CBDT has observed that, In a recent review of assessment of Banks carried out by C&AG, it has been observed that white computing the income of banks under the head 'Profit and Gains of Business & Profession', deductions of large amounts under different sections are being allowed by the Assessing Officers without proper verification, leading to substantial loss of revenue.

It is, therefore, necessary that assessments in the cases of banks are completed with due care and after proper verification. In particular, deductions under the provisions referred to below should be allowed only after a thorough examination of the claim on facts and on law as per the provisions of the I.T. Act., 1961.

Therefore, CBDT has issues long list of deductions to be examined while allowing from profit and gains from Business or Profession in case of Banking Sector.

See Income Tax - INSTRUCTION NO. 17/2008 - dated - 26-11-2008

Deductions verification: Banking sector deductions must be allowed only after thorough factual and legal examination. CBDT directs heightened scrutiny of deductions from income under the head Profit and Gains of Business & Profession in the banking sector; Assessing Officers must allow deductions only after thorough factual and legal examination under the Income-tax Act to prevent revenue loss, and detailed instructions list deduction categories requiring focused verification in bank assessments.