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TMI Blog2021 (4) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(viia) of the Act. Respectfully following the principles of precedent, we reverse the order passed by the Ld. CIT(A) - Appeal of the Revenue is allowed. - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For the Appellant : Mr. Suresh Periasamy, JCIT For the Respondent : Mr. K. Ravi, Advocate. ORDER PER SHRI V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals), Puducherry in I.T.A No. 200/CIT(A)-PDY/2016-17 dated 19.03.2018 relevant to the Assessment Year 2014-15. 2. The brief facts of the case are that the assessee is M/s. The cuddalore District Central Co-operative Bank Ltd. filed its return of income by admitting total income of Rs. 11,36,78,396/-. The return was processed u/s. 143(1) of the Income Tax Act, 1961 (for short the Act ). The case was selected for scrutiny through CASS and after following the due procedure assessment was completed u/s. 143(3) of the Act. In the assessment order, the AO has noted that from the balance sheet it is seen that the assessee has created Reserve for NPA to the extent of Rs. 17,52,92,029/- only. Hence, total deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10) 320 ITR 577(SC). 2.3 The learned CIT(A) erred in holding that the deduction u/s. 36(1)(viia) need not be restricted to the reserves created. 2.4 The learned CIT(A) erred in not taking cognizance of the decision of the Hon ble Punjab Haryana High Court in the case of State Bank of Patiala (2005) ITR 54 which is directly on the issue and where it has been held that the deduction cannot exceed the reserves created. 3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored. 5. The ld. DR has submitted before us that the assessee has only created a provision for NPA at Rs. 17,52,92,029/- and he has claimed in the return of income u/s. 36(1)(viia) of the Act for Rs. 20,73,99,433/- and submitted that the assessee is only eligible for the provision made for NPA for Rs. 17,52,92,029/-. For the above contention, he has relied on the decision of the Hon'ble Punjab Haryana High Court in the case of State Bank of Patiala vs. CIT [2005] 143 TAXMAN 196 (Punj. Har) and also the decision of the Co-ordinate Bench of the Tribunal in the case of M/s. Nazareth Urban Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as under: 5. Section 36(1)(vzza) of the Act as applicable to the assessment year 1985 86 reads as under: in respect of any provision for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of clause (vii) or a bank incorporated by or under the laws of a country outside India] or a non scheduled bank an amount not exceeding ten per cent of the total income (computed before making any deduction under this clause and Chapter VI A) or an amount not exceeding two per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner whichever is higher 6. A bare perusal of the above shows that the deduction allowable under the above provisions is in respect of the provision made Therefore making of a provision for bad and doubtful debt equal to the amount mentioned in this section is a must for claiming such deduction The Tribunal has rightly pointed out that this issue stands further clarified from the proviso to clause (vu) of section 36(1) of the Act which reads as under: Provided that in the case of an assessee to which clause (viia) applies the amount of the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled 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 the material placed before us. The assessee has debited a sum of Rs. 7,72,84,858/- under the head NPA during the previous year relevant to the AY 2008-09 and claimed the deduction u/s. 36(i)(vii)(a) for an amount of Rs. 19,49,25,398/-. The Ld.Counsel argued that the assessee has already created the provision for NPA in the earlier years which remained unadjusted. Therefore, there is no need to create any fresh provision during the previous year relevant to the AY 2008-09. 8.0 In Income Tax, each year is an independent and the income has to be computed as per the system of accounting regularly followed by the assessee. Therefore, the deduction can be made by the assessee only on the basis of the expenditure debited to the Profit Loss A/c from the previous year relevant to the AY under consideration. No expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. This view is supported by the decision of the Hon ble Punjab Haryana High Court cited supra. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is allowed. Ground Nos.6 12 of the assessee are dismissed. 11. In so far as the case law relied on by the ld. counsel for the assessee in the case of DCIT vs. Prathma Bank (supra) is concerned, by following the assessee s own case, the Revenue appeal was dismissed. We find that the Hon'ble Punjab Haryana High Court (supra) has laid down a clear ratio that to claim deduction making of provision for bad and doubtful debt equivalent to an amount claimed as a deduction in account books is necessary for claiming deduction u/s. 36(1)(viia) of the Act. Respectfully following the principles of precedent, we reverse the order passed by the Ld. CIT(A). Apart from that the two other Co-ordinate Benches of the Tribunal has followed the Hon'ble Punjab Haryana High Court (supra) and rejected the argument made by the assessee. In view of the above, we find that the Ld. CIT(A) not correct in allowing the grounds of appeal raised by the assessee to the extent of the amount claimed in the return of income without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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