9911796707
TMI Blog2019 (6) TMI 1721X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income, it is clear that, the bank has not created any reserve for bad and doubtful debts during the year. The fact is also evident from the statement of Break-up of the Details of income furnished in support of the original return of income which was signed by the Managing director and General Manager of the bank, wherein no such reserve was created. It s clear from the decision of the Hon ble High Court of Punjab Haryana in the case of State Bank of Patiala [ 2004 (5) TMI 12 - PUNJAB AND HARYANA HIGH COURT] that making of provision equal to the amount claimed as deduction, in the account books is necessary for claiming deduction u/s. 36(1)(viia). Since the assessee has not made any provision in the books of accounts, as admitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s revised return filed on 14.03.2016, the provision for bad and doubtful debts of Rs. 70.00 lakhs was made. During the course of assessment proceedings, the representative confirmed vide a letter dated 21.12.2016 that the assessee filed original return of income without making provision for Non-Performing Asset (in short NPA ) since the provision already made in the earlier year is adequate. Then by the advice of the auditor, the assessee filed the revised return by making a provision for NPA of Rs. 70.00 lakhs and requested to consider the assessee s claim of deduction u/s. 36(1)(viia). The AO, inter alia, held that the provision for bad and doubtful debts should necessarily be created during the year, in the absence, he refused the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and General Manager of the bank, wherein no such reserve (Rs.70,00,000/-) was created. These accounts of the bank were also audited by the charted accountant as required u/s. 44AB of the IT Act 1961 and copy of form No. 3GA 3CD dated 24-09-2014 certified by the chartered accountant was also furnished. There is no omission or wrong statement in the original return of the income and as such the bank's claim of Rs. 1,87,21,431/- (restricted to Rs. 67,42,872/-) as deduction u/s. 36(l)(viia) made in the revised return of income filed incorporating the reserves for bad and doubtful debts is not accepted. Accordingly, Rs. 67,42,872/- claimed u/s. 36(1)(viia) by the assessee was disallowed by the AO and added back to the return of income. 4. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision for bad and doubtful debt is created in the books of account is not in accordance with law. The claim of the assessee should be considered in the light of the provision of section 36(l)(viia) of the IT Act read with the CBDT instruction No,17/2008 dated 26.11.2008 in which it is clearly stated as follows: Quote: '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 the provisions of section 36(l)(viia), whichever is less. Unquote: 5.3 Further, this view of the department has been upheld by the Hon ble High Court of Punjab and Haryana in the case of State Bank of Patiala Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Punjab Haryana, supra, that making of provision equal to the amount claimed as deduction, in the account books is necessary for claiming deduction u/s. 36(1)(viia). Since the assessee has not made any provision in the books of accounts, as admitted by the assessee before the AO by its letters dated 21.12.2016, in the respective assessment years, the assessee is not entitled for the impugned deductions for the respective assessment years. Further, the relevant portion of the order of the co-ordinate Bench of this Tribunal in the case of M/s.The Salem Dt. Central Co.Op Bank Ltd., Salem vs. The DCIT, Salem in ITA No. 1168/Chny/Mds/2016 for the AY 2008-09 dated 07.06.2017, is extracted as under: 7.1 We heard the rival submissions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Circular No. 17/2008 which was relied upon by the Ld.CIT(A) in Para No. 4.2 which is re-produced hereunder: 4.2. The Assessing Officer has restricted the claim of the assessee Bank to the amount of provision made for the relevant assessment year. This restriction should be considered in light of the provisions of Section 36(1)(viia) of the IT Act read with the CBDT instruction No. 17/2008 dated 26.11.2006. In this Instruction it is clearly stated as follows: QUOTE: (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 section 36(1)(viia), whichever is less. UNQUOTE. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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