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TMI Blog2020 (10) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... e (BDDR) of earlier years of Rs. 3,39,02,128/- written back is taxable income irrespective of the fact that every year the BDDR Provisions were disallowed from Income (added to taxable income). 2. The Hon'ble CIT(A) is wrong in treating reversal of excess provision of BDDR of Rs. 3,39,02,128/- written back is taxable income. Since appellant claimed deduction u/s.36(1)(vii) in earlier years. 3. The Hon'ble CIT(A) failed to appreciate the fact that deductions claimed u/s.36(1)(vii) has no way concern with written back of excess BDDR Provision and that to non reduction of taxable income. 4. The learned Income Tax Officer and the Hon'ble Commissioner of Income Tax Appeal ought to have considered that no deduction or benefit is claimed whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (hereinafter also called 'the Act'). He also found that prior to the assessment year 2007-08, i.e. 2006-07 and before, the assessee was claiming deduction in respect of entire total income u/s.80P of the Act. No relief was allowed in the first appeal. 4. We have heard the rival submissions through virtual court and gone through the relevant material on record. As can be seen from the grounds reproduced above that the only issue raised in this appeal is against the addition of Rs. 3,39,02,128/- made by the AO on account of Bad and Doubtful Debts Reserve for earlier year written back in this year in the books of account. We have gone through the assessee's Profit and loss account, whose copy is available at pages 10 and 11 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact, there is no separate declaration of net income in the computation of total income on this score. It, therefore, emerges that the assessee in the computation of total income at loss of Rs. 6.93 lakh started with the figure of Net Profit which was inclusive of Rs. 2.10 crore and reduced the same amount. The net effect of this exercise is that the assessee neither claimed any deduction on account of provision for Bad and Doubtful Debts made for the year nor offered any income on account of write back of the provision for Bad and Doubtful Debts for the earlier years in the computation of total income. The claim of the assessee is that the amount of Rs. 3.39 crore was not includible in the total income because no deduction was claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee at the time of creation of provision. Once the assessee did not take any deduction in the computation of total income on account of BDDR created on the basis of RBI norms, its reversal in subsequent years, cannot call for any addition. Here, it is relevant to mention that the claim of deduction u/s 36(1)(viia) of the Act is separate and independent of such provision created or reversed in the books of account as per the RBI norms. 6. The authorities below have also taken cognizance of the fact that the assessee claimed deduction u/s.80P for full amount of profit for the A.Y. 2006-07 and earlier years. Here, it is worthwhile to mention that prior to amendment by insertion of sub-section (4) by the Finance Act, 2006 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.80P has come to be denied to the societies like the assessee but with the simultaneous onset of the benefit of deduction u/s.36(1)(viia) by the Finance Act 2007 w.e.f. 01-04-2007. Irrespective of the fact whether it is case of the period when the assessee was eligible for deduction u/s.80P or thereafter when the benefit of section 36(1)(viia) came to be conferred, the creation of BDDR and its simultaneous addition in the computation of total income has made it clear that, in fact, no deduction was claimed by the assessee in this regard. Once the assessee did not claim any deduction in respect of BDDR, there can be no question of taxing the reversal of BDDR in a subsequent year, as has been the case under consideration. We, therefore, ove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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