Ita/25/2016 Of The Principal Commissioner Of Income Tax, Kozhikode v. M/S.north Malabar Gramin Bank

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942 ITA.No.25 OF 2016 AGAINST THE ORDER IN ITA 183/COCH/2015 DATED 05-10-2015 OFI.T.A.TRIBUNAL, COCHIN BENCH FOR THE ASSESSMENT YEAR 2007-08 APPELLANT/APPELLANT/RESPONDENT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX, KOZHIKODE BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: M/S.NORTH MALABAR GRAMIN BANKHEAD 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 ON23.09.2020, ALONG WITH ITA.41/2016, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 23RD DAY OF SEPTEMBER 2020 / 1ST ASWINA, 1942 ITA.No.41 OF 2016 AGAINST THE ORDER/JUDGMENT IN ITA 184/COCH/2015 DATED 05-10-2015OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/RESPONDENT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAXKOZHIKODE. BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENTSRI.K.M.V.PANDALAI INCOME TAX DEPARTMENT RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: M/S. NORTH MALABAR GRAMIN BANKKANNUR-670 004. R1 BY ADV. SRI.MOHAN PULIKKALR1 BY ADV. SRI.K.S.MENON KR1 BY ADV. SRI.NARAYANAN P POTTY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON23.09.2020, ALONG WITH ITA.25/2016, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: Vinod Chandran, J. JUDGMENT The questions of law raised in the appeals are the following:- Common question of law in I.T.A.Nos.25 & 41 of 2016“1)Whether, on the facts and in the circumstancesof the case and the main issue involved in thepresent case being regarding the restriction ofdeduction under Section 36(1)(viia) to the extentof provisions of bad and doubtful debt made in thebooks of account, is not reliance on the decisionof the Supreme Court in 343 ITR 270 (SC) by theTribunal erroneous and misplaced? Independent question of law in I.T.A.No.25 of 20162)Whether, on the facts and in the circumstancesof the case and the provisions made during the yearbeing Rs.34,09,314/- only should not the deductionunder section 36(1)(viia) has to be restricted toRs.34,09,314/- as against Rs.12,29,07,669/- claimedby the assessee?” Independent question of law in I.T.A.No.41 of 20162)Whether, on the facts and in the circumstancesof the case and the provisions made during the yearbeing Rs.3,42,68,822/- only, should not thededuction under section 36(1)(viia) has to berestrictedtoRs.3,42,68,822/-asagainstRs.16,99,98,327/- claimed by the assessee?” 2.The above questions have been answered in a different assessment year as against the assessee-respondent itself by a Division Bench in I.T.A.No.119 of 2015 by judgment dated 25.09.2018. The Division Bench held so inparagraph 3: Independent question of law in I.T.A.No.41 of 20162)Whether, on the facts and in the circumstancesof the case and the provisions made during the yearbeing Rs.3,42,68,822/- only, should not thededuction under section 36(1)(viia) has to berestrictedtoRs.3,42,68,822/-asagainstRs.16,99,98,327/- claimed by the assessee?” 2.The above questions have been answered in a different assessment year as against the assessee-respondent itself by a Division Bench in I.T.A.No.119 of 2015 by judgment dated 25.09.2018. The Division Bench held so inparagraph 3: “3.The learned Standing Counsel for theRevenue submits that the decision of theHonourable Supreme Court would definitely indicatethat clause (v) of sub-Section (2) of Section 36is not applicable for a claim raised under clause(viia) of Section 36(1). However, it is submittedthat without a provision in the books of accounts,there could not have been a claim for deductionunder Section 36(1)(viia). The learned counselfor the assessee points out that while sub-Section(vii) of Section 36(1) speaks of writing off, ofdebts as irrecoverable, in the accounts of theassessee for the previous year, there is no suchmandate in clause (viia). Clause (viia) startswith the words 'in respect of any provision forbad and doubtful debts made by-'. A provision forbad and doubtful debts can be made only in thebooks of accounts and if the same has not beenmade, there is no reason for allowing the same.As has been submitted by the learned counsel forthe Revenue, though the AO was not correct inapplying clause (v) of Section 36(2), even thenthe claim could not have been allowed for reasonof the absence of any provision having been madeby the assessee in the books of accounts. We,hence, answer the questions of law in favour ofthe Revenue and against the assessee and restore the order of the AO for the reasons statedhereinabove. No order as to costs”. 3. We, hence, respectfully follow the decision of the Division Bench, answer the questions of law in favour ofthe Revenue and against the assessee and restore the orderof the Assessing Officer for the reasons stated in the aboveextracted paragraph. The appeals would stand allowed. No costs. Sd/-K.VINOD CHANDRAN JUDGE Sd/-T.R.RAVIJUDGE APPENDIX OF ITA NO.25 OF 2016 PETITIONER'S EXHIBITSANNEXURE ACOPY OF ASST. ORDER DATED 26.03.2013ANNEXURE BCOPY OF CIT(A)'S ORDER DATED 19.12.2014ANNEXURE CORDER OF THE ITAT, KOCHI, DATED 05.10.2015 APPENDIX OF ITA NO.41 OF 2016 PETITIONER'S EXHIBITS ANNEXURE ACOPY OF ASST. ORDER DATED 26.03.2013ANNEXURE BCOPY OF CIT(A)'S ORDER DATED 19.12.2014ANNEXURE CORDER OF THE ITAT, KOCHI, DATED 05.10.2015