Gujarat State Financial Corporation, Gandhinagar v. The Dy.CIT.,Circle-4,, Ahmedabad

ITA 2915/AHD/2012 | 2000-2001
Pronouncement Date: 11-10-2013 | Result: Allowed

Appeal Details

RSA Number 291520514 RSA 2012
Assessee PAN AABCG2924M
Bench Ahmedabad
Appeal Number ITA 2915/AHD/2012
Duration Of Justice 9 month(s) 11 day(s)
Appellant Gujarat State Financial Corporation, Gandhinagar
Respondent The Dy.CIT.,Circle-4,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 11-10-2013
Date Of Final Hearing 13-06-2013
Next Hearing Date 13-06-2013
Assessment Year 2000-2001
Appeal Filed On 31-12-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI T.R. MEENA ACCOUNTANT MEMBER ITA NO. 2915/AHD/2012 ASSESSMENT YEAR :2000-01 GUJARAT STATE FINANCIAL CORPORATION BLOCK -10 1 ST FLOOR SECTOR-11 UDHYOG BHAVAN GANDHINAGAR. V/S . THE DCIT CIRCLE-4 AHMEDABAD PAN NO. AABCG2924M (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI P. F. JAIN A.R. /BY RESPONDENT SHRI J. P. JANGID SR. D.R. /DATE OF HEARING 23.08.2013 /DATE OF PRONOUNCEMENT 11.10.2013 O R D E R PER : SHRI T.R.MEENA ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A)-XXI AHMADABAD ORDER DATED 02.11.2012 FOR A.Y. 2000-01. THE APPELLANTS GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE APPELLANT IS ENGAGED IN THE BUSINESS O F FINANCING BY WAY OF TERM LOANS LEASE FINANCE ETC. FOR INDUSTRI AL UNITS IN THE STATE OF GUJARAT. 2. THAT LD. CIT(APPEALS) HAS ERRED IN LAW & ON FACT S IN DISALLOWING THE CLAIM OF BAD DEBTS WRITTEN OFF OF RS.29 72 860/- U/S.36(1)(VII) BY STATING THE REASON THAT THERE IS ALSO DUPLICATE CLAIM U/S. 36(1)(VIIA) BEING 5% OF TOTAL INCOME. ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 2 3. THAT LD. CIT(APPEALS) HAS ERRED NOT FOLLOWING TH E PROVISIONS OF SEC.36(1)(VII) & SEC.36(1)(VIIA) & ALSO LEGAL C ITATIONS SUBMITTED DURING THE COURSE OF APPEAL RESULTING INTO WRONGFUL DISALLOWANCE OF BAD DEBTS WRITTEN OFF OF RS.29 72 860/-. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD ALTER A MEND SUBSTITUTE DELETE AND WITHDRAW ANY OR ALL OF THE GROUNDS OF A PPEAL. ALL THE GROUNDS OF APPEALS ARE FOR THE DISALLOWANCE OF CLAIM OF BAD DEBT WRITTEN OFF RS.29 72 860/- U/S.26(1)(VII) BY STATING THE RE ASONS THAT THERE IS ALSO DUPLICATE CLAIM U/S.36(VIIA) BEING 5% OF THE TOTAL INCOME. IN THIS CASE RETURN OF INCOME WAS FILED ON 27.10.2000 DECLARING TOTAL I NCOME OF RS.8 85 99 560/-. THE SAID RETURN OF INCOME WAS PROCESSED U/S.143(1) ON 07.01.2001. THE CASE WAS SUBSEQUENTLY REOPENED AND ASSESSMENT U/S.147 WA S FINALIZED AT RS. 9 41 29 560/- ON 14.12.2007 AFTER MAKING DISALLOWAN CE OF RS.55 30 000/- U/S.35D. SUBSEQUENTLY THE LD. COMMISSIONER OF INCO ME TAX-II AHMEDABAD REVIEWED THE AFORESAID ORDER U/S.263 AND HELD