TaxTMI 
TaxTMI 
2021 (7) TMI 332
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....Tribunal, Bengaluru Bench 'C', Bengaluru (henceforth referred to as 'the Tribunal') dismissing the appeals filed by the assessee for the assessment year 2011-12 and 2012-13. 2. The assessee filed its return of income for the assessment year 2011-12 and claimed deduction of a sum of Rs. 9,18,82,49,133/- under Section 36 (1)(viia) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short). The deduction claimed comprised of a sum of Rs. 8,10,96,43,882/- being provision made towards rural advances and Rs. 1,07,86,05,251/- being 7.5% of the total income. The assessee was selected for scrutiny and the Assessing Officer passed an order of assessment dated 22.02.2013 and recomputed the total income of the appellant by restrict....
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....earned CIT (A) erred in holding that the provision made in the subsequent years cannot be considered for allowing deduction under Section 36 (1)(viia) during the relevant assessment year under Appeal; iv) The learned CIT(A) erred in holding that the brought forward loss should be adjusted to arrive at Total income before computing the deduction under Section 36 (1)(viia) v) The learned CIT(A) erred in not adjudicating the grounds relating to various additions made while computing the book profit which are not covered by the explanation I to Section 115JB(2). 6. The Tribunal followed a decision passed by a Co-ordinate Bench of the Tribunal in ITA 681 and 955/Bang/2012 dated 13-06-2014, in the case of the as....
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....ion as a percentage of the total income must be computed after setting off the brought forward loss, would be doing harm to the provision itself. 10. This appeal was admitted to consider the following substantial questions of law: "Whether, on the facts and circumstances of the case and on the grounds raised: i) the Tribunal was right in holding that the amount deductible under Section 36(1)(viia) of the Act would have to be limited to the amount actually provided for in the books; ii) the Tribunal was right in holding that the deduction computed at the rate of 7.5% of the total income ought to be computed after setting off of brought forwards losses; and iii) the Tribunal was righ....
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....r any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance 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: Provided further that for the relevant assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, the provisions of the first proviso shall have effect as if for the words "five per cent", the words "ten per cent" had been substituted: Provided also that a scheduled bank or a nonscheduled bank referred to in this sub-clause shall, at its option, be allowed a further deductio....
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....led bank. 13. Thus, a conjoint reading of provision contained in Section 36(1)(viia) and explanatory note dated 30.06.1982, it is evident that deduction provided in Section 36(1)(viia) shall be allowed in respect of the matters dealt therein, in computing the income. The condition precedent for claiming deduction under Section 36(1)(viia) of the Act is that a provision for bad and doubtful debt should be made in the accounts of the assessee. The aforesaid Section mentions the maximum amount for which such a provision should be made. If a provision is made in excess of the limits prescribed under the Section, the assessee would not be entitled to deduction of the excess amount. Once a provision is made and the amount of deduction i....