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2022 (1) TMI 583 - AT - Income TaxDeduction of bad debts claimed u/s 36(1)(vii) - AO noticed that the above said amount was included in “Provisions and Contingencies” account debited to the Profit and Loss account - adjustment of bad debts against provision allowed u/s 36(1)(viia) - AO noticed that the above said amount was included in “Provisions and Contingencies” account debited to the Profit and Loss account - HELD THAT:- We hold that the view expressed by Ld CIT(A) is not legally correct. Accordingly, we set aside the order passed by Ld CIT(A) with regard to his alternative decision, i.e., the view that the proviso to sec. 36(1)(vii) which requires adjustment of bad debts against provision allowed u/s 36(1)(viia) would apply to non-rural advances also. Accordingly, we direct the AO to delete the disallowance. Disallowance of payments made to VISA International u/s 40(a)(ia) - HELD THAT:- We confirm the deletion of payments made to NPCI and Cash tree Network. We also set aside the order passed by Ld CIT(A) in respect of VISA charges and direct the AO to delete the disallowance of the same. MAT computation - Addition made to the book profit computed u/s 115JB on disallowance computed u/s 14A in respect of exempt income - HELD THAT:- This issue is covered by the decision rendered by jurisdictional Hon’ble High Court of Karnataka in the case of Shobha Developers Ltd vs. DCIT [2021 (1) TMI 378 - KARNATAKA HIGH COURT ] wherein it was held that the disallowance made u/s 14A is a notional disallowance and hence the same cannot be adopted for the purpose of clause (f) of Explanation 1 to sec.115JB of Act. Accordingly we restore this issue to the file of AO for computing disallowance for the purpose of clause (f) from the profit and loss account. Deduction of education cess and Secondary & Higher education cess paid during the year as deduction - HELD THAT:- The assessee has raised this claim by way of additional ground. The Ld A.R submitted that the claim of the assessee is allowable as per the decision rendered by Hon’ble Rajasthan High Court in the case of Chambal Fertilisers and Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] - A.R also submitted that the Hon’ble Bombay High Court has expressed the view in the case of Sesa Goa Ltd [2016 (2) TMI 308 - BOMBAY HIGH COURT] that the education cess, secondary and higher education cess is allowable as deduction.Accordingly, following the above said decision, we restore this issue to the file of AO to examine the claim of the assessee in accordance with the decision rendered in the cases cited supra. Disallowance of claim made u/s 36(1)(viia) - HELD THAT:- What has to be seen by the AO is as to whether PBDD is created (irrespective of whether it is in respect of rural or non-rural advances by debiting the Profit & Loss a/c. To the extent PBDD is created, the assessee is entitled to deduction subject to upper limit of deduction laid down in Sec.36(1)(viia) of the Act - As relying on case of Corporation Bank [2015 (3) TMI 1360 - ITAT BANGALORE] CIT(A) held that the assessee is entitled for deduction u/s 36(1)(viia) of the Act and accordingly directed the AO to allow deduction as per the decision of ITAT.
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