TMI Blog2016 (1) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... for bad and doubtful debts made by scheduled or a non-scheduled Indian bank is allowed as deduction within the prescribed limits. The limit prescribed is 10 per cent of the total income or 2 per cent of the aggregate average advances made by the rural branches of such banks, whichever is higher. It had been represented to the Government that the foreign banks were not entitled to any deduction under this provision and to that extent, they were being discriminated against. Further, it was felt that the existing ceiling in this regard, i.e., 10 per cent of the total income or 2 per cent of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank. - Decided in favour of assessee - ITA No. 3971/Del/2013 - - - Dated:- 6-1-2016 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Respondent : Sh. Piyush Kaushik, Adv For the Petitioner : Sh.P Dam Kanunjna, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. The present appeal filed by the assessee is directed against the order of learned CIT (A), Bareilly dated 06.03.2013 passed for the assessment year 2009-10. The assessee raised the following grounds of appeal: 1. That the ld Commissioner of Income Tax (Appeals) had erred in law to upheld the order of the Assessing Officer who did not allow the deduction of ₹ 41,12,596/- under section 36(2)(viia) of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961. The assessment was completed u/s 143(3) of the Act on 14.12.2011 and determined total income at ₹ 1,04,27,256/-. The assessing officer did not allow deduction of ₹ 41,12,596/- being 7.5% of total income by observing that as per section 36(1)(viia), the allowable deduction is only 7.5% of total income or 10% of average rural advance, whichever is higher, therefore, the higher of the two figures which is ₹ 5,07,42,646/- is found to be allowable. Hence, he disallowed excess claim of ₹ 41,12,596/- and added to the total income of assessee. Aggrieved the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals), who upheld the order of the Assessing Officer. Aggrieved, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf per cent] of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding 1[ten] per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. 7. From the plain reading of the above section it is clear that in case of a cooperative bank also deduction of the amount is allowable an amount not exceeding seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank is allowed. In case of the assessee it is not disputed that whether the assessee is eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions. One of these limits the deduction to an amount not exceeding 2 per cent of the aggregate average advances made to by rural branches of the banks concerned. It may be clarified that foreign banks do not have rural branches and hence this amendment will not be relevant in the case of the foreign banks. The other provisions secure that a further deduction shall be allowed in respect of the provision for bad and doubtful debts made by all banks, not just the banks incorporated in India, limited to 5 per cent of the total income (computed before making any deduction under this clause and Chapter VIA). This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction up to 2 per cent of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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