The Delhi bench of Income Tax Appellate Tribunal (ITAT) allowed the bad debts claimed under Section 36(1)(vii) of Income Tax Act in respect of identified debts.
The assessee E-oriental Bank of Commerce is a Nationalized Bank. It filed its original e-return on 28.10.2017 which was subsequently revised on 29.03.2019 at a returned loss of Rs. 370.79 crores. The case was picked up for scrutiny through CASS.
The Assessing Officer completed the assessment on 30.12.2019 under section 143(3) of the Income Tax Act on total income of Rs. 6483.38 crores by making various additions/disallowances; one such disallowance being under section 36(1)(vii) of Rs. 4545,89,00,000
Aggrieved by the order the assessee filed an appeal before the CIT(A). CIT(A) confirmed the addition and hence the assessee has filed this appeal before the Tribunal.
During the adjudication K.V.S.R. Krishna, the counsel for assessee argued that the issue is covered in assessee’s own case by the decision of the Tribunal for immediately preceding AY 2016-1. Further pointed out that cross appeals by the Revenue and the assessee were filed before the Delhi High Court pertaining to AY(s) 2013-14, 2014-15 and 2015-16.
The Revenue’s appeals for the aforesaid AY(s) were against deletion of disallowance of Rs. 1062.73 crores; Rs. 1231.56 crores and Rs. 315 crores by the CIT(A)/ITAT in AY 2013- 14, 2014-15 and 2015-16 respectively under section 36(1)(vii) of the Act.Accordingly the Delhi High Court, dismissing the Revenue’s appeal held that no substantial question of law arises qua the issue raised by the Revenue.
T. James Singson, Department representatives supported the decision of lower authorities.
After analyzing the submission of both parties the bench comprising Astha Chandra, (Judicial Member) and N.K. Billaiya(Accountant Member) observed that an identical issue was brought up for consideration before the Coordinate Bench of the Tribunal in assessee’s case for AY 2015-16.
According to the decision the bench observed “that deduction under Section 36(1)(vii) of Income Tax Act will be limited only in those cases where such bad debt exceeds provision under Section 36(1)(viia) of Income Tax Act . That means there should be a debt against which a provision under Section 36(1)(viia) Income Tax Act should exist and such debt is a subject matter of write off under Section 36(1)(vii). Under such circumstances only the excess will be allowed. “
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