THAT THE ASSESSEES CLAIM OF BAD DEBT OF RS.29 72 860/- HAD BEEN WRONGLY ALLOWED AS PROVISION FOR BAD AND DOUBTFUL DEBT OF RS.19 576 81 000/- WAS ADJUSTING T HE BOOKS OF THE ASSESSEE. THE LD. COMMISSIONER OF INCOME TAX-II VIDE HIS ORDE R U/S.263 DATED 09.11.2009 DIRECTED THE ASSESSING OFFICER TO PASS A FRESH ORDER CONSIDERING THE CLAIM OF BAD DEBT OF RS.29 72 860/-AS PER THE P ROVISIONS OF INCOME TAX ACT 1961. ACCORDINGLY THE LD. A.O. SCRUTINIZED TH E CASE AFTER ISSUING NOTICE US/.142(1) AND143(2) OF THE IT ACT. THE APPELLANT HAD ALSO OFFERED EXPLANATION AGAINST THE QUERY RAISED BY THE A.O. FO R THE ISSUE OF BAD DEBT OF RS.29 72 860/-. THE ASSESSEES REPLY HAD BEEN REPR ODUCED BY THE A.O. ON ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 3 PAGE 2 OF THE ASSESSMENT ORDER DATED 14.12.2010 AND HELD THAT THE ASSESSEE CORPORATION HAD RESERVES IN THE BALANCE SHEET AS ON 31.03.1999 AT RS.19 57 81 000/- AND WHICH WAS MORE THAN THE BAD D EBTS WRITTEN OFF RS.29 72 860/-. THEREFORE APPELLANT WRITTEN OFF E XCESS BAD DEBT OF RS.29 72 860/-. HE FURTHER HELD THAT IN STATEMENT OF TOTAL INCOME CLAIM ALSO U/S.36(1)(VII) BEING 5% OF TOTAL INCOME OF RS.9 32 62 696/- AND AMOUNTING TO RS.46 63 135/- WAS ALSO CLAIMED. THEREFORE HE DIS ALLOWED THE BAD DEBT OF RS.29 72 860/- AND ALSO HELD THAT JUDGMENT OF OMAN INTERNATIONAL BANK SAOJ VS. DCIT 92 TTJ 752 IS PERTAINING TO SECTION 3 6(1)(VII)(A)(B) WHILE ASSESSEE IS A STATE FINANCE INSTITUTION AVAILABLE U /S.36(1)(VII)(A)(C). 2. BEING AGGRIEVED BY THE ORDER OF THE A.O. ASSESS EE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- IN THE APPELLATE PROCEEDINGS THE APPELLANT SUBMIT TED THAT THE HONBLE BENCH OF ITAT AHMEDABAD HAS DECIDED THE M ATTER AGAINST THE APPELLANT AND THE APPELLANT IS UNDER PROCESS OF FILING APPEAL BEFORE THE HONBLE HIGH COURT OF GUJARAT. MORE OR LESS SIMILAR SUBMISSIONS WERE MADE BEFORE ME AS WERE MADE BEFORE THE ASSESSING OFFICER. THE APPELLANT ALSO RELIED ON TH E FOLLOWING JUDGMENTS:- (A) OMAN INTERNATIONAL BANK SOAG VS. DCIT 92 TTJ 7 25 (ITA NO.6043/MUMBAI/1996. (B) TOURISM FINANCE CORPORATION OF INDIA VS. JT. CIT (2010) 128 TTJ 43 (DELHI) ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 4 2.1 NOW ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE APPELLANT CONTENTED THAT THE ORDER PASSED U/S.263 BY THE LD. COMMISSIONER OF INCOME TAX HAD BEEN CONFIRMED BY THE ITAT AND MATTER WAS P ENDING BEFORE THE HONBLE GUJARAT HIGH COURT. IT WAS ARGUED THAT BAD DEBT WRITTEN OFF RS.29 72 860/- WAS OUTSTANDING SINCE MORE THAN 5 YE ARS AND HAD BEEN WRITTEN OFF AFTER ALL DUE DILIGENT PROCEDURES CARRIED OUT B Y THE CORPORATION. FURTHER IN THE PAST ALL RESERVES CREATED U/S.37(1)(VII)(A)(C) FOR VARIOUS YEARS HAD BEEN DISALLOWED BY THE