Deputy Commissioner of Income-tax, Patan Circle, Patan v. Gozaria Nagarik Sahkari Bank Ltd
[Citation -2016-LL-1019-68]

Citation 2016-LL-1019-68
Appellant Name Deputy Commissioner of Income-tax, Patan Circle, Patan
Respondent Name Gozaria Nagarik Sahkari Bank Ltd.
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 19/10/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags gross total income
Bot Summary: In the first ground of appeal, the Assessing Officer has raised the following grievance: The learned CIT(A) has erred in law and on facts in deleting the addition of Rs 96,23,606 made on account of disallowance of claim of deduction under section 36(1)(viia) of the Income Tax Act, 1961. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction of Rs 1,01,08,760. The AO, on a perusal of material on record, was of the view that the amount of Rs 1,42,36,140, against investment in CRB Capital Markets, has been debited to reserve fund, and, as such, no provision is created as required under section 36(1)(viia). We have noted that that so far as the provision of Rs 1,42,36,140 in respect of CRB Capital Market is concerned, the assessee himself has added it back, alongwith the provision of Rs 4,85,154 for other bad debts, in the computation of income. As regards the Assessing Officer s observations to the effect that since no provision is created for the bad debts, and that, for this reason, the same cannot be allowed as deduction, we find this aspect of the matter is now covered by the decision of a coordinate bench of this Tribunal, in the case of Power Finance Corporation Limited Vs JCIT 10 SOT 190 inasmuch as undisputedly the assessee has created a provision of Rs 1,42,36,140 to the debit of reserve fund against the investment in CRB Capital Market, and the mere fact that it is termed as transfer to reserve does not alter substance of the provision because I. TI.T.A.No. 2, the Assessing Officer has raised the following grievance: The learned CIT(A) has erred in law and on facts in deleting the addition made on account of disallowance of provision on account of Government Securities. Learned representatives fairly agree that this issue is covered, in favour of the assessee, by decision of a coordinate bench, in assessee s own case for the immediately preceding assessment year.


I.T.A.No.369/Ahd/2013 Assessment year:2009-10 Page 1 of 4 IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [Coram: Pramod Kumar AM and S S Godara JM] I.T.A. No. 369/Ahd/2013 Assessment year: 2009-10 Deputy Commissioner of Income Tax Patan Circle, Patan ...... . .Appellant Vs. Gozaria Nagarik Sahkari Bank Ltd. .. . . Respondent Main Bazar, Gozaria District Mehsana. PIN - 382 825 [PAN: AAAAT1074G] Appearances by: Prasoon Kabra for appellant Sanjay R Shah for respondent Date of concluding hearing : September 16, 2016 Date of pronouncing order : October 19th, 2016 ORDER Per Pramod Kumar, AM: 1. By way of this appeal, Assessing Officer has challenged correctness of order dated 8th November 2012, in matter of assessment under section 143(3) of Income Tax Act, 1961, for assessment year 2009-10. 2. In first ground of appeal, Assessing Officer has raised following grievance: learned CIT(A) has erred in law and on facts in deleting addition of Rs 96,23,606 made on account of disallowance of claim of deduction under section 36(1)(viia) of Income Tax Act, 1961. I.T.A.No.369/Ahd/2013 Assessment year:2009-10 Page 2 of 4 3. assessee before us is cooperative bank. During course of assessment proceedings, Assessing Officer noticed that assessee has claimed deduction of Rs 1,01,08,760. It was also noted that while in profit and loss account, there is provision for bad debts of Rs 4,85,154 and of Rs 1,42,36,140, deduction, as made in computation, is of Rs 1,01,08,760. AO, on perusal of material on record, was of view that amount of Rs 1,42,36,140, against investment in CRB Capital Markets, has been debited to reserve fund, and, as such, no provision is created as required under section 36(1)(viia). He noted that as provision is confined to Rs 4,85,154, deduction under section 36(1)(viia) is restricted to same amount, as against claim of Rs 1,01,08,760. Accordingly, disallowance of Rs 96,23,606 was made in respect of bad debts. Aggrieved, assessee carried matter in appeal before CIT(A) who deleted disallowance. Assessing Officer is aggrieved and is now in appeal before us. 4. We have heard rival contentions, perused material on record and duly considered facts of case in light of applicable legal position. 5. We have noted that that so far as provision of Rs 1,42,36,140 in respect of CRB Capital Market is concerned, assessee himself has added it back, alongwith provision of Rs 4,85,154 for other bad debts, in computation of income. What has been claimed is deduction is as per formulae set out in section 36(1)(viia) which provides for deduction of 10% of rural advances and 7.5% of gross total income, which works out to Rs 86,,71,687 and Rs 14,37,073 respectively, and thus aggregate to Rs 1,01,08,760. As regards Assessing Officer s observations to effect that since no provision is created for bad debts, and that, for this reason, same cannot be allowed as deduction, we find this aspect of matter is now covered by decision of coordinate bench of this Tribunal, in case of Power Finance Corporation Limited Vs JCIT [(2006) 10 SOT 190 (Del)] inasmuch as undisputedly assessee has created provision of Rs 1,42,36,140 to debit of reserve fund against investment in CRB Capital Market, and mere fact that it is termed as transfer to reserve does not alter substance of provision because I . TI.T.A.No.369/Ahd/2013 Assessment year:2009-10 Page 3 of 4 admittedly it is above line transfer and not below line appropriation. In view of these discussions, as also bearing in mind entirety of case, we uphold relief granted by CIT(A) and decline to interfere in matter. 6. Ground no. 1 is thus dismissed. 7. In ground no. 2, Assessing Officer has raised following grievance: learned CIT(A) has erred in law and on facts in deleting addition made on account of disallowance of provision on account of Government Securities. 8. Learned representatives fairly agree that this issue is covered, in favour of assessee, by decision of coordinate bench, in assessee s own case for immediately preceding assessment year. In this view of matter, even as learned Departmental Representative, relied upon stand taken in order of Assessing Officer, which has anyway been rejected by coordinate bench in immediately preceding assessment year, we see no reasons to interfere in relief granted by CIT(A). copy of reasoned order dated 13th August 2015, in assessee s own case for immediately preceding assessment year, will be deemed to be attached to and forming part of this order as well. 9. Ground no. 2 is also dismissed. 10. In result, appeal is allowed. Pronounced in open court today on 19th day of October, 2016. Sd/- Sd/- S S Godara Pramod Kumar (Judicial Member) (Accountant Member) Dated: 19th day of October, 2016. I.T.A.No.369/Ahd/2013 Assessment year:2009-10 Page 4 of 4 Copies to: (1) appellant (2) respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Deputy Commissioner of Income-tax, Patan Circle, Patan v. Gozaria Nagarik Sahkari Bank Ltd
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