Revision under section 263 barred after appellate adjudication; bank deduction for bad and doubtful debts remained allowable.

Revision under section 263 cannot be used on an issue already adjudicated in first appeal, because the assessment merges with the appellate order to that extent. The assessee-bank's deduction claim under section 36(1)(viia) was also upheld because that provision for bad and doubtful debts operates separately from section 36(1)(vii) and does not require a distinct provision earmarked only for rural advances. The anti-double-deduction restriction is addressed by the proviso to section 36(1)(vii) read with section 36(2)(v), so the statutory deduction remained allowable.

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Issues: (i) Whether the Commissioner could invoke revisionary jurisdiction under section 263 where the issue relating to deduction under section 36(1)(viia) had been dealt with in appeal by the first appellate authority; (ii) whether the assessee-bank was entitled to deduction under section 36(1)(viia) and whether the claim could be disallowed for want of a separate provision in respect of rural advances.

Issue (i): Whether the Commissioner could invoke revisionary jurisdiction under section 263 where the issue relating to deduction under section 36(1)(viia) had been dealt with in appeal by the first appellate authority.

Analysis: The issue of quantification and allowability of deduction under section 36(1)(viia) had been specifically raised before the first appellate authority and was decided by it. Once the appellate authority had adjudicated the point, the assessment order merged with the appellate order to that extent. The revisional power under section 263 does not extend to matters covered by such appellate adjudication.

Conclusion: The Commissioner had no jurisdiction to revise the assessment on that issue; the assessee succeeded on the jurisdictional objection.

Issue (ii): Whether the assessee-bank was entitled to deduction under section 36(1)(viia) and whether the claim could be disallowed for want of a separate provision in respect of rural advances.

Analysis: Section 36(1)(vii) and section 36(1)(viia) operate in distinct fields: one concerns bad debts written off as irrecoverable, while the other grants a deduction for provision for bad and doubtful debts subject to statutory ceilings. The provision under clause (viia) is not conditioned upon a separate earmarking of the provision exclusively for rural advances. The restriction against double deduction is addressed by the proviso to section 36(1)(vii) read with section 36(2)(v). The assessee had made a provision for bad and doubtful debts and was entitled to the statutory deduction quantified in the manner prescribed.

Conclusion: The disallowance under section 36(1)(viia) was unsustainable; the assessee succeeded on merits as well.

Final Conclusion: The revisional order was set aside both for lack of jurisdiction and because the assessee-bank's deduction claim under section 36(1)(viia) was legally admissible.

Ratio Decidendi: Once an appellate authority has decided an issue, the Commissioner cannot revise the assessment on that same issue under section 263; and section 36(1)(viia) grants an deduction for provision for bad and doubtful debts, distinct from section 36(1)(vii), subject only to the statutory anti-double-deduction limits.

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