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2018 (3) TMI 1516 - AT - Income TaxProvision for contingency of standard assets claimed by the assessee u/s 36(1)(viia) - Held that:- The assessee, which is a cooperative bank carrying on banking business, we find that the assessee is eligible to claim “provision for bad and doubtful debts” to the extent of 7.5% of the total income before making any deduction under this clause and under Chapter VIA. Further in the profit and loss account except for the alleged “provision” for ₹ 2 lacs, no other provision for bad and doubtful debts has been claimed. The phrase “contingency provision for standard assets” is basically a provision for bad and doubtful debts only which is in general a regular feature of the banking business. It is also pertinent to mention that even though the assessee was eligible to claim much higher amount as an expenditure of “provision for bad and doubtful debts”, it only claimed ₹ 2 lacs. In the instant appeal the contingency provision for standard assets is basically in the nature of bad and doubtful debts only and the assessee has rightly claimed the expenditure u/s 36(1)(viia) of the Act. - Decided in favour of assessee
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