TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 1023
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....erefore, the amended provision w.e.f. A.Y. 2014-15 is not applicable and hence the bad debt written off u/s 36(1)(vii) should be allowed. 3. The appellant contends that the claim of the assessee is as per the provisions of sec. 36(1)(vii) of the Income Tax Act as accepted by the CIT(A) in its order. 4. The appellant contends that similar claim has been allowed by the Hon'ble ITAT Delhi in assessee's own case for the A.Y. 2015-16. Therefore, following the precedence, the claim of the appellant should be allowed in the year under consideration also. 5. Without prejudice, the appellant contends that the provisions for bad and doubtful in the books of accounts of the bank is Rs. 6315.18 crs. which is reduced from the loans and advances balances in the Balance sheet and hence should be allowed u/s 36(1)(vii) in entirety as bad debt written off following the Hon'ble Supreme Court judgement in the case of Vijaya Bank which is principally upheld by the CIT(A). 6. The above grounds are independent and without prejudice to one and other." 3. Briefly stated, the assessee is a Nationalized Bank. It filed its original e-return on 28.10.2017 which was subsequently revised on....
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....import of Supreme Court decision in the case of Vijaya Bank v. CIT (2010) 323 ITR 166 (SC). In that decision, the hon'ble Supreme Court had laid down twin requirements for being eligible to claim the deduction u/s 36(1)(vii) viz (i) debiting the P&L a/c and creating a provision for bad and doubtful debt, and (ii) correspondingly/simultaneously obliterating the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the asset side of the balance sheet. 5.4 This is to ensure that at the end of the year, the figure in the loans and advances or the debtors on the asset side of the balance sheet are necessarily shown as net of the provision for bad debt. In the instant case, the appellant had satisfied both the above conditions by duly writing off the bad debt by way of debit to P&L account and simultaneously reducing the corresponding amount from loans/advances. The AO has not brought any findings of facts on record to challenge the correctness of the amount duly reduced from the loans/advances/debtors. Therefore, the finding by the AO that it does not amount to actual write off is not tenable being against the law laid down by the....
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....b-section and clause (v) of sub-section (2), the account referred to therein shall be only one account in respect of provision for bad and doubtful debts under clause (viia) and such account shall relate to all types of advances, including advances made by rural branches, 5.9 As such, with effect from 01.04 2014, in respect of the tax payers in whose case provisions of section 36(1)(viia) is applicable, what is allowable u/s 36(1)(vii) is only the amount by which the debt written off exceeds the credit balance in the provision created under section 36(1)(viia), irrespective of whether the assessee had maintained two different accounts (viz one for rural advances, and the other for non-rural ones) or not. In fact, the quantum of outstanding rural advances covered in the claim u/s 36(vii) is not at all relevant now in view of the Explanation 2 as cited above. 5.10 It is also clarified here that in view of the amendment, the issue of any possible double deduction or absence thereof is loses its relevance now. What is relevant is that bad debts written off must first be adjusted against the credit balance available under 'provision for bad & doubtful debts' covered u/s 36(1....
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....tion 36(1)(vii) of the Act. Copy of Hon'ble Delhi High Court's decision is placed at pages 1-6 of Paper Book 3 wherein the Hon'ble Delhi High Court, dismissing the Revenue's appeal held that no substantial question of law arises qua the issue raised by the Revenue. The Ld. AR also submitted that against the Tribunal's decision for AY 2016-17 the Revenue had gone in appeal before the Hon'ble Delhi High Court proposing the following question of law for consideration:- "whether on the facts and circumstances of the case Hon'ble ITAT is legally justified in deleting the disallowance of Rs. 2153.02 crores under section 36(1)(vii) by ignoring first proviso as well as clarificatory provision of Explanation 2 to section 36(1)(vii)?" 7. The Ld. AR submitted that before the Hon'ble Delhi High Court, the Revenue did not dispute the fact that the aforesaid proposed question of law was covered by the decision rendered by the Hon'ble Delhi High Court on 13.09.2023 in a bunch of appeals, the lead appeal being ITA 521/2023 titled PCIT vs. Oriental Bank of Commerce (now merged with Punjab National Bank Ltd.). The Hon'ble Delhi High Court closed the appeal with the observation "In our view no sub....
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....concluded that it is not a "bad debt written off but it is still a "provision for bad and doubtful debts" and is not a write off. Further, the ld. CIT(A) has relied on the CBDT Circular No.314 of 2014 and the amendment to section 36(1)(vii) wherein Explanation-2 was inserted by the Finance Act, 2013 with effect from A.Y. 2014-15 which [CIT(A)'s order at page 67] is again reproduced: "11.7 In order to clarify the scope and applicability of provision of clause (vii), (via) of sub-section (1) and sub-section (2), an Explanation in clause (vii) of sub-section (1) of section 36 has been inserted stating that for the purposes of the proviso to clause (vii) of sub-section (1) of section 36 and clause (v) of sub-section (2) of section 36, only one account as referred to therein is made in respect of provision for bad and doubtful debts under clause (via) of sub-section (1) of section 36 applies, the amount of deduction in respect of the bad debts actually written off under clause (vii) of sub-section (1) of section 36 shall be limited to the amount by which such bad debts exceeds the credit balance in the provisions for bad and doubtful debts account made under clause (viia) of sub-secti....