Industrial Investment Bank of India Ltd. v. Deputy commissioner of Income-tax, Circle-6, Kolkata
[Citation -2016-LL-0928-18]

Citation 2016-LL-0928-18
Appellant Name Industrial Investment Bank of India Ltd.
Respondent Name Deputy commissioner of Income-tax, Circle-6, Kolkata
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 28/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags bad and doubtful debts • computing book profit
Bot Summary: The AO disallowed bad debts written off to a tune of Rs.51,95,96,000/-. According to assessee, it had written back a sum of Rs.207,51,95,000/- out of provision made for doubtful debts and reduced the same while computing book profit u/s. 1, it is the argument of the Ld. AR that the account referred to in proviso to section 36(1)(vii) of the Act is the account that had been made under clause of section 36(1) of the Act and not the account of the provision for bad and doubtful debts as appearing in the financial account. In the instant case, we found that it is an admitted fact that the assessee made provision for Rs.126,67,12,600/- in his books and claimed as deduction in the AY 2003-04 u/s. Out of said provision the assessee has periodically writing of various amounts as follow: Bad debts written off disallowed: AY Amount 2003-04 70,15,873 2004-05 1,42,48,266 2005-06 8,20,27,924 2006-07 9,71,69,000 2007-08 3 ITA No. 540/Kol/2013 Industrial Investment Bank of India Ltd., AY 2009-10 2008-09 19,59,35,000 2009-10 51,95,96,000 After writing off the aforesaid amounts till 2009-10 to a tune of Rs.91,59,92,063/- the unabsorbed portion still left with the assessee works to Rs.35,22,62,228/-. Admittedly the amounts written off as stated above includes a sum of Rs. 51,95,96,000/- relating to the assessment year 2009-10 which the assessee claims as deduction under section 36(1)(vii). Since the bad debts written off in the current assessment year do not exceed credit balance in the provision for bad and doubtful debts account, the authorities below have rightly disallowed the amount claimed as deduction by the assessee, inasmuch as the intention of the legislature was to see that deductions for bad debts in respect of the very same amount covered by clause of the Act is not again claimed under clause of the Act.


ITA No. 540/Kol/2013 Industrial Investment Bank of India Ltd., AY 2009-10 IN INCOME TAX APPELLATE TRIBUNAL BENCH: KOLKATA [Before Shri P. M. Jagtap, AM & Shri K. Narasimha Chary, JM] I.T.A No. 540/Kol/2013 Assessment Year: 2009-10 Industrial Investment Bank of India Ltd. Vs. Deputy commissioner of Income-tax, (PAN:AABCI0324D) Circle-6, Kolkata. (Appellant) (Respondent) Date of hearing: 26.09.2016 Date of pronouncement: 28.09.2016 For Appellant: Shri Sanjay Bhattacharya, FCA For Respondent: Shri R. S. Biswas, CIT ORDER Per Shri K. Narasimha Chary, JM: This appeal by assessee is arising out of order of CIT(A)-VI, Kolkata vide Appeal No. 282/CIT(A)-VII/Cir-6/2011-12/Kol dated 14.01.2013. Assessment was framed by DCIT, Circle-6, Kolkata u/s. 143(3) of Income Tax Act, 1961 (hereinafter referred to as Act ) for AY 2009-10 vide his order dated 29.12.2011. 2. Brief facts of case are that assessee is Industrial Investment Bank. For AY 2009-10 it had filed revised return of income on 29.03.2010 declaring loss of Rs.74,72,10,744/-. AO disallowed bad debts written off to tune of Rs.51,95,96,000/-. According to assessee, it had written back sum of Rs.207,51,95,000/- out of provision made for doubtful debts and reduced same while computing book profit u/s. 115JB of Act. Challenging disallowance of Rs.51,95,96,000/- assessee carried matter in appeal before Ld. CIT(A), who by way of impugned order dismissed relevant ground on this issue and upheld disallowance. 3. Aggrieved by same, assessee is in appeal before us on following grounds: 1. That CIT(A) was wrong in confirming action of Assessing Officer in disallowing Rs.51,95,96,000/- being Bad Debts Written off. 2. That without prejudice to contention raised in Ground No. 1 above, CIT(A) failed to appreciate that due to writing back of provision to extent of Rs.124,69,89,000/- in Assessment Year 2004-05, balance in account of Provision for Doubtful Debts had been substantially reduced and thus he erred in holding that Bad Debts Written Off would not exceed balance in account of Provision for Doubtful Debts. 