ITAT Mumbai: Write-Back of General Loan Loss Provision Cannot Be Taxed Twice — KBC Bank Case Analyzed
Overview of the Case
The Mumbai Bench of the Income Tax Appellate Tribunal recently adjudicated an appeal filed by KBC Bank Naamloze Vennootschap against the assessment order framed under Section 147 read with Section 144C(13) of the Income Tax Act, 1961, pertaining to Assessment Year 2016-17. The assessment had been completed following directions issued by the Dispute Resolution Panel (DRP), and the assessee raised multiple substantive grievances before the Tribunal concerning additions made under both normal tax provisions and book profit computation under Section 115JB.
While the assessee had initially challenged the validity of reassessment proceedings initiated under Section 148 of the Act, those grounds were expressly abandoned at the hearing, and the matter proceeded entirely on merits.
Background and Assessment History
KBC Bank N.V. is a foreign company that qualifies under Section 144C(15)(b)(ii) of the Income Tax Act, 1961. A draft assessment order was drawn up on 27.03.2025 under the provisions of Section 144C, proposing certain variations to the income returned by the assessee. The assessee contested these proposed variations before Dispute Resolution Panel-1, Mumbai, which disposed of the objections vide its directions under Section 144C(5) dated 22nd August, 2025.
Pursuant to the DRP's directions, the final assessment order was passed on 29.09.2025, in which the Assessing Officer recomputed the assessee's income as follows:
Under Normal Provisions
| Particulars | Amount (Rs.) |
|---|---|
| Losses of current year as per ITR | (-) 86,39,968/- |
| Add: General Provision for Loan Loss | 3,14,00,000/- |
| Total Assessed Income | 2,27,60,032/- |
| Rounded off to | 2,27,60,030/- |
Under Book Profit — Section 115JB
| Particulars | Amount (Rs.) |
|---|---|
| Book Profit as per order u/s 143(3) dated 25.12.2018 | 2,60,86,263/- |
| Add: Provision for forfeiture of security deposit | 1,04,42,250/- |
| Add: General provision for loan losses | 3,14,00,000/- |
| Total Addition | 4,18,42,250/- |
| Book Profit assessed u/s 115JB | 6,79,28,513/- |
| Rounded off to | 6,79,28,510/- |
Key Issues Before the Tribunal
The appeal raised the following principal disputes:
- Addition of Rs. 3,14,00,000/- on account of reversal of general provision for standard assets — both under normal provisions and book profit computation under
Section 115JB - Addition of Rs. 1,04,42,250/- towards forfeiture of security deposit while computing book profit under
Section 115JB - Short grant of TDS credit — assessee claimed Rs. 2,05,07,427/- but only Rs. 50,47,728/- was granted, resulting in a shortfall of Rs. 1,54,59,699/-
- Incorrect refund computation — the Assessing Officer considered refund already issued as Rs. 2,98,03,228/- (including interest under
Section 244A) whereas the assessee actually received only Rs. 2,65,82,132/-, resulting in an excess of Rs. 32,21,096/- - Interest levied under
Section 234B— amounting to Rs. 92,71,050/- - Interest levied under
Section 234C— amounting to Rs. 22,815/- - Initiation of penalty proceedings under
Section 271(1)(C)of the Act