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TMI Blog2022 (11) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein as clear ratio laid down 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. Thus we confirm the disallowance made by Ld. AO u/s 36(1)(viia). The corresponding ground stand dismissed. The issue of OTS-interest waiver has apparently been not contested by the assessee before Ld. CIT(A) and therefore, no findings have been rendered in the impugned order in that respect. Since, the assessee has contested this issue before us, we admit the issue and restore this issue back to the file of Ld. CIT(A) for adjudication by way of speaking order. The grounds thus raised stand allowed for statistical purposes. Appeal stand partly allowed for statistical purposes. - HON BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM For the Appellant : Shri K. Ravi (Advocate) - Ld. AR For the Respondent : Shri S. Chandrasekaran (JCIT) Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2009-10 arises out of the order of learned Commissioner of Income Tax (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R advanced arguments and submitted that first appellate authority has not considered the issue on merits and merely upheld the directions given in the revisional order. The Ld. Sr DR, on the other hand, submitted that the issue is covered against the assessee by the order of this Tribunal in ITA No.1921/Chny/2018 for AY 2014-15 order dated 09.04.2021. The copy of the same has been placed on record. Having heard rival submissions, the appeal is disposed-off as under. Assessment Proceedings 4.1 The assessee is a District Central Co-operative Bank. The assessee was assessed u/s 143(3) r.w.s. 147 on 06.03.2015. This order was subjected to revision by revisional authority u/s 263 and consequently, an assessment was framed u/s 143(3) r.w.s. 263 on 15.12.2017. The revision was done with a view to withdraw excess deduction allowed to the assessee u/s 36(1)(viia) and to examine the assessee s claim on issue of OTS-interest waiver with reference to the records of the assessee. 4.2 The Ld. AO noted that the assessee claimed provision for bad and doubtful debts and claimed deduction u/s 36(1)(viia) for Rs. 888.48 Lacs. The same was computed as sum of 7.5% of total income and deduction not exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized was to be credited to overdue interest reserve account. The assessee had created overdue interest reserve account and such interest waiver was to be debited in that account only. Accordingly, this claim was also disallowed. Appellate Proceedings 5. The Ld. CIT(A), in para 6.2 of impugned order, held that specific directions were given by revisional authority to withdraw the claim made u/s 36(1)(viia) and therefore, such directions could not be subject matter of appeal before CIT(A). The CIT(A) cannot sit over the judgment over the correctness of specific direction given in order u/s 263. Therefore, the ground was dismissed. Regarding ground that all the provisions made in the books should be considered as provision for bad debts, the same was also rejected. Further, the amount to be allowed was already decided by Ld. Pr. CIT in his order u/s 263 and therefore, there was no scope to differ with those directions. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 6. We are of the considered opinion that the order passed by Ld. AO was an appealable order before Ld. CIT(A). Accordingly, as first appellate authority, independent findings should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viia) applies the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or prt thereof exceeds the credit balance m the provision for bad and doubtful debts account made under that clause 7. This also clearly shows that making of provision equal to the amount claimed as deduction in the account books is necessary for claiming deduction under section 36(1)(viia) of the Act. The Tribunal has distinguished various authorities relied upon by the assessee wherein deductions had been allowed under various provisions which also required creation of reserve after the assessee had created such reserve in the account books before the completion of the assessment. It has been correctly pointed out that in all those cases, reserves/provisions had been made in the books of account of the same assessment year and not of the subsequent assessment year. 8. In the present case, the assessee has not made any provision in the books of account for the assessment year under consideration i.e 1985 86 by making supplementary entries and by revising its balance sheet. The provision has been made in the books of account of the subsequent year. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AY under consideration. No expenditure which is not debited to the Profit Loss A/c in the year under consideration is permissible for deduction. In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s. 36(1)(viia) is permissible to the extent of the amount debited to the Profit Loss A/c or as per the permissible limits specified u/s. 36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act. This view is clarified by the CBDT 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 deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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