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2017 (4) TMI 1493 - AT - Income TaxRectification of mistake u/s 154 - total income for the purpose of deduction u/s.36(1)(viia)(c) - applicability of the provisions of Sec.72 of the Act in the context of allowing deduction u/s.36(1)(viia)( c) - HELD THAT:- It is not in dispute before us that the Assessee is an Industrial Investment Bank of India Ltd. In computing its total income it is entitled to deduction on account of provision for bad and doubtful debts at the rates specified in Sec.36(1)(viia)(c) of the Income Tax Act, 1961 (Act) i.e., an amount not exceeding 5% of the total income (computed before making any deduction under clause Sec.36(1)(viia)( c) Firstly income is categorized under various heads of income. This is laid down in Section 14 of the Act, which lays down that save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income – Salaries, income from house property, profits and gains of business or profession, capital gains, income from other sources. Chapter V then brings income of other persons, which are to be included in the total income of an Assessee and this is contained in section 60 to 65 of the Act. Chapter-VI (containing sec. 66 to 80) then lays down provisions regarding aggregation of income and set off or carry forward of loss. It is thus clear that carried forward loss has to be deducted to arrive at the total income. Sec.36(1)(viia) ( c) of the Act uses the expression “total income” and therefore total income as understood and defined in the Act has to be adopted. We do not think that the issue is debatable as contended by the learned counsel for the Assessee. An issue to become debatable should have a possibility of another view on the plain language of the statutory provisions referred to above, we do not think there can be any dispute or debate on the proposition that effect to Sec.72 has to be given before allowing deduction u/s.36(1)(viia) ( c) of the Act. Alternative contention raised by the Assessee is concerned, we are of the view that the claim for deduction under the provisio to Sec.36(1)(viia)( c) of the act, though made for the first time before the Tribunal, deserves examination. After all the purpose of tax proceedings is to determine the correct tax liability in accordance with law. If an option is available to an Assessee to claim deduction u/s.36(1)(viia)(c) proviso of the Act, then that option when exercised at any stage of the proceedings should be examined and if found correct allowed. The fact that the Assessee did not make a claim before the revenue authorities cannot stand in the way. The tax liability of a taxpayer has to be determined in accordance with law and cannot arise by reason of default. We therefore set aside the order of the CIT(A) and remand the issue to the AO. The Assessee will put forth its claim for deduction in the alternative under the proviso to Sec.36(1)(viia) (c) of the Act and the AO will consider the same in accordance with law. - Appeal filed by the assessee is allowed for statistical purposes.
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