TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 113
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....e documentary evidence submitted, the Assessing Officer passed an assessment order dated 31.03.2006 determining the taxable income of the respondent at Rs. 102,59,90,180/- by making certain additions. 3. Aggrieved by the order of assessment dated 31.03.2006, the respondent filed an appeal before the Commissioner of Income Tax (Appeals), Tiruchirapalli in ITA No.116/2006-2007. Upon due contest, the appellate authority partly allowed the appeal filed by the respondent by order dated 22.03.2007. In respect of the claim under section 36(1)(viia), the appellate authority held that the assessee was entitled to deduction of the entire provision for bad and doubtful debts of Rs. 8.53 crores and accordingly, deleted the disallowance made by the assessing officer. As regards the disallowance of Rs. 12.63 crores in respect of bad debts written off, the appellate authority agreed with the contention of the respondent that if there was no deduction claimed for the provision for bad and doubtful debts in respect of non-rural advances under clause (viia) and then, deduction was being claimed as a debt written off under section 36(1)(vii) r/w sub section (2) of section 36 for non-rural advances a....
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....erwise, there would be double deduction. 7. On the contrary, the learned counsel for the respondent / assessee submitted that (i)the provision made for bad debts on rural advances only, had been claimed u/s 36(1)(viia) and the provision for non-rural advances had been disallowed by the assessee itself for income tax purposes and therefore, the bad debts written off for non-rural advances during the year is an allowable deduction u/s 36(1)(viia); and agreeing with the same, the CIT(A) allowed the deduction of Rs. 12.63 crores in respect of non-rural bad debts written off u/s 36(1)(vii) of the Act, which was confirmed by the Tribunal. (ii)Referring to Rule 62ABA of the Income Tax Rules, the learned counsel submitted that the aggregate average advances made by the rural branches have to be computed by taking the amounts of advances made by each branch as outstanding at the end of the last day of each month comprised in the previous year; and hence, the CIT(A) rightly allowed the deduction of Rs. 8.53 crores u/s 36(1)(viia) in respect of the provision for bad and doubtful debts and the same was also confirmed by the Tribunal. 8. we have considered the submissions made by the learned ....
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....uestion of law in T.C.(A) No.22 of 2004, the only question of law in T.C.(A) No.196 of 2004 and the second question of law in T.C.(A) No.466 of 2004, the learned counsel for the assessee submitted that a similar issue has been answered in favour of the assessee in South Indian Bank Ltd. v. Commissioner of Income-tax, [2003] 262 ITR 579 (Ker.). 10.The Division Bench of Kerala High Court in South Indian Bank Ltd. v. CIT [2003] 262 ITR 579, held that: "The proviso to clause (vii) of section 36(1) and clause (v) of section 36(2) of the Income-tax Act, 1961, were inserted simultaneously with effect from April 1, 1985, by the Finance Act, 1985. The scope of the proviso to clause (vii) of section 36(1) has to be ascertained from a cumulative reading of the provisions of clauses (vii), (viia) of section 36(1) and clause (v) of section 36(2). The intention of the Legislature in enacting the proviso to clause (vii) of section 36(1) and clause (v) of section 36(2) simultaneously is only to see that a double benefit in respect of the same bad debt is not given to a scheduled bank. A scheduled bank may have both urban and rural branches and advances give en from both branches. Having regard....
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....e previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating 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. This, obviously, would be subject to satisfaction of the requirements contemplated under Section 36(2). 42. Consequently, while answering the question in favour of the assessee, we allow the appeals of the assessees and dismiss the appeals preferred by the Revenue. Further, we direct that all matters be remanded to the assessing officer for computation in accordance with law, in light of the law enunciated in this judgment." 10.2 Similarly, the second issue relating to deduction of Rs. 8.53 crores u/s 36(1)(viia) with regard to the provision for bad and doubtful debts, is covered by the decision in Principal Commi....
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....deduction, as alleged by the appellant / Revenue, there was no clear vision about the advances made by the rural and non-rural branches of the bank and the quantum of deduction was not properly determined by the assessing officer based on the materials furnished by the respondent / assessee. In this context, the relevant paragraphs of the assessment order dated 31.03.2006 passed by the assessing officer are quoted below: "5.3 When the assessee was asked to clarify whether the advances which were considered to be bad and doubtful in earlier years and for which the provision was made so as to claim deduction under section 36(1)(viia) of the Act, have been recovered subsequently, it was stated that as the provision claimed was not with reference to any particular debt due to the assessee but on an overall basis, it is not possible to certify that the bad debts claimed as trading loss for deduction u/s 36(1)(viia) was recovered or not. It was also stated that the assessee would not be able to give age-wise details of outstanding advances for the branches more so for the rural branches with reference to which the deduction was claimed, so as to determine whether any advance of earlier....