Non-performing asset provisions are not deductible as bad debt or business loss under binding precedent.

A provision made for non-performing assets treated as irrecoverable is not deductible as a bad debt because binding precedent, applying Supreme Court principles, excludes such claim. The same provision is also not allowable as a business loss on the same reasoning. The disallowance of the deduction was therefore sustained.

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Issues: (i) Whether the provision made in respect of non-performing assets considered irrecoverable was allowable as a deduction as bad debt. (ii) Whether, if not allowable as bad debt, the same provision was allowable as a business loss.

Issue (i): Whether the provision made in respect of non-performing assets considered irrecoverable was allowable as a deduction as bad debt.

Analysis: The questions raised were covered by binding precedent, which had applied the principles laid down by the Supreme Court and held that such provision could not be claimed as a deductible bad debt.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether, if not allowable as bad debt, the same provision was allowable as a business loss.

Analysis: The same precedent also held that a provision made for non-performing assets considered irrecoverable was not deductible as a business loss.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: The appeals were rejected, and the disallowance of deduction in respect of the provision made for non-performing assets was sustained.

Ratio Decidendi: A provision made for non-performing assets considered irrecoverable is not allowable as a deduction either as a bad debt or as a business loss.

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