No Double-Deduction of Bad and Doubtful Debts in Cooperative Bank’s Income Tax Return: ITAT Upholds Deletion of ₹17 Cr Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, dismissed the appeal filed by the Deputy Commissioner of Income Tax (DCIT) and upheld the deletion of ₹17,00,00,000 addition made towards double deduction of provision for bad and doubtful debts claimed by Jila Sahakari Kendriya Bank Maryadit.

The respondent, Jila Sahakari Kendriya Bank Maryadit is a cooperative bank, filed its return of income for the Assessment Year (AY) 2014-15 declaring total income as ₹9,62,69,540. Later, the AO reopened the assessment under Section 147 of the Income Tax Act, 1961 after certain observations during verification of records.

During reassessment proceedings, the AO made multiple additions, including an addition of ₹17,00,00,000 on account of alleged double claim of deduction for provision for bad and doubtful debts.

The AO also disallowed ₹1,50,00,000 towards contribution to Society Cadre Fund under Section 37 and ₹26,72,958 under Section 36(1)(va) of Income Tax Act. The total income of the respondent was declared as ₹31,47,42,720.

Aggrieved by the reassessment order, the respondent filed an appeal before the Commissioner of Income Tax (Appeals) CIT(A). The respondent contended that the provision for bad and doubtful debts had already been added back in the computation of income and therefore it had not claimed the deduction twice.

The CIT(A) observed that the respondent had added back ₹21,66,46,812 in Schedule BP, which included the provision of ₹17,00,00,000 towards bad and doubtful debts. Accordingly, the CIT(A) held that the addition made by the AO was deleted.

Raghunath, representing the RevenueDepartment, supported the assessment order and contended that the CIT(A) had erred in deleting the addition made by the Assessing Officer.

Rakesh Dhody, counsel for the respondent, submitted that the provision for bad and doubtful debts amounting to ₹17,00,00,000 had already been voluntarily added back while computing the taxable income, and therefore the AO’s addition would result in double taxation of the same amount.

Partha Sarathi Chaudhury, Judicial Member and Arun Khodpia, Accounting Member observed that the respondent had already added the provision for bad and doubtful debts to its taxable income while computing the total income for the relevant year.

The Tribunal held that the AO had misread the facts and wrongly assumed that the respondent had claimed the deduction twice and the amount had already been added back in the computation, making another addition would lead to double addition for the respondent.

Accordingly, the Tribunal found no infirmity in the order of the CIT(A) deleting the addition and dismissed the Revenue’s appeal.

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