The Principal Commissioner of Income-tax, Kozhikode v. North Malabar Gramin Bank
[Citation -2020-LL-0923-48]

Citation 2020-LL-0923-48
Appellant Name The Principal Commissioner of Income-tax, Kozhikode
Respondent Name North Malabar Gramin Bank
Court HIGH COURT OF KERALA AT ERNAKULAM
Relevant Act Income-tax
Date of Order 23/09/2020
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags bad and doubtful debts • books of accounts
Bot Summary: 25 41 of 2016 1) Whether, on the facts and in the circumstances of the case and the main issue involved in the present case being regarding the restriction of deduction under Section 36(1)(viia) to the extent of provisions of bad and doubtful debt made in the books of account, is not reliance on the decision of the Supreme Court in 343 ITR 270 by the Tribunal erroneous and misplaced Independent question of law in I.T.A.No. 25 of 2016 2) Whether, on the facts and in the circumstances of the case and the provisions made during the year being Rs.34,09,314/- only should not the deduction under section 36(1)(viia) has to be restricted to Rs.34,09,314/- as against Rs.12,29,07,669/- claimed by the assessee Independent question of law in I.T.A.No. 41 of 2016 2) Whether, on the facts and in the circumstances of the case and the provisions made during the year being Rs.3,42,68,822/- only, should not the deduction under section 36(1)(viia) has to be restricted to Rs.3,42,68,822/- as against Rs.16,99,98,327/- claimed by the assessee 2. The learned Standing Counsel for the Revenue submits that the decision of the Honourable Supreme Court would definitely indicate that clause of sub-Section of Section 36 is not applicable for a claim raised under clause of Section 36(1). The learned counsel for the assessee points out that while sub-Section of Section 36(1) speaks of writing off, of debts as irrecoverable, in the accounts of the assessee for the previous year, there is no such mandate in clause. A provision for bad and doubtful debts can be made only in the books of accounts and if the same has not been made, there is no reason for allowing the same. As has been submitted by the learned counsel for the Revenue, though the AO was not correct in applying clause of Section 36(2), even then the claim could not have been allowed for reason of the absence of any provision having been made by the assessee in the books of accounts.


IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942 ITA.No.25 OF 2016 AGAINST ORDER IN ITA 183/COCH/2015 DATED 05-10-2015 OF I.T.A.TRIBUNAL, COCHIN BENCH FOR ASSESSMENT YEAR 2007-08 APPELLANT/APPELLANT/RESPONDENT/REVENUE: PRINCIPAL COMMISSIONER OF INCOME TAX, KOZHIKODE BY ADVS. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: M/S.NORTH MALABAR GRAMIN BANK HEAD OFFICE, PALLIKKUNNU, KANNUR-670 004. BY ADVS. SRI.MOHAN PULIKKAL SRI.K.S.MENON K SRI.NARAYANAN P POTTY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23.09.2020, ALONG WITH ITA.41/2016, COURT ON SAME DAY DELIVERED FOLLOWING: I.T.A. Nos.25 & 41 of 2016 2 IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942 ITA.No.41 OF 2016 AGAINST ORDER/JUDGMENT IN ITA 184/COCH/2015 DATED 05-10-2015 OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/RESPONDENT/REVENUE: PRINCIPAL COMMISSIONER OF INCOME TAX KOZHIKODE. BY ADVS. SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI INCOME TAX DEPARTMENT RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: M/S. NORTH MALABAR GRAMIN BANK KANNUR-670 004. R1 BY ADV. SRI.MOHAN PULIKKAL R1 BY ADV. SRI.K.S.MENON K R1 BY ADV. SRI.NARAYANAN P POTTY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 23.09.2020, ALONG WITH ITA.25/2016, COURT ON SAME DAY DELIVERED FOLLOWING: I.T.A. Nos.25 & 41 of 2016 3 JUDGMENT Vinod Chandran, J. questions of law raised in appeals are following:- Common question of law in I.T.A.Nos.25 & 41 of 2016 1) Whether, on facts and in circumstances of case and main issue involved in present case being regarding restriction of deduction under Section 36(1)(viia) to extent of provisions of bad and doubtful debt made in books of account, is not reliance on decision of Supreme Court in 343 ITR 270 (SC) by Tribunal erroneous and misplaced? Independent question of law in I.T.A.No.25 of 2016 2) Whether, on facts and in circumstances of case and provisions made during year being Rs.34,09,314/- only should not deduction under section 36(1)(viia) has to be restricted to Rs.34,09,314/- as against Rs.12,29,07,669/- claimed by assessee? Independent question of law in I.T.A.No.41 of 2016 2) Whether, on facts and in circumstances of case and provisions made during year being Rs.3,42,68,822/- only, should not deduction under section 36(1)(viia) has to be restricted to Rs.3,42,68,822/- as against Rs.16,99,98,327/- claimed by assessee? 2. above questions have been answered in different assessment year as against assessee-respondent itself by Division Bench in I.T.A.No.119 of 2015 by I.T.A. Nos.25 & 41 of 2016 4 judgment dated 25.09.2018. Division Bench held so in paragraph 3: 3. learned Standing Counsel for Revenue submits that decision of Honourable Supreme Court would definitely indicate that clause (v) of sub-Section (2) of Section 36 is not applicable for claim raised under clause (viia) of Section 36(1). However, it is submitted that without provision in books of accounts, there could not have been claim for deduction under Section 36(1)(viia). learned counsel for assessee points out that while sub-Section (vii) of Section 36(1) speaks of writing off, of debts as irrecoverable, in accounts of assessee for previous year, there is no such mandate in clause (viia). Clause (viia) starts with words 'in respect of any provision for bad and doubtful debts made by-'. provision for bad and doubtful debts can be made only in books of accounts and if same has not been made, there is no reason for allowing same. As has been submitted by learned counsel for Revenue, though AO was not correct in applying clause (v) of Section 36(2), even then claim could not have been allowed for reason of absence of any provision having been made by assessee in books of accounts. We, hence, answer questions of law in favour of Revenue and against assessee and restore I.T.A. Nos.25 & 41 of 2016 5 order of AO for reasons stated hereinabove. No order as to costs . 3. We, hence, respectfully follow decision of Division Bench, answer questions of law in favour of Revenue and against assessee and restore order of Assessing Officer for reasons stated in above extracted paragraph. appeals would stand allowed. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- T.R.RAVI JUDGE Pn 23/09 I.T.A. Nos.25 & 41 of 2016 6 APPENDIX OF ITA NO.25 OF 2016 PETITIONER'S EXHIBITS ANNEXURE COPY OF ASST. ORDER DATED 26.03.2013 ANNEXURE B COPY OF CIT(A)'S ORDER DATED 19.12.2014 ANNEXURE C ORDER OF ITAT, KOCHI, DATED 05.10.2015 I.T.A. Nos.25 & 41 of 2016 7 APPENDIX OF ITA NO.41 OF 2016 PETITIONER'S EXHIBITS ANNEXURE COPY OF ASST. ORDER DATED 26.03.2013 ANNEXURE B COPY OF CIT(A)'S ORDER DATED 19.12.2014 ANNEXURE C ORDER OF ITAT, KOCHI, DATED 05.10.2015 Principal Commissioner of Income-tax, Kozhikode v. North Malabar Gramin Bank
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