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2011 (7) TMI 87 - HC - Income TaxDisallowance - special reserve account and bad and doubtful debts account which is It reflected in the annual accounts for the Financial Year 1995-96 - if the deduction for bad debts was not to be reduced to the extent of the aforesaid amounts, the assessee would have enjoyed double deduction which, according to the CIT(A) is contrary to the provisions of law - The unamended provision allowed the deduction to a financial institution for an amount not exceeding 40% of the total income carried to a special reserve - The assessee in this case being a financial institution, is governed by these guidelines issued by the RBI and has therefore correctly reversed the interest from NPA and it is not the case of revenue that the assessee has realized any part of the interest which it has credited to the P & L A/c in the earlier years to the extent the interest remains unrealized the same is really in the nature of bad debt and could have been claimed u/s 36(1)(vii) - If the income which is earlier recognized is not to be allowed to be reversed in the subsequent assessment years, in any case it is permissible for the assessee to write off such an income in the concerned assessment years when it was found that the amount was not recoverable - Appeal is dismissed
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