A.O. AND RESULTING INTO NON EXIST ENCE OF EFFECTIVE AVAILABILITY OF BAD DEBT RESERVES. THERE IS NO DOUBLE OR EXCESS CLAIM OF EXPENSES U/S.36(1)(VII)(A)(C) OR 36(2) OF THE I.T. ACT 1961 HAD BEEN CLAIMED BY THE APPELLANT. HE ALSO DRAWN OUR ATTENTION ON VARIOUS R ECTIFICATIONS U/S.154 MADE BY THE A.O. IN A.YRS.1997-98 & 1998-99. HE ALSO A RGUED THAT THE CHART FOR RESERVE CREATED AND DISALLOWED BY THE A.O. WAS SUBM ITTED BEFORE THE CIT(A). BUT THE LD. CIT(A) HAD NOT VERIFIED THE FACTS AND W ITHOUT VERIFYING THE FACTS HE CONFIRMED THE ADDITIONS. HE AGAIN RELIED UPON THE CASE OF OMAN INTERNATIONAL BANK SAOJ VS. DCIT (SUPRA) AND TOURISM FINANCE CORP ORATION OF INDIA VS. JCIT ITAT DELHI-I BENCH (2010)120A TTJ (DELHI) (40 ) 43 (2009) 31 SOT 495 WHEREIN IT WAS HELD THAT THE DEDUCTION U/S.36(1)(VI I)(A) HAD TO BE COMPUTED @ 5% OF THE TOTAL INCOME COMPUTED BEFORE MAKING ANY D EDUCTION UNDER THAT SECTION AND CHAPTER VI-A. HE FURTHER DRAWN OUT OUR ATTENTION ON ITAT AHMEDABAD BENCH DECISION IN ASSESSEES OWN CASE WHI CH REPRODUCED AS UNDER: ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 5 FURTHER IN THE ORDER THE HONBLE ITAT BENCH CONCL UDED THAT REGARDING THIS ISSUE IT WAS AGREED BY BOTH SIDES THAT THIS ISSUE IS IDENTICAL TO GROUND NOS.8 AND 9 IN ASST. YR.1997-98 AND CAN BE DECIDED ON SIMILAR LINES. IN ASST. YR. 1997-98 TH IS ISSUE HAS BEEN DECIDED BY US AS PER PARA NO.30 ABOVE AND IT WAS HE LD THAT PROVISIONS FOR BAD AND DOUBTFUL DEBTS FOR THE CURRE NT YEAR WAS HELD THAT PROVISIONS FOR BAD AND DOUBTFUL DEBTS FOR THE CURRENT YEAR CANNOT BE REDUCED FROM ACTUAL WRITE OFF OF BAD DEBTS IN T HE CURRENT YEAR AND THE SAME IS TO BE REDUCED FROM ACTUAL WRITE OFF OF BAD DEBTS IN THE SUBSEQUENT YEAR ONLY. ACCORDINGLY IN THIS YEA R ALSO THIS ISSUE IS DECIDED ON SIMILAR LINES AND IT IS HELD THAT THE A. O. IS JUSTIFIED IN REDUCING THE OPENING BALANCE OF PROVISION FOR BAD DEBTS FROM ACTUAL WRITE OFF OF BAD DEBTS BUT THE AO CANNOT REDUCE THE PROVISIONS OF BAD DEBTS MADE IN THE CURRENT YEAR FROM ACTUAL WRI TE OFF OF BAD DEBTS. THIS GROUND OF THE ASSESSEE IS PARTLY ALLOW ED. 2.3 THE BAD DEBT AMOUNTING TO RS.29 72 860/- ARE BA D DEBTS AND ARE ALLOWABLE INDEPENDENTLY AND NOT TO BE ADJUSTED AGAI NST BAD DEBT RESERVES U/S.36(1)(VII)(A)(C) BY RELYING UPON THE HONBLE SU PREME COURT DECISION IN CASE OF TRF LTD. THUS HE ALSO PRAYED TO DELETE TH E ADDITION. AT THE OUTSET THE LD. DR VEHEMENTLY RELIED UPON AND SUPPORTED THE ORDER OF THE CIT(A). 