2 ITA No. 540/Kol/2013 Industrial Investment Bank of India Ltd., AY 2009-10 4. At time of hearing Ld. AR did not press ground no. 2 and hence, same is dismissed being not pressed. 5. In respect of ground no. 1, it is argument of Ld. AR that account referred to in proviso to section 36(1)(vii) of Act is account that had been made under clause (viia) of section 36(1) of Act and not account of provision for bad and doubtful debts as appearing in financial account. It is his further argument that unless relationship between bad debts written off and provisions which was allowed earlier is made out, proviso to section 36(1)(vii) of Act has no application. 6. Ld. DR, on other hand, vehemently relied on orders of authorities below and urged before bench to confirm order of Ld. CIT(A) in this regard. 7. We have heard rival submissions and gone through facts and circumstances of case. Under section 36(1)(viia)(c) of Act, State Industrial Investment Corporation shall be allowed deductions in respect of any provision for bad and doubtful debts made by it, amount not exceeding 5% of total income computed before making any deduction under that particular clause and Chapter VIA. Proviso to section36(1)(vii) of Act states that to assessee to whom clause (viia) of Act applies, amount of bad debt or part thereof which is written off as irrecoverable in account of assessee for previous year, amount of deduction relating to any such debt or part thereof shall be limited to amounts by which such debt or part thereof exceeds credit balance in provision for bad and doubtful debts account made under that clause (viia) of section 36(1) of Act. 8. In instant case, we found that it is admitted fact that assessee made provision for Rs.126,67,12,600/- in his books and claimed as deduction in AY 2003-04 u/s. 36(1)(viia)(c) of Act. Out of said provision assessee has periodically writing of various amounts as follow: Bad debts written off disallowed: AY Amount 2003-04 70,15,873 2004-05 1,42,48,266 2005-06 8,20,27,924 2006-07 9,71,69,000 2007-08 3 ITA No. 540/Kol/2013 Industrial Investment Bank of India Ltd., AY 2009-10 2008-09 19,59,35,000 2009-10 51,95,96,000 After writing off aforesaid amounts till 2009-10 to tune of Rs.91,59,92,063/- unabsorbed portion still left with assessee works to Rs.35,22,62,228/-. Ld. AR submitted that sum of Rs.12,95,83,000/- was also disallowed for AY 2007-08 and it should also be considered. Even in that event also there is credit balance of more than Rs.21 cr. 9. Admittedly amounts written off as stated above includes sum of Rs. 51,95,96,000/- relating to assessment year 2009-10 which assessee claims as deduction under section 36(1)(vii) . We find that if this deduction is allowed, then it would amount to double deduction granted to assessee, in view of fact that assessee has already granted deduction under section 36(1) (viia)(c) of Act in view of making provision in year 2003-04. Since bad debts written off in current assessment year do not exceed credit balance in provision for bad and doubtful debts account, authorities below have rightly disallowed amount claimed as deduction by assessee, inasmuch as intention of legislature was to see that deductions for bad debts in respect of very same amount covered by clause (viia) of Act is not again claimed under clause (vii) of Act. With this view of matter, we do not find any merits in contention of Ld. AR. Hence, we find that orders of authorities below do not warrant any interference and same are hereby upheld. This ground of appeal of assessee is dismissed. 10. In result, appeal of assessee is dismissed. Order is pronounced in open court on 28.09.2016. Sd/- Sd/- (P.M.Jagtap) (K. Narasimha Chary) Accountant Member Judicial Member Dated : 28th September, 2016 Jd.(Sr.P.S.) 4 ITA No. 540/Kol/2013 Industrial Investment Bank of India Ltd., AY 2009-10 Copy of order forwarded to: 1. APPELLANT Industrial Investment Bank of India Ltd., 19, Netaji Subhas Road, Kolkata-700 001. 2 Respondent DCIT, Circle-6, Kolkata. 3. CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata True Copy, By order, Asstt. Registrar. Industrial Investment Bank of India Ltd. v. Deputy commissioner of Income-tax, Circle-6, Kolkata
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