Bank denied bad debt deduction under Section 36(1)(viia) for creating provisions only in revised returns

ITAT Chennai dismissed the assessee bank's appeals for deduction u/s 36(1)(viia) regarding bad and doubtful debts. The bank failed to create provisions in its original return, only adding them in revised returns. The Tribunal held that provisions must be actually created in books of accounts during the relevant assessment year to claim deductions. Following State Bank of Patiala HC precedent, mere provision in revised returns without actual book entries is insufficient. The CIT(A)'s order denying deductions was upheld.

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Issues:
- Provision for bad and doubtful debts in original vs. revised return for AYs 2013-14 & 2014-15
- Claim of deduction u/s. 36(1)(viia) by the assessee
- Disallowance of claimed deduction by the AO
- Appeals filed by the assessee before the Ld.CIT(A)
- Decision based on High Court and Tribunal precedents
- Adjourning of case and rejection of plea for further adjournment
- Necessity of making provision during the financial year for deduction u/s. 36(1)(viia)

Analysis:
The judgment by the Appellate Tribunal ITAT Chennai involved appeals by an assessee against the Commissioner of Income Tax (Appeals) regarding the provision for bad and doubtful debts in original vs. revised returns for the assessment years 2013-14 & 2014-15. The assessee, a cooperative bank, had not initially made provisions for bad debts but later did so in the revised returns. The AO disallowed the deduction u/s. 36(1)(viia) due to the absence of provisions in the original returns, emphasizing the necessity of creating such provisions during the year.

In the case for AY 2014-15, the bank's claim for deduction u/s. 36(1)(viia) was restricted by the AO as the provisions were not created in the original return. The Ld.CIT(A) dismissed the appeals based on precedents from the High Court and Tribunal, emphasizing the requirement of creating provisions during the relevant financial year for claiming deductions.

The Tribunal rejected the appeals, citing the necessity of making provisions during the financial year for claiming deductions u/s. 36(1)(viia), in line with the decisions of the High Court and the Tribunal. The judgment highlighted the importance of following accounting practices and creating necessary provisions in the books of accounts to support claims for deductions under the Income Tax Act. The rejection of the appeals was based on the consistent application of legal principles and precedents established by higher authorities.

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