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TMI Blog2023 (8) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim based on a different ground. We notice that the revenue had not taken any action against the directions of the Tribunal as per the original order, and therefore the directions have crystallized which means that the Assessing Officer has no alternate course except to follow the directions. Accordingly, AO in the remand proceedings ought to have verified the availability of sufficiency of provisions as per the books of accounts of the assessee and allow the claim u/s. 36(1)(viia). As has been pointed out by assessee is carrying a provision of Rs. 1549 crores as on 31/03/2009 and the claim made during the year under consideration is Rs. 820.28 crores. Therefore respectfully following the decision of Sarvodaya Sahakari Bank Ltd (supra), we are of the view that no disallowance is warranted since the assessee is having sufficient provision towards bad and doubtful debts in the books of accounts and delete the disallowance made by restricting the amount claimed as a deduction u/s. 36(1)(viia) by the Assessing Officer in this regard. Decided in favour of assessee. - SHRI ABY T. VARKEY (JUDICIAL MEMBER) AND MS. PADMAVATHY S. (ACCOUNTANT MEMBER) For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision rendered by Hon ble Punjab Haryana High Court, we are inclined to follow the same. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and restore that of the AO. 16. However, before us, the Ld. Counsel for the assessee placed the decision of the Tribunal Ahmedabad Bench in the case of DCIT Vs Sarvodaya Sahakari Bank Ltd. in ITA No. 779 (Ahd) of 2011. It is the say of the Ld. Counsel that this issue need to be decided afresh in the light of the findings of the Tribunal Ahmedabad Bench. We find force in the contention of the Ld. Counsel. We accordingly set aside the issue to the file of the AO. The AO is directed to decide the issue afresh in the light of the decision of the Tribunal, Ahmedabad Bench in the case of Sarvodaya Sahakari Bank Ltd (supra). This ground is treated as allowed for statistical purpose. 3. In the remand proceedings, the Assessing Officer passed an order giving effect dated 22.12.2017 to the Tribunal's order where he had computed the amount allowable under section 36(1)(viia) as below:- Particulars Amount (Rs.) Amount (Rs.) Income as per order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has not complied with the directions of the Tribunal since the issue was remanded with a specific direction to consider the issue in the light of decision of the Ahmedabad Tribunal in the case of DCIT vs Sarvodaya Sahakari Bank Ltd (2014) 48 Taxmann.com 82 (Ahmedabad-Tib) where it has been held that 11. We have heard the Departmental Representative. The relevant provision of section 36(1)(viia) reads as under: '(viia) in respect of any provision for bad and doubtful debts made by - (a) a scheduled bank not being a bank incorporated by or under the laws of a country outside India or a non-scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, an amount not exceeding seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner: Explanation: - In this clause, (vi) co-operative bank , primary agricultural credit society and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction u/s. 36(1)(vii). Thus, it is clear that it is the intention of the legislature that the provision should be made specifically for this purpose but did not however require that the provision needs to be made only in the relevant previous year as could be clearly seen on comparative reading of section 36(1)(vii) and 36(1)(viia). 14. Further, where the intention of the legislature was requiring the debit in the profit and loss account it has been specifically provided in the section as will be seen from a reading of section 33AC which reads as under: Reserves for shipping business: - (1) In the case of an assessee, being a Government company or a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount not exceeding fifty per cent of profits derived from the business of operation of ships (computed under the head Profits and gains of business or profession and before making any deduction under this section), as is debited to the profit and loss account of the previous year in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made in the books of account of the subsequent year. Further, it was observed by the Hon'ble Punjab Haryana High Court that additional provision was created only subsequently. Therefore, the judgment of the Hon'ble Punjab Haryana High Court holds good for that particular circumstance of the case. Hence, in our considered opinion, it is clear that the provisions for bad and doubtful debts should be allowed u/s. 36(1)(viia), to the extent of provision made and available in the books of account, whether made in the current previous year or in the preceding previous years as we find that none of the lower authorities i.e. either Assessing Officer or the Commissioner of Income Tax (Appeals) has examined the issue under consideration from this angle and as the entire facts are not available for us to adjudicate the issue, we, in the interest of substantial justice, set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer for adjudication of the issue afresh as per law in the light of the discussions made hereinabove. Needless to mention that the Assessing Officer shall allow reasonable and proper opportunity of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Ltd (supra) where the Hon'ble Tribunal has held that the deduction under section 36(1)(viia) should be allowed to the extent the provision for bad and doubtful debts available in the books of accounts irrespective of whether the provision is made in the current previous year or in the preceding previous years. Therefore the assessee had prayed that the issue needs to be examined in the light of the decision of the Ahmadabad Bench of the Tribunal in the case of Sarvodaya Sahakari Bank Ltd (supra). Accordingly the issue for the year under consideration was remanded by the Hon'ble Tribunal to the assessing officer with a direction to consider the issue of amount allowable under section 36(1)(viia) in the light of the above decision of the Ahmadabad Tribunal. 9. We notice that the lower authorities while considering the issue afresh in the remanded proceedings restricted the deduction on the ground that the amount of provision made towards bad and doubtful debts in the books of accounts for the purpose of section 36(1)(viia) should exclude the provision made towards standard assets. The ld DR while relying on the order of the CIT(A) submitted that the provision made on sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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