9911796707
TMI Blog2022 (3) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 8,54,42,557/- on account of Bad and Doubtful Debts Reserve (BDDR) for earlier years written back in the year under consideration. 3. The facts of the case are that the assessee is a Co-operative Society conducts its banking business under the name and style of "The Janalaxmi Co-Op. Bank Ltd". During the course of assessment proceeding, the AO noted that the assessee credited an amount of Rs. 8,54,42,557/- to the profit and loss account on account of bad and doubtful debts reserve written off. The assessee submitted that there was excess provision for earlier year and made reversal of Rs. 8,96,28,496/- with effect of Rs. 41,85,939/- the net reversal of Rs. 8,54,42,557/- in the year under consideration. It was contended that such amount s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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. As can be seen from the assessment order the details of disallowance of reversal provision for bad and doubtful debts reserves from A.Ys. 2004-05 to 2012-13 were reproduced wherein we note that the assessee started making provision for bad and doubtful debts from A.Ys. 2004-05 to 2014-15 to an extent of Rs. 71,88,98,173/-. It is also noted that the assessee made net of reversal for A.Y. 2013-14 to an extent of Rs. 2,10,39,033/- and Rs. 8,54,42,557/- for the year under consideration making the total reversal for A.Ys. 2013-14 and 2014-15 to an extent of Rs. 10,64,81,590/- (Rs. 2,10,39,033/- + Rs. 8,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 13-10-2020, the relevant portion is reproduced here-in-below for ready reference : "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 paper book. The assessee credited a net sum of Rs. 2,10,39,032 to its Profit and loss account with the narration "Bad and Doubtful Debts Reserve". This amount was computed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 in the earlier years at the time of creation of such BDDR inasmuch as it though debited the amount of provision for BDDR in its Profit and loss accounts for earlier years, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.e.f. A.Y. 2007-08 to section 80P making the provision u/s.80P as not applicable to any Cooperative Bank other than a Primary Agricultural Credit Society or a Primary Cooper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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, overturn the impugned order on this score and hold that the ld. CIT(A) was not justified in upholding the addition of Rs. 3,39,02,138/- to the total income. The same is directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
