AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 1467
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....arties, the cross appeal for the assessment year 2022-23 is considered as a lead case, and the decision rendered therein shall apply mutatis mutandis to the cross appeal for the assessment year 2023-24. ITA No.781/Mum/2026 Revenue's Appeal - A.Y. 2022-23 3. In this appeal, the Revenue has raised the following grounds: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 85,27,45,662/- made by the Assessing Officer under section 36(1)(viia)(c) of the Income tax Act, 1961, without proper appreciation of the statutory conditions prescribed under the proviso to section 36(1)(vii)" 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in placing reliance on earlier decisions of the Hon'ble ITAT in assessee's own case without independently verifying the factual correctness of the provision for bad and doubtful debts account, including the availability of credit balance required for application of the proviso to section 36(1)(vii)." 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that allow....
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....same are currently pending before the Hon'ble High Court. 8. We find that while deciding the similar issue in favour of the assessee, the Coordinate Bench of the Tribunal in assessee's own case in DCIT vs. Small Industries Development Bank of India, in ITA No.2943/Mum/2023, etc., for the assessment years 2014-15 to 2018-19, vide order dated 10.10.2025, following its earlier decision rendered on 15.02.2012 in assessee's own case for the assessment year 2004-05, observed as follows: - "8. We heard the parties and perused the material on record. We notice that the Co-ordinate Bench in assessee's own case for AY 2004-05 (ITA No. 7143/Mum/2008 dated 15.02.2012) has considered the identical issue where it has been held that "28. Even on merits of the claim of the Assessee, we are of the view that the same deserves to be accepted. The relevant provisions under which the deduction has been claimed by the Assessee are as follows: 36. Other deductions (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28(vii) subject to the provisions of sub se....
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....t the amount in question was not claimed in the return of income though the Assessee could have claimed it legitimately. In the given circumstances, we are of the view that there is no merit in the ground raised by the Revenue. Consequently, the ground of appeal of the revenue is dismissed and the order of CIT(A) in this regard is upheld." 9. The interplay between the deduction claimed under section 36(1)(vii) and 36(1)(viia) has been explained by the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. vs. CIT [206 Taxman 182 (SC)]. The relevant observations are extracted below - "Under Section 36(1)(vii) of the ITA 1961, the tax payer carrying on business is entitled to a deduction, in the computation of taxable profits, of the amount of any debt which is established to have become a bad debt during the previous year, subject to certain conditions. However, a mere provision for bad and doubtful debts) is not allowed as a deduction in the computation of taxable profits. In order to promote rural banking and in order to assist the scheduled commercial banks in making adequate provisions from their current profits to provide for risks in relation to t....
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....uction, the proviso to clause (vii) was inserted which says that in respect of bad debts) 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 provision allowed under clause (viia). Thus, the proviso to clause (vii) stood introduced in order to protect the Revenue. It would be meaningless to invoke the said proviso where there is no threat of double deduction. In case of rural advances, which are covered by the provisions of clause (viia), there would be no such double deduction. The proviso limits its application to the case of a bank to which clause (via) applies. Clause (via) applies only to rural advances. This has been explained by the Circulars issued by CBDT. Thus, the proviso indicates that it is limited in its application to bad debts) arising out of rural advances of a bank. It follows that if the amount of bad debts) actually written off in the accounts of the bank represents only debts) arising out of urban advances, the allowance thereof in the assessment is not affected. controlled or limited in any way by the proviso to clause (vii)" 10. From the above obse....
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.... appeal, the Revenue has raised the following grounds: - "1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 158,97,03,104/- made by the Assessing Officer under section 36(1)(viia)(c) of the Income tax Act, 1961, without proper appreciation of the statutory conditions prescribed under the proviso to section 36(1)(vii)" 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)' erred in placing reliance on earlier decisions of the Hon'ble ITAT in assessee's own case without independently verifying the factual correctness of the provision for bad and doubtful debts account, including the availability of credit balance required for application of the proviso to section 36(1)(vii)." 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that allowing deduction of bad debts written off, where deduction for provision had already been granted in earlier years under section 36(1)(viia)(c) results in a double deduction, contrary to the intent of the statute.?" 12. The solitary grievance of the Revenue is against....
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..... On the facts and in the circumstances of the case and in law, the Learned CIT(A) as well as the Learned Assessing Officer has erred in not appreciating that the amortization of such premium is allowable under generally accepted principles of accounting and the reasons advanced for rejecting the same are wrong and contrary to the facts and circumstances of the case, provisions o Income tax Act, 1961, and Rules made thereunder. 5. Without prejudice to the above, the appellant submits that the issue of disallowance of lease premium paid to MMRDA is admitted by the Hon'ble High Court in A.Y. 2004-05, and as per provision of section 158A of the Income Tax Act, 1961, the Hon'ble ITAT may direct Assessing Officer to apply the decision of Hon'ble High Court as it reaches finality." 15. During the hearing, the learned AR submitted that the assessee has filed declarations in Form No.8 for the assessment years 2022-23 and 2023-24, invoking the provisions of section 158A of the Act, stating that a similar question of law is pending consideration before the Hon'ble Jurisdictional High Court in the assessee's appeal for the assessment year 2004-05. The learned AR accordingly prayed....