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TMI Blog2012 (6) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... determination by this court : "(a) Whether, under the facts and circumstances of the case and on the true and correct interpretation of the provisions of section 36(1)(vii), 36(1)(viia), the Tribunal is justified in upholding the dis- allowance of deduction of Rs. 19,77,535 whereas both the sections are separate, distinct and operate independently ? (b) Whether, under the facts and circumstances of the case, the Tribunal is justified in upholding the disallowance of deduction of Rs.19,77,535 whereby when there is no judgment against the asses- see the view favouring on the basis of true and correct interpretation of the provisions of law, objects of introduction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure A 1. 5. This is how the assessee has filed the present appeal. 6. We have heard learned counsel for the parties and have perused the record. 7. The claim of the assessee was that the provision which was made by the assessee during the year amounting to Rs. 19,77,535, was admissible as deduction. 8. In order to effectively adjudicate the controversy, the provisions of sec- tion 36(1)(vii), the proviso thereto, section 36(1)(viia) and section 36(2)(v) have to be analysed. The provisions as they existed at the relevant time are reproduced as under : "36. Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the guidelines issued by it in this behalf, for an amount not exceeding five per cent. of the amount of such assets shown in the books of account of the bank on the last day of the previous year. (b) a bank, being a bank incorporated by or under the laws of a country outside India, an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A) ; (c) a public financial institution or a State financial corporation or a State industrial investment corporation, an amount not exceeding five per cent. of the total income (computed before making any deduction under this clause and Chapter VI-A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 36(2)(v) of the Act. 10. The Tribunal held that the assessee had created provision for bad and doubtful debts during the year under section 36(1)(viia) and the said amount had to be reduced from the actual bad debts claimed under section 36(1)(vii) in view of the proviso appended thereto. The findings recorded by the Tribunal are as under : "We find that the assessee has created a provision for bad and doubtful debts under section 36(1)(viia) amounting to Rs. 19,77,535. In addition to that there was already a credit balance in the provision for bad and doubtful debts for the assessment year 1993-94 and for the assessment year 1994-95 totalling to Rs. 9,88,844. The assessee claimed bad debts excluding a sum of Rs. 9 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 29,66,379 Thus, as on March 31, 1995, the credit balance in the previous year for bad and doubtful debts consists of not only the provision made for the year ending March 31, 1993, and March 31, 1994, but also the provision made for the year 1995. The proviso does not distinguish the time when the bad debt was written off or when the provision for bad and doubtful debts has been made for the previous year. The income-tax is leviable on the income computed for a previous year. The deduction allowable to the assessee also relate to the previous year. The deduction available under section 36(1)(vii) is also available to the assessee only for the previous year, i.e., at the time when tax- able income of the assessee is computed. Since the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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