The ITAT upheld the deductibility of recoveries from bad debts...

The ITAT upheld the deductibility of recoveries from bad debts written off under section 41(1) subject to verification of the nature of prior deductions under section 36(1)(viia) or (vii). Deductions under section 36(1)(viia) for rural advances and under section 36(1)(vii) for branches identified by ward were allowed following precedent. The Tribunal allowed depreciation at the higher rate under section 32 for ATMs and UPS, rejecting the AO's reclassification. Provisions for leave fare concession, resettlement expenses, and silver jubilee awards were held deductible under section 37(1) as ascertained liabilities. Deduction under section 36(1)(viii) was sustained despite lack of separate books, based on consistency and reasonableness of the profit computation. Provisions under the RBI-mandated Debt Relief Scheme qualified for deduction under section 36(1)(viia). Disallowances under section 40(a)(ia) and additions under section 69C were deleted. The provision for Janatha Deposit Collector gratuity was allowed under section 37(1). The 14A disallowance was upheld at 2% of exempt income, with no proximate nexus found for higher disallowance.

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