2018 (3) TMI 1516

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....f the case, as culled out from record, are that the assessee is a cooperative society engaged in the banking business. The return of income was filed on 30.9.2013 declaring income at Rs. 1,72,18,260/-. Case selected for scrutiny through CASS. Notices u/s 142(1)( and 143(2) of the Act were served on the assessee. The Assessing Officer observed that the assessee has claimed expenditure under the head contingency provision for standard assets at Rs. 2,00,000/- u/s 36(1)(viia) of the Act. The Assessing Officer was of the view that under the provisions of section 36(1)(viia) of the Act the assessee can claim provision for bad and doubtful debts and not for the contingency for standard assets and accordingly disallowed the provision for standard ....

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....nd the disallowance of Rs. 2 lacs confirmed by both the lower authorities relating to "provision for contingency of standard assets" claimed by the assessee u/s 36(1)(viia) of the Act. Before proceeding further we would like to reproduce the provision of section 36(1)(viia) of the Act as under :- "Other deductions. 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- xxxx xxxx xxxx (viia) 98in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank [not being a bank incorporated by or under the laws of a country outside India] or a non-scheduled bank or a co-operative bank other th....

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....es in accordance with a scheme framed by the Central Government: Provided also that no deduction shall be allowed under the third proviso unless such income has been disclosed in the return of income under the head "Profits and gains of business or profession." Explanation.-For the purposes of this sub-clause, "relevant assessment years" means the five consecutive assessment years commencing on or after the 1st day of April, 2000 and ending before the 1st day of April, 2005" 7. On perusal of the above provision and in the given facts of the case, wherein the assessee, which is a cooperative bank carrying on banking business, we find that the assessee is eligible to claim "provision for bad and doubtful debts" to the extent of 7.5% o....