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2014 (8) TMI 604 - HC - Income TaxAccrual of income - Interest on securities to be assessed on half yearly due dates – Interest accrued at the end of assessment year – Claim of Bad debts to non-rural branches u/s 36(1)(viia) - Following the decision in Commissioner of Income Tax v. City Union Bank Ltd. [2007 (2) TMI 187 - MADRAS High Court] - the assessee is taxable for interest on securities only on specified dates when it becomes due for payment, in view of third proviso to Section 145(1) of the Act, which was in force during the relevant assessment years. Bad debts - The scheduled bank will be entitled to the deduction of the entire bad debt relating to advances made by the urban branches written off in the books and also the difference between the amount written off in the books relating to advances made by the rural branches during the previous year relevant to the assessment year and the credit balance in the provisions for bad and doubtful debts account relating to advances made by the rural branches made under clause (viia) - while allowing the claim for bad debts written off in respect of advances made by rural branches, the CIT(A) as well as the Tribunal, was of the opinion that the assessee has not claimed any debts written off in respect of rural branch in the earlier year – there was no error in the order of the Tribunal in holding that the claim of bad debts in relation to non-rural branches of the assessee bank is allowable – Decided against Revenue.
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