TaxTMI 
TaxTMI 
2026 (10) TMI 64
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of law that have been admitted on 12.08.2013: (i) Whether the finding of the Tribunal is proper especially when the investments were held to maturity being long term investment and therefore could not be considered as stock in trade?" (ii) Whether the Tribunal was right in upholding the order of the CIT(A) as regard loss on revaluation of assets amounting Rs. 27,76,08,025/- ? (iii) Whether the Tribunal was right in directing the Assessing officer to allow the entire bad debts pertaining to non rural advances? (iv) Whether the Tribunal was right in dismissing the appeal of the revenue especially when the Finance Bill, 2013 had clarified that write off u/s. 36(1)(vii) had to be set off against the credit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Commissioner of Income Tax I v. Karur Vysya Bank Ltd. (TCA Nos.290 to 295 and 663 of 2010 dated 20.02.2026) applying the judgement in Catholic Syrian Bank Ltd. (supra), these questions are answered in favour of the assessee. The operative portion of order dated 20.02.2026 reads as follows: 14. Substantial question of law arising in TCA.Nos.291 & 292 of 2010 (A.Ys.1997-98 and 1998-99) and admitted on 28.06.2010: Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in allowing the claim of bad debts without applying the proviso under Section 36(1)(vii) and without appreciating that the provision was a composite one composed of a percentage of total income and a percentage of ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its to provide for risks in relation to their rural advances, the Finance Act, inserted clause (viia) in sub-section (1) of Section 36 to provide for a deduction, in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debt(s) relating to advances made by their rural branches. The deduction is limited to a specified percentage of the aggregate average advances made by the rural branches computed in the manner prescribed by the IT Rules, 1962. Thus, the provisions of clause (viia) of Section 36(1) relating to the deduction on account of the provision for bad and doubtful debt(s) is distinct and independent of the provisions of Section 36(1)(vii) relating to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osition 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 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 provision....