on advances and discount the bank has included ₹ 1716.80 Lakh interest under the head Govt Agro Rural Debt Relief'. This amount includes interest subvention due from state also. As per bank, it has received amount of ₹ 443.81 Lakh before 31/03/2011 and now balance amount of ₹ 1411.66 Lakhs pertains to the amount of interest, which has been booked by them on estimated basis towards amount of Agri Debt Relief and Interest Subvention received by them late from Central and State government, The Amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 Amount received on 04.08.2010 39,90,000 Amount received on 13.08.2010 1,65,20,000 22.11.2010 Amount reversed as above 10,15,60,904 Amount Received on 31.03.2011 1,38,70,338 Balance 2,57,38,963 7. In view of the above details, we are convinced that the assessee s claim is a bonafide and the amount which has been reversed and debited to the P L A/c for A.Y. 211-12 has already been added in the computation of income because the assessee has already claimed the same in the computation of income for A.Y. 2010-11 i.e. year under consideration. In view of these facts, we allow the claim of the assessee and this issue of assessee s appeal is allowed. 8. The next issue in this appeal is against the order of Ld.CIT(A) in not allowing the brought forward loss for A.Y. 2008-09 to ₹ 5,01,70,769/-. For this, the assessee has raised following grounds:- 2. The Learned Commissioner of Income Tax (Appeals) erred in not allowing the brought forward loss of A.Y. 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. In view of the above, Ld. Counsel for the assessee only stated that the appropriate directions can be given to the AO. On the other hand, Ld.Sr.DR conceded the position. After hearing rival contentions, we direct the AO to verify the claim of the assessee and accordingly allow the same. Ld.CIT(A) has already examined this issue in A.Y. 2009-10. Accordingly, we allow the claim of the assessee and this issue of the assessee s appeal is allowed. ITA No.128/NAG/2015 12. Now, coming to assessee s appeal in ITA No.128/Nag/2015 which is against the order of Ld.CIT(A) rejecting the rectification application of the assessee u/s 154 of the Act. At the outset, Ld. Counsel for the assessee stated that the issue of brought forward loss has already been adjudicated in ITA No.127/Nag/2015 while adjudicating the claim of appeal order passed u/s 143(3) of the Act. Hence, this appeal has became infructuous. Accordingly, the same is dismissed. ITA No.135/NAG/2015 13. The first issue in this appeal of the Revenue is as regards to the order of Ld.CIT(A) holding the assessee a Non-Scheduled Cooperative Bank eligible for deduction u/s 36(1)(viia) of the Act. For this, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed in the Rule 6ABA which reads as under: 6ABA. For the purposes of clause (viia) of sub-section (1) of section 36, the aggregate average advances made by the rural branches of a scheduled bank shall be computed in the following manner, namely:- (a) The amounts of advances made by each month rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately; (b) The sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstandi8ng advances have been taken into account for the purposes of clause (a); (c) The aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate advances made by the rural branches of the scheduled bank. Explanation: In this rule, rural branch and scheduled bank shall have the meanings assigned to them in the Explanation to clause (viia) of sub-section (1) of section 36 44). From the above provisions of Rule 6ABA, it is evident that the deduction in respect of 10% of the average advance of defined rural banks is admissible to a scheduled bank only. No rules have been prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant figures have been published before the first day of the previous year. A bare reading of the above clearly shows that for an allowance to be given under this Section, there has to be a provision for Bad and Doubtful Debts. Rule 6ABA has provided for the manner in which deduction has to be calculated and nothing more than that. Basic allowance of deduction is as per section 36(1)(viia) as held by the coordinate benches of the Tribunal. Even the CBDT instruction No.17/2008 dt . 26.11.2008 has clarified this issue further. Sub clause (b) ( c) of clause (iii) of above circular had clarified the issue as under: - (b] The deduction for provision for bad and doubtful debts should be restricted to the amount of such provision actually created in the books of the assessee in the relevant year or the amount calculated as per provisions of Sec. 36(I)(viia), whichever is less (c) For working out the aggregate average advances by rural branches) the Assessing Officer should verify whether the branch (es) in question actually qualify to be categorized as (rural branches) as per the definition in Explanation (ia) below Sec. 36(I)(viia). The aggregate average advances of such rur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find from the facts of the case that the area of operation of the assessee bank is restricted to Buldhana District, having 106 branches in rural areas. The loans and advances are given to farmers residing in rural areas. As per provision in 36(1)(viia) assessee is entitled for deduction @ 10% of the average rural advances and this manner is prescribed in rule 6ABA as under:- For the purposes of clause (viia ) of subsection 1 of section 36, the aggregate average advances made by rural branches of a Scheduled bank shall be computed in the following manner namely, a) the amount of advances made by each rural branch as outstanding at the end of last day of each month comprised In the previous year shall be aggregated separately, b) the sum so arrived at in the case of such branch shall be divided by the number of months for which outstanding advances have taken into account for the purposes of clause (a); c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank. Explanation: In this rule rural branch and scheduled bank shall have the meanings a ..... 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