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TMI Blog2021 (8) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... trated by the assessee that as per the bye-laws of the assessee-bank from the Profit loss Appropriation account, Depreciation Investment fund has been created. The Investment Depreciation has been debited in P L account, which has been claimed as bad debt. See case of Kalupur Commercial Co-op. Bank Ltd. [ 2019 (10) TMI 1068 - ITAT AHMEDABAD] - Decided against revenue. - ITA No.895/Ahd/2019 - - - Dated:- 24-8-2021 - Shri Rajpal Yadav, Vice-President And Shri Waseem Ahmed, Accountant Member For the Revenue : Shri S.S. Shukla, Sr.DR For the Assessee : Shri S.N. Divetia, AR ORDER PER RAJPAL YADAV, VICE-PRESIDENT Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-10, Ahmedabad dated 19.3.2019 passed for Asstt.Year 2014- 15. 2. In the grounds of appeal of the Revenue, sole issue raised for our adjudication is that the ld.CIT(A) has erred in deleting disallowance of ₹ 2,69,68,337/- by ignoring the fact that provisions of section 36(1)(vii) is applicable to the facts of the assessee s case. 3. Brief facts of the case are that the assessee is a cooperative bank and engaged in banking activities. It has e-filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 36(1)(vii) of the Act, because the transaction carried out by the assessee was an isolated, and in the nature of investment, and the same did not form part of regular course of business. 5. On the other hand, the ld.counsel for the assessee submitted that the transaction carried out by the assessee was in the ordinary course of business, and as per guidelines of Reserve Bank of India, which stated that non-scheduled UCB has to place deposits with scheduled UCB subject to some conditions. As per the bye-laws of the assesseebank, depreciation fund has been created out of profit loss account from 2001-02, and as per RBI circular the provision has been made for the MMC Bank FD Depreciation fund, and it has been written off as irrecoverable. Therefore, the claim of the assessee is within scope of section 36(1)(vii) and therefore is an allowable expenditure. The ld.counsel for the assessee has also filed a chart showing Investment Depreciation fund and MMC Bank FD Depreciation Fund , in order to demonstrate how the profit loss appropriate account has been debited and credited MMC Bank FD Depreciation Fund . He further submitted that as per the bye-laws of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by ₹ 2,69,68,337/- in P L account, which has been claimed as bad debt. The decisions relied upon by the ld.counsel for the assessee that similar issue has been considered by the Tribunal in favour of the assessee, which are cited (supra). We therefore pertinent to take relevant part of the cited decision in the cases of other assessee viz. in the case of Kalupur Commercial Co-op. Bank Ltd. Vs. DCIT in ITA No.770/Ahd/2017 order dated 14.10.2019, which reads as under: 5. Ground No.l: The deletion of disallowance of deposits with the Madhavpura Mercantile Co. Op, Bank Ltd. of ₹ 23,88,83,704/- has been challenged before us. 6. The assessee has debited on account of Madhavpura Mercantile Co. Op. Bank Ltd. deposit written off amounting to ₹ 23,88,83,704/-. The assessee filed the copy of the letter dated 02.12.2010 issued by the Reserve Bank of India whereby and whereunder the bank has directed the assessee to make full provision against exposure to Madhavpura Mercantile Co. Op. Bank Ltd. as on 31.03.2011. Another letter issued by the Ministry of the Agriculture Department of Agriculture Land Corporation, Krishi Bhawan New Delhi dated 05.08.2010 submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the assessee. Payment should have been for the purpose of carrying on the business. On the facts of the assessee's case assessee has placed deposits with the Madhavpura Mercantile Co-Op bank ltd In its ordinary course of business. The details of such deposits placed with other bank since last 5 years are annexed herewith. The details of outstanding balance of deposits placed by bank (along with those banks who gets amalgamated with the assessee bank)with MMCB and amount still due and payable to Your assessee is as under. ₹ 22,98,61,862 : The Kalupur Comm. Co-op Bank Ltd. ₹ 79,42,847 : The Standard Co-op Bank Ltd. Merged With Kalupur ₹ 10,78,995 : The Tapi Co-op Bank Ltd. J Bank Your Assessee Accepting of Deposits and giving of loans and advances, making investments, deposits etc. form part of core activity of banking business. Thus the deposits placed with MMCB were certainly, exclusively wholly in the course of and for the purpose of business. This is also evident form - Annexure II (Page No. 7 to 12} As per the corrigendum of the meeting held on 26.5.20 JO and notice of the department of Agriculture Co-operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the same RBI has given that MMCB ceased to be solvent and which indicates that there is no chances of receiving the deposits back from the MMCB your assessee has written off the same from its books of accounts. As the Claim of deduction is rightly, made under the Provision of the Act. u/s 28 37 of the IT Act, it may kindly be allowed and oblige. The Learned AO, however, was not convinced with such submissions furnished by the assessee and he, therefore, observed as follows while making addition : 7. I have carefully perused the submission of the assessee. However the contention of the assessee is not acceptable on the following facts. i) The assessee has not filed any Corroboratory evidence or justification regarding the write off amounting to ₹ 23,88,83,704/-. The assessee has furnished a letter dated 05/08/20/0 issued by the, Director, Ministry of agriculture. Department of Agriculture Co-operation, Krishi Bhavan, New Delhi regarding the Gist of discussions taken in the meeting held on 26/05/2010 to discuss the possibilities of the revival of The Madhupura Mercantile Co-operative Bank Ltd. Ahmedabad. The letter clearly indicates tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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