Andhra Pradesh State Co-operative Bank Ltd. Vs ACIT (ITAT Hyderabad)
Summary: The ITAT Hyderabad disposed of two appeals filed by Andhra Pradesh State Co-operative Bank Ltd. against orders of the CIT(A)-III, Hyderabad concerning bad debts, employees’ gratuity, the Agricultural Debt Waiver and Debt Relief Scheme, 2008, investment depreciation and profit on sale of investments, and rectification under S.154. On the principal bad-debt issue, the Tribunal held that after the amendment to S.36(1)(vii) with effect from 1.4.1989, it was not necessary to establish that the debt had actually become irrecoverable where the bad debt had been written off in the books, and allowed the deduction under S.36(1)(vii) read with S.36(2), notwithstanding the State Government guarantee. The amount of Rs.70,96,83,398 disallowed by the Assessing Officer and sustained by the CIT(A) was accordingly deleted. The issue concerning Rs.21,55,72,052 paid to LIC towards Employees Gratuity Fund was restored to the Assessing Officer in light of subsequent approval of the fund. In respect of Rs.173,15,46,253 claimed under ADWDRS, the Tribunal modified the CIT(A)’s direction and required verification of S.36(2)(v), keeping in view that S.36(1)(viia) applied to cooperative banks only from 1.4.2007. The issue relating to Rs.7,05,18,382 investment depreciation and Rs.5,11,09,716 profit on sale of investments was also restored. The separate S.154 appeal was dismissed as infructuous.
Cases Discussed
- TRF Limited Vs. CIT (323 ITR 397) — relied upon for the position that, after 1.4.1989, it is not necessary for an assessee to establish that a debt had actually become irrecoverable where the bad debt is written off as irrecoverable in the accounts.
- Vijaya Bank Vs. CIT (323 ITR 126) — relied upon by the assessee before the CIT(A) in relation to the requirements for claiming deduction on bad debts.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
