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2016 (4) TMI 642 - AT - Income TaxRestriction of claim of deduction under section 36(1)(viia) - Held that:- From the bare perusal of the provisions, it is clear that the statute has provided that the provision for bad debt is required to be made by the scheduled Bank. Further, it is also provided in the section under consideration that the rate of 7.5% and 10% was dependent on the aggregate advances made. Thus the focal point of the section is made. The assessee is required to made the provision in the computation about the bad and doubtful debts, is dependent upon the aggregate average advances made in the relevant year. The language of the statute is clear and unambiguous and is not capable of any other interpretation. In view of the above, we are of the view that the provisions for bad and doubtful debt should be restricted to the amount of such provision which are actually created in the books of account in the relevant year. - Decided against assessee Entitlement to claim to Bad and Doubtful Debts - Held that:- The assessee is entitled to Bad and Doubtful Debts as claimed in the Balance Sheet for the relevant year. The AO is, therefore, directed to verify the Bad and Doubtful Debts claimed by the assessee in the revised computation of income. The assessee is also directed to produce all the documents to substantiate Bad and Doubtful Debts made by it either in the computation of total income or under Profit & Loss account. The AO shall decide the matter on merit without being influenced by the arithmetical calculation mentioned herein above. However, the AO shall be guided by the law stated herein above i.e. that the assessee is entitled to the benefit of Bad and Doubtful Debts made by it during the relevant year.
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