2010 (12) TMI 1198

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....se are that assessee is a co-operative society registered under the U.P. Cooperative Society Act. It is engaged in the business of banking. It has filed its return of income on 31.10.2007 declaring an income of ₹ 6,99,15,737/-. The assessee had made a provision of bad debts at ₹ 4,10,00,000/-. It claimed a deduction of ₹ 2,84,42,000/- as per section 36(viia) of the Income-tax Act, which is 10% of the average advance of the rural branches. The learned Assessing Officer disallowed this claim of the assessee on the ground that assessee ought to have actually written off this amount in the books. The learned first appellate authority has allowed the claim of the assessee on the ground that Assessing Officer has erred in interp....

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....dance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent of the amount of such assets shown' in the books of account of the bank on the last day of the previous year]" [Emphasis supplied by me] A bare perusal of this clause reveals that it is nowhere provided in this clause that bad debts have to be actually written off by the assessee. This condition is available in section 36(vii). Therefore, we are of the view that learned CIT (A) has rightly deleted the addition. 5. In the next ground of appeal, grievance of revenue is that the learned CIT (A) has erred in directing the Assessing Officer to examine the claim of the assessee u/s 10(34) and if admissible, then grant the exemption. 6. The ....