Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 978 - ITAT DELHIDeduction u/s 36(1)(viia) of provision for nonperforming assets (NPA) - disallowance on the grounds that no provision made under the head “Provision for bad and doubtful debts for the year under consideration” - as held by AO that the net balance of other provisions have actually decreased in respect of last year balance and since it shows overall decrease in provisions, the same needs to be disallowed - HELD THAT:- The terminology ‘Reserve for NPA’ has been used by the assessee in accordance with the RBI directions. As is evident from the assessment order, the assessee has indeed created ‘Reserve for NPA’. For claiming benefit under the provisions of Section 36(l)(viia)(a) the conditions to be satisfied is: that provision for bad and doubtful debts should have been made by the bank eligible to claim such deduction. Cooperative Banks do not strictly follow the provisions of Banking Regulation Act for the purpose of maintaining their Books of Accounts. In our considered opinion, the assessee has created provision for bad and doubtful debts may be under different nomenclature. This will not dis-entitle the assessee for claiming deduction under the provisions of Section 36(l)(viia)(a). The purpose for creation of reserve for NPA is same i.e., creating provision towards bad and doubtful debts. Thus, in view of the facts of the case and judicial pronouncements in the above state cases the assessee will be entitled to deduction u/s 36(l)(viia) to the extent of provision made for bad and doubtful debts . The A.O is therefore directed to allow the full deduction as claimed by the assessee in the computation of income and not to restrict it - Decided in favour of assessee.
|