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2021 (8) TMI 1043 - AT - Income TaxDisallowance of provisions of section 36(1)(vii) - whether the loss on account of FDR's maintained with MMCBL, which was under liquidation, and written off of the same is eligible for deduction under the head business and profession? - HELD THAT:- It is pertinent to observe that the MMC Bank was sick bank and the amount of FDs deposited by the assessee-bank with MMC Bank has not received by the assessee bank. We also note that activities of the assessee-bank in parking surplus fund in the scheduled banks were in accordance with the guidelines of the RBI in this behalf. It was also not in dispute that Reserve Bank of India vide letter dated 12.2.2010 has advised all UCBS having exposure to MMC Bank to have full provisions against their exposure to the said bank as on 31.3.2011. In the instant case, the entries made in the assessee's books of account in that behalf were strictly in accordance with the guidelines issued by the RBI. Consequently, the assessee bank has written off the loss on account of FDR deposited with the MMC Bank. It is demonstrated by the assessee that as per the bye-laws of the assessee-bank from the Profit & loss Appropriation account, Depreciation Investment fund has been created. The Investment Depreciation has been debited in P&L account, which has been claimed as bad debt. See case of Kalupur Commercial Co-op. Bank Ltd. [2019 (10) TMI 1068 - ITAT AHMEDABAD]- Decided against revenue.
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