TaxTMI 
TaxTMI 
2018 (11) TMI 1990
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....and contended that deduction under section 36(1)(viia) is not restricted to banks having rural branches but available @7.5% of total income computed before making deduction under this clause and Chapter VIA, to all scheduled Banks irrespective of the facts whether they have rural branches or not. In fact, deduction to banks having rural branches and provision made on account of advance made by the rural branches of such banks is over and above @10% of aggregate advances, hence, the deduction allowed for an amount not exceeding 7.5% of total income. 4. Per contra, the ld. Sr. D.R. submitted that the AO and CIT (A) has relied in the case of Catholic Syrian Bank Ltd. v. CIT [2012] 343 ITR 270 (SC) /[2012] 206 Taxman 182 (SC) and submitted that the assessee has claimed deduction under section 36(1)(viia) for Rs. 10,30,353 which is applicable only to rural branches. Since the assessee has no rural branches, hence, deduction under section 36(1)(viia) has been rightly denied by the AO and CIT (A). 5. We have heard the rival submissions and perused the relevant material on record. In order to appreciate the claim of the assessee it would be relevant to reproduced the relevant provisi....
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....ative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount ^61[not exceeding ^62[seven and one-half per cent]] of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ^63[ten] per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner : ^64[Provided that a scheduled bank or a non-scheduled bank referred to in this sub-clause shall, at its option, be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for 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:] ^65[Provided further that for the relevant assessment years com-mencing 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 w....
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....ny as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank;] ^73[(ia)] "rural branch"^74 means a branch of a scheduled bank ^75[or a non-scheduled bank] situated in a place^74 which has a population of not more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; ^76[(ii) "scheduled bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) ^77[***];] 6. The plain reading of above provisions of section 36(1)(viia) makes it clear that section 36(1)(vii) and section 36(1)(viia) are distinct and indepe....
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....same rural advance the bank may get allowance on the basis of clause (viia) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limits the allowance on the basis of the actual write off the only issue is the excess, if any, of the write off over the amount standing to the credit of the account created under clause (viia). However, the Revenue disputes the position that the proviso to clause (vii) refers only to rural advances. It says that there are no such words in the proviso which indicates that the proviso apply only to rural advances. We find no merit in the objection raised by the Revenue. Firstly, CBDT itself has recognized the position that a bank would be entitled to both the deduction, one under clause (vii) on the basis of actual write off and another, on the basis of clause (viia) in respect of a mere provision. Further, to prevent double deduction, the proviso to clause (vii) was inserted which says that in respect of bad debt(S) arising out of rural advances, the deduction on account of actual write off would be limited to the excess of the amount written off over the amount of the provisio....