2014 (2) TMI 1080

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....the provisions for bad debts created under section 36(1)(viia) alone is admissible for deduction under Section 36(1)(vii) ? B. Whether on the facts and in the circumstances of the case the authorities are correct in law and fact in not allowing the claim for leave encashment ? C. Whether on the facts and in the circumstances of the case the Tribunal is correct in law and fact in holding that the surplus outstanding in the appellant's accounts acquired the character of trade surplus when the appellant had not credited the said sum in their P&L account and there is nothing to show that there is cessation of the liability ?" 2. The appellant Bank is before us for the assessment year 2006-07. In the above three substantial questions of l....

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....R 174]. So far as Section 43B(f) claim, the Tribunal reversed the finding of the CIT(Appeals) in the light of judgment of Calcutta High Court in Exide Industries Case (pending in SLA (Civil) No.CC.12060 dated 08.09.2008). So far as the third issue, addition of Rs. 23,221/-, being the trade surplus, placing reliance on its earlier decision, the Tribunal, Cochin Bench, confirmed the order of the Assessing Officer reversing the opinion of CIT(Appeals). Aggrieved by the same, the appellant/assessee is before us. 5. The argument of learned counsel appearing for the assessee so far as the first issue, i.e. disallowance of Rs. 21,40,05,176/- towards bad debts being written off, he placed reliance on (2012) 343 ITR 270 (SC) in the case of Catholic....

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....with reference to rural loans while, under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for the previous year. In the light of above observations of the Apex Court, the Full Bench judgment relied upon by the Tribunal is no longer good law, therefore the first substantial question of law is answered in favour of the assessee. 6. Then coming to the second issue, it pertains to the provision made for leave encashment and the disallowance claimed was under Section 43B(f). As already stated above, the opinion of the CIT(Appeals) was set aside by the Tribunal in the light of the stay order of the judgment of th....