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2020 (7) TMI 502 - AT - Income TaxDisallowance u/s.14A r.w.Rule 8D(2) - disallowance made under third limb of Rule 8D(2) of the Rules - HELD THAT:-We find that the Hon’ble Supreme Court in the case of Maxopp Investments Ltd., [2018 (3) TMI 805 - SUPREME COURT] had held that in the case of bank, investments that are held as ‘stock in trade’ cannot be subject matter of disallowance u/s.14A. The Special Bench of Delhi Tribunal in the case of Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] had held that those investments which had not yielded any exempt income should not be considered for the purpose of working out the disallowance u/s.14A of the Act r.w.Rule 8D(2) of the Rules. We direct the ld. AO that since, assessee being a bank, investments held as ‘stock in trade’ should not be considered for the purpose of working of disallowance u/s.14A of the Act irrespective of the fact whether exempt income was derived from such investments or not. Strategic investments held by the assessee which had yielded exempt income alone are to be considered for the purpose of working out the disallowance u/s.14A of the Act read with Rule 8D(2)(iii) of the Rules. Deduction for provision for bad and doubtful debts u/s.36(1)(viia) - HELD THAT:- We find that the ld. CIT(A) in principle had accepted to the fact that assessee would be entitled for deduction u/s.36(1)(viia) of the Act which would be restricted to 7.5% of total business income plus 10% of average rural advances. This is the benefit provided to the assessee in the statute which had to be duly provided to the assessee. The ld. AO is hence directed to apply this statutory provision and consider the claim of deduction u/s.36(1)(viia) of the act for the year under consideration after suitable verification of the details provided by the assessee. Claim of deduction towards bad debts written off u/s.36(1)(vii) - HELD THAT:- As opening credit balance brought forward as on 1st April of the relevant accounting year in provision for bad and doubtful account is more than the bad debts written off during the year, the appellant will not be entitled to any deduction u/s.36(1)(viia) in the above manner. The AO after examining the balance in provision for bad and doubtful debts account 36(1)(viia) shall allow deduction of bad debts written off only if it exceeds the credit balance in the provision account as explained. Broken period interest - HELD THAT:- CIT(A) had deleted this addition by following the decision of the Hon’ble Jurisdictional High Court in assessee’s own case and the decision of this Tribunal in assessee’s own case for A.Y.2008-09 and 2009-10 and 2010-11 [2015 (9) TMI 643 - ITAT MUMBAI]. In all these decisions, it was held that the broken period interest paid by the assessee is allowable as deduction while computing total income of the assessee.
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