Assessing Officer allowed the Income Tax deduction in the form of amortization of premium with due verification, and the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the revisional order.
The assessee Dena Bank merged with Bank of Baroda filed its return of income for the assessment year 2017-18 on 28.10.2017 declaring a total income of Rs. nil and later filed a revised return of income on 24.01.2019 declaring a total loss at Rs.339,96,14,813/-. Assessment under section 143(3) of the income tax Act was completed on 26.12.2019 assessing the total income of the assessee at Rs.276.23 crores.
The Pr. CIT vide order under section 263 of the income tax Act dated 30.03.2022 observed that in respect of an investment under held to maturity the A.O has allowed the deduction in the form of amortization of premium without due verification. The Pr. Commissioner of Income Tax observed that while computing book profit u/s 115JB of the Act the A.O has allowed a deduction on account of bad debt written off of Rs.833.39 crores without verifying that the same has not been debited to the profit and loss account.
S. Ananthan & Mrs Lalitha, the Counsels for the appellant contended that A.O verified both the issue during the course of the assessment. Further contended that Pr. Commissioner of Income Tax has not considered the submission made before the A.O that the assessee had already debited the profit and loss account by the entire amount of provision for Bad and Doubtful debt for the doubtful debt of Rs.24,57,74,58,081/- which also included the amount of bad debt written off of Rs.833.39 crores and the same cannot be again debited to the profit and loss account. Dr Mahesh Akhade, appeared for the respondent and relied on the revisional order.
It was observed that the Assessing Officer had discussed in detail the nature of HTM securities held by the assessee while making disallowance under the head broken period interest. The AO vide notice u/s 142(1) of the income tax Act dated 08.11.2019 as per question no. 9 of the annexure specifically asked the assessee to submit a note on the applicability of Sec. 115JB/MAT provisions to the case of the assessee.
In Vide reply dated 21.11.2010 the assessee submitted that MAT provisions did not apply to the assessee being a banking company which was rejected by the A.O. The A.Oreduced the amount of Bad Debt off Rs.833.39 crores which was already added to the profit and loss account In being a part of the provisions of Doubtful debt of Rs.24,57,74,58,081/-.
A Coram of Shri Amit Shukla, judicial member & Shri Amarjit Singh, accountant member observed that the Pr. CIT(A) had not controverted these facts and material to substantiate his findings.
The Tribunal held that the decision of the ld. Pr. CIT for treating the assessment order as erroneous as well as prejudicial to the interest of the revenue is not justified and set aside the order passed u/s 263 of the income tax Act. The appeal of the assessee was allowed.
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