TMI Blog2002 (2) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the respondent-assessee for the assessment year 1985-86 on the income of Rs. 17,78,882 and for the assessment year 1986-87 for Rs. 1,50,04,051. The Assessing Officer allowed the deduction under section 36(1)(viia) to the tune of Rs. 34,82,940 for the assessment year 1985-86 and Rs. 38,77,230 for the assessment year 1986-87 with respect to bad and doubtful debts on advances made by its rural branches. The assessee was also allowed deduction under section 36(1)(vii) on account of bad debts written off amounting to Rs. 6,350 and Rs. 2,12,488. On appeal, the Commissioner of Income-tax (Appeals) was of the view that the original assessments for the assessment years 1985-86 and 1986-87 were prejudicial to the interests of the Revenue with respect to the deduction of bad debts as it was done without verifying the deduction for the bad debts claimed in respect of the urban branches without examining the question as to whether the assessee was entitled to deductions under section 36(1)(vii) in addition to the deduction allowed in respect of the provision for bad and doubtful debts under section 36(1)(viia). Accordingly, the Commissioner of Income-tax (Appeals) directed the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Sums of Rs. 1,74,220 and Rs. 75,000 were recovered under EPFG and PSG, respectively. After crediting the said amounts, the balance amount was of Rs. 7,88,847.37. The said amount was written off as the borrower had been declared insolvent and expired subsequently leaving behind no assets. Thus, the bad debt which was written off in the assessment year 1986-87, the debt became bad and irrecoverable in the assessment year 1987-88. In the opinion of the Tribunal, the assessee-bank was entitled to claim of deduction with respect to the bad debt of Rs. 7,88,847 for the assessment year 1987-88 as it was a premature claim for the assessment year 1986-87. It is contended by Mr. L. M. Lodha that as in the books of account of the assessee the debt in question was written off only in the assessment year 1986 87, it became a bad debt in the previous year relevant to the assessment year 1987-88. As such the respondent-assessee was not entitled to claim benefit and allowances by way of deduction for the assessment year 1987-88 as the proviso to section 36(1)(vii) 'applies to the assessee's claim in respect of bad debt. On the other hand, Mr. Rajendra Mehta has supported the judgment of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee of that previous year or of an earlier previous year, or represents money lent in the ordinary course of business of banking or money-lending which is carried on by the assessee, and (b) has been written off as irrecoverable in the accounts of the assessee for that previous year;... (iii) any such debt or part of debt may be deducted if it has already been written off as irrecoverable in the accounts of an earlier previous year being a previous year relevant to the assessment year commencing on the 1st day April, 1988, or any earlier assessment year, but the Assessing Officer had not allowed it to be deducted on the ground that it had not been established to have become a bad debt in that year;... (v) where such debt or part of debt relates to advances made by a bank to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the bank has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause." Section 36(1)(viia) was introduced by the Income-tax (Amendment) Act, 1986, with a view to provide for grant of deduction in respect of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the deduction in respect of the provision for bad and doubtful debt can be allowed necessarily implies that such a provision has to be made in respect of the loans and advances made at the end of the year. Thus, it is evident that both the clauses, i.e., sections 36(1)(vii) and 36(1)(viia), are separate and they are distinct and independent. It is open for an assessee to claim benefit of the provision which enables him a larger benefit. A reference be made to the decisions of the apex court in CIT v. Indian Engineering and Commercial Corporation Pvt. Ltd. [1993] 201 ITR 723 and CCE V. Indo Petro Chemicals [1997] 11 SCC 318. It is also a known principle in tax law that if the assessee's income falls under two exempting sections, he is entitled to rely on both sections unless they are expressly or by necessary implication made mutually exclusive and he may claim exemption under either of them even if he does not fulfil the conditions of the other. In the instant case, the amount outstanding against J.R. Exports had been written off in the books of account relating to the assessment year 1986-87. This amount was not shown as outstanding in the books of account of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