2.4 WE HEARD THE RIVAL CONTENTION AND PERUSED THE M ATERIAL ON RECORD. THE APPELLANT HAD DEBITED BAD DEBT OF RS.29 72 860/- DI RECTLY IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD OTHER EXPENSES. HOWEVER IN COMPUTATION OF INCOME HE CLAIMED THE FOLLOWING:- PROVISION FOR BAD DEBTS RESERVE U/S.36(1)(VII) OF THE ACT BEING 5% OF TOTAL INCOME OF RS.93262696/- RS. 4 6 63 135 ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 6 40% OF SPECIAL RESERVE U/S.36(1)(VIII) OF THE I.T. ACT TO THE EXTENT OF RESERVE CREATED. (RESERVE CREATED RS.6 21 75 131 IS RS.9 50 00 000/- 2.5 THE COMPUTATION MADE BY THE LD. A.O. SHOWED THA T HE HAD ALLOWED THE CLAIM MADE BY THE APPELLANT IN THE COMPUTATION OF I NCOME US.143(3) OF THE I.T. ACT. THE APPELLANT DEBITED RS.29 72 860/- IN THE P ROFIT & LOSS ACCOUNT UNDER THE HEAD EXPENSES U/S.36(1)(VII) OF THE ACT WHICH WAS WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION BY THE APPELLANT WHICH WAS ALLOWABLE AS PER HONBLE SUPREME COURT DECISION IN TRF LTD. (SUPRA). HOWEVE R THE APPELLANT CANNOT CLAIM THIS BAD DEBT TWICE IF THE RESERVES ARE AVAIL ABLE WITH THE APPELLANT. PRIMA FACIE IT APPEARS THAT RESERVES FOR BAD DEBTS MADE BY THE APPELLANT US/.36(1)(VIIA)(C) HAD BEEN DISALLOWED BY THE A.O. THE LD. A.O. HAS RECORDED THE FIGURE OF PROVISIONS FOR SUBSTANDARD AND DOUBTF UL AND LOSS ASSETS HAD BEEN SHOWN FOR A.Y.1999-2000 AT RS.19 57 81 000/-. IT I S TRUE THAT THERE WAS A PROVISION FOR RS.19 57 81 000/- AS PER THE BALANCE SHEET DRAWN FOR THE COMPANY LAW. THE CHART FOR RESERVES CREATED FOR DO UBTFUL DEBTS U/S. 36(1)(VIIA)(C) AND DISALLOWANCE MADE BY THE A.O SHO WED THAT THERE IS NO PROVISIONS FOR BAD AND DOUBTFUL DEBT IS REMAINED WI TH THE APPELLANT. THE FACTS AND FIGURES ARE REQUIRED TO BE VERIFIED BY THE A.O. IF IN PAST WHATEVER RESERVES CREATED BY THE ASSESSEE U/S.36(1)(VIIA)(C) HAD BEEN DISALLOWED THEN THE APPELLANT IS JUSTIFIED TO CLAIM THE BAD DEBTS U/S.3 6(1)(VII) OF THE I.T. ACT. THE REVENUES CLAIM THAT APPELLANT HAD TAKEN DOUBLE DED UCTION FOR BAD DEBTS ARE NOT FIGURING OUT FROM THE DETAILS SUBMITTED BY THE APPELLANT. THEREFORE WE ARE CONSIDERED VIEW THAT A.O. HAS TO VERIFY THE PAST RE CORDS FOR BAD DEBT WRITTEN ITA NO. 2915/AHD/2012 A.Y. 00-01 PAGE 7 OFF AND RESERVES FOR PROVISION FOR BAD DEBT WERE C REATED BY THE APPELLANT. IT IS HELD BY THE VARIOUS COURTS THAT BOTH THE CLAUSES DI STINCT AND INDEPENDENT. FIRST THE ASSESSEE HAS TO WRITTEN OFF BAD DEBTS U/S .36(1)(VII) FOR THE CURRENT YEAR AND ALSO CAN CREATE THE RESERVE U/S.36(1)(VIIA )(C) OF THE IT ACT. ON TOTAL INCOME COMPUTED BEFORE MAKING ANY DEDUCTION UNDER T HIS SECTION AND CHAPTER VI-A. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT (A) TO THE A.O. AND HE IS DIRECTED TO TAKE DECISION AS PER THE ABOVE OBSERVATION MADE BY US. 3. IN RESULTS THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 11.10.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ) ) 12( / DR ITAT AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ 8/ 1 ': ) 12( ;