TaxTMI 
TaxTMI 
2016 (8) TMI 50
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.... erred in allowing separate deduction U/s 36(1)(vii) of Rs. 337,30,00,000/- when the provision U/s 36(1)(viia) is inclusive of urban advances, which amounts to double deduction and not permissible in law. 3. The ld. CIT(A) ought to have appreciated that the decision of Catholic Syrian Bank Vs. CIT is not applicable to the facts of the case of the assessee was inclusive of the urban advances also which are separately allowable U/s 36(1)(vii) and therefore amounts to double deduction with respect to these advances. 4. The ld. CIT(A) ought to have appreciated that the decision of Catholic Syrian." 2. The assessee is a banking company and is a subsidiary of the State Bank of India, Mumbai. The assesse has claimed deduction ....
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....aggregate average advances made by the rural branches computed in the manner prescribed by the IT Rules. Therefore, what follows is that the Hon'ble Supreme Court relied on the facts of Catholic Syrina Bank in which case the provision U/s 36(1)(viia) was limited only to the rural advances. Even otherwise, from a simple reading of the decision of the Supreme Court, it becomes evident that the Supreme Court observed that provision under clause (viia) is limited to the rural advances and that the same rural advances cannot be claimed twice since the Explanation to clause (vii) limits the amount of allowance. 4.16 As stated above, in respect of deduction under section 36(1)(viia) is concerned the assessee has made a provision of Rs. 10....
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....computed before making any deduction u/s 36(1)(viia) and Chapter-VIA and an amount not exceeding 10% of the aggregate average advances made by rural branches of such bank computed in terms with the prescribed rules. Thus, on reading of the aforesaid provision, it is very much clear that for claiming deduction under the said provision, assessee has to fulfill two conditions, firstly, it must have made a provision for bad and 22 ITA Nos. 450, 498 & 499 /Hyd/2015 State Bank of Hyderabad doubtful debts in its books of account and secondly the maximum deduction allowable is to the extent of 7.5% of the total income and 10% of the aggregate average advances made by rural branches of such bank. On a reading of the provisions of section 36(1)(viia)....
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....whichever is higher. At this stage also the PBDD had to be created and debited to the profit and loss account but was not required to be done in relation to advances made by Bank's rural branches and can be in relation to any debt. PBDD need not be in relation to rural advances but can be in relation to any advances both rural and non-rural advances. The two percent AAA made by rural branches of such banks had to be computed and the PBDD made in books has to be in relation to rural advances. The other eligible sum which can be considered for deduction u/s.36(1)(viia) of the Act viz., ten per cent of the total income (computed before making any deduction under the proposed new provision) does not require computation in relation to rural adva....
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....ter 1.4.1987, scheduled or non-scheduled banks having rural branches were allowed deduction., (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) Schedule or non-scheduled banks whether it had rural branches or not a deduction upto 5% of their total income in respect of provision for bad and doubtful debts. Even under the new provisions creating a PBDD in the books of accounts is necessary. 37. Though under Stage-II and Stage-III of the provisions of Sec.36(1)(viia) of the Act, PBDD has to be created by debiting the profit and loss account of the sum claimed as deduction, the condition that the provision should be in respect of rural advances is not necessary. At stage-II of the provisions of Sec.3....
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....mining assessee's claim of deduction u/s 36(1)(viia). If the bank does not have rural branch, it will not get deduction relating to 10% of aggregate average advances made by rural branches. However, it will be eligible to claim deduction of 7.5% of total income. The Bench further held that bifurcating the provision for bad and doubtful debt as one relating to rural advances and other advances (non-rural) does not arise for consideration. Considered in the aforesaid perspective, reasoning of the AO in confining the deduction claimed u/s 36(1)(viia) only to the provision made towards rural advances, in our view, is not in accordance with the statutory provision. On the other hand, the view expressed by ld. CIT(A) while allowing assessee's cla....