2026 (2) TMI 569

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....sed in ground no.1 is general in nature and needs no adjudication. 3. The first issue raised in ground no.2 is against the confirmation of disallowance by the ld. CIT (A) of Rs.1,78,019/-, which was made by the ld. AO by disallowing expenses at the rate of 10% of total amount debited under miscellaneous expenses of Rs.17,80,192/-. 3.1. The facts in brief are that the ld. AO observed from the Profit and Loss account that the assessee has debited under the head miscellaneous expenses under the head other expenses schedule 19 a sum of Rs.17,18,192/-. The assessee submitted before the ld. AO that these are the composite expenses of 7 branches of the bank to meet the day-to-day expenses. The assessee also furnished few bills, however, the ....

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.... (SC)vide order dated 12-09-1972 and Omar Salay Mohamed Sait vs. Commissioner of Income-tax [1959] 37 ITR 151 (SC) dated 05-03-1959. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 4. The second issue raised in ground nos. 3 and 4 is against the order of ld. CIT (A) confirming the disallowance of Rs.2,72,91,922/- as disallowed by the ld. AO in respect of provisions made against the non-performing assets under the head other expenditure schedule-19 of the Profit and Loss account by ignoring the fact that same are allowable under Provisions of Section 36(1)(viia) of the Act and was created in accordance with the RBI and NABARD guidelines. 4.1. The facts in brief are that the ld. AO upon ....

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....duction under these clauses and chapter VIA, an amount not exceeding 4% of aggregated advances made by the rural branches of such bank computed in the prescribed manner. We have also perused the provisions of Section 36(1)(vii) of the Act, which provides for allowing the amount of any bad debt or a part thereof which is written off as irrecoverable in the account of the assessee. We observe that both these deductions are independent of each other. We note that Section 36(1)(vii) of the Act deals with the writing off bad debts whereas the section 36(1)(viia) deals with creation of provisions for bad and doubtful debts based upon the non-performing assets of the bank, which is in accordance with the guidelines issued by the Reserve Bank of In....