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TMI Blog2013 (8) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... (l)(viia) is a statutory deduction with reference to the amount provided as laid down in said section. The conditions of s. 36(l)(viia) having been fulfilled, the entire deduction claimed ought to have been allowed. 3. Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO of Rs.5,000,000/- of provision made for bad and doubtful debts holding the appellant not eligible for deduction u/s 36(1)(viia) of the Act. Ld. CIT (A) erred in not appreciating the fact that by transferring excess balance in 'Overdue Interest Reserve a/c' to Reserve for bad and doubtful debts a/c there was no claim of double deduction made by the appellant. The deduction under s. 36(lxviia) be held to be allowable in view of conditions of s. 36(1) (viia) being fulfilled. 4. The ld. CIT(A) has erred in law and on facts in holding that for claiming deduction u/s 36(1)(viia) of the Act the appellant ought to make provision out of income of the current year only. Both the lower authorities failed to appreciate provisions of law in its proper perspective as well ratio of the judgment relied upon by the appellant in Rural Electrification Corporation Ltd. rendered by AAR in AAA No. 759 of 2007.". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of disallowance Rs.5,00,00,000/- the AO held that this amount was not eligible for deduction under sub clause (a) of clause (viia) of subsection(1) of section 36 because it amounted to allowing deduction in respect of this amount twice. 4. Being aggrieved, the assessee carried the matter in appeal before the learned CIT(A), but without success, and now the assessee is in further appeal before us. At the very outset, it was submitted by the learned AR of the assessee that this issue is now squarely covered in favour of the assessee by the judgment of the Hon'ble Apex Court rendered in the case of Catholic Syrian Bank Ltd. v. Commissioner of Income-tax, 343 ITR 270 (SC). He also placed reliance on the various other judicial pronouncements: i) Bank of Tokyo Ltd. Vs. JCIT, 36 SOT 8 (Del) ii) ACIT Vs. Alfa Lamination, ITA No.2234/Ahd/2010 dtd. 11/02/2011; iii) The Jamnagar Dist. Co-operative Bank Ltd. Vs. ACIT, ITA No.7/Rjt/2012 and 481/Rjt/2011 dtd.1/8/2012; iv) ____ 78 ITD 103; v) Rural Electrification Corporation Ltd., In re (AAR), 312 ITR 122 (AAR) As against this, the learned DR of the Revenue supported the order of the learned CIT(A). 5. We have considered rival submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st day of April, 2000, and ending before the 1st day of April, 2005 '; (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) : Provided that a public financial institution or a State financial corporation or a State industrial investment corporation referred to in this sub-clause shall, at its option, be allowed in any of the two consecutive assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, of an amount not exceeding ten per cent. of the amount of such assets shown in the books of account of such institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of such write off, being in excess of the credit balance in the provision for bad and doubtful debts made under that clause i.e. clause (viia) of section 36(1) of the Act. In the light of these provisions, being the proviso to section 36(1)(vii), we have to consider and decide the claim of the assessee in the present case. A finding is given by the learned CIT(A) at page no.6 of his order that for the amount of provision of Rs.1 crore made by the assessee against the standard assets of the bank, the amount is credited to the reserve for bad and doubtful debts towards standard assets, and not in the provision for bad and doubtful debts account. He has given a finding that deduction under clause (viia) of subsection (1) of Section 36 can be allowed only in respect of those provisions, which are made for provision for bad and doubtful debts account created by the assessee, and since, the assessee has not credited any amount to this account, but has credited the amount in question to reserve for bad and doubtful debts towards standard assets, deduction is not allowable to the assessee under section 36(1)(viia) of the Act in respect of this amount of Rs.1 crore. Regarding this decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier year. The learned CIT(A) has placed reliance on the judgment of Hon'ble Apex Court rendered in the case of Escorts Ltd. Vs. UOI, 199 ITR 43 (SC) in support of this contention that double deduction cannot be allowed in respect of an income unless the Act is specifically providing the same. 9. This is an undisputed position that as per the provisions of section 36(1)(viia) as reproduced above, deduction is allowable in respect of provision for bad and doubtful debts to the extent of specified limit. We also find that the audited accounts of the assessee (English version) is available at pages 35 to 55 of the paper book, and out of these, the balance sheet is at page no.36of the paper book. As per the same, the share capital is Rs.854.21 lakhs, and reserve and other funds are of Rs.6083.83 lakhs. No provision is appearing in the said balance sheet, and therefore, we examine the annexures also. As per the annexure-7, available at page no.43 of the paper book, we find that this annexure includes other liabilities, and one of the items, in this annexure at Sr.No.19 is provision for rent and taxes of Rs.103.09 lakhs. In that said annexure, at Sr.No.14 is subsidy reserve fund of Rs.97 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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