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Moradabad Zila Sehkari Bank Ltd., Court Road, Moradabad Versus Addl. CIT, Range I, Moradabad

Deduction u/s 36(1) (viia) - whether assessee is eligible for deduction of 10 % of the amount of aggregate average rural advances of the bank and a further deduction of 7.5 % of the Income? - Held that:- Circular no 464 dated 18/7/1986 explaining the provision of The Income Tax (Amendment) Act 1986 has answered this issue as under:- “Income-tax (Amendment) Act, 1986 Modification in respect of deduction on provisions for bad and doubtful debts made by the banks 5. Under the existing provisions of .....

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titled 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, the deduction presently available under clause (viia) of sub-section (1) of section 36 of the Income-tax Act has been split into .....

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ted 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 the aggregate average advances made by such branches and a further deduction up to 5 per cent of their total income in respect of provision for bad and doubtful debts.” There is no change in law except the percentages subsequent to this ci .....

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HANT 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 .....

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provisions of section 36(1)(viia) of the Income Tax Act 1961. 2. This appeal is filed late by 9 days by assessee and for which an application of condonation dated 21.06.2013 is filed submitting that delay has been caused due to change in counsel who did not inform about the fate of the order before CIT (A) and later on order was obtained on 17.6.2013 and appeal was sent on 21.06.2013. Therefore there is reasonable cause in filing appeal to ITAT late by 9 days. Ld DR did not object to the delay i .....

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laiming the deduction of ₹ 5,48,55,242/- under section 36(1)(viia) of the 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 t .....

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of 7.5 % of the Income and 10 % of the aggregate average rural advances. For this he relied on the provision of this section amended by The Income Tax (Amendment) Act 1986, CBDT circular No 464 dated 18/07/1986 and also the decision of ITAT Jaipur bench in case of ACIT V Jaipur Central Cooperative bank dated 7.3.2012. Therefore he submitted that bank should be allowed deduction of 7.5 % of the total income and a further deduction of 10 % of aggregate average rural advances of the bank. 5. Ld DR .....

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a scheduled bank [not being 97[* * *] a bank incorporated by or under the laws of a country outside India] or a non- scheduled bank 98[or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], an amount 99[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 1[ten] per cent of the aggregate average advanc .....

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assessee it is not disputed that whether the assessee is eligible for deduction or not. Only issue is that whether assessee is eligible for deduction of 10 % of the amount of aggregate average rural advances of the bank and a further deduction of 7.5 % of the Income. Circular no 464 dated 18/7/1986 explaining the provision of The Income Tax (Amendment) Act 1986 has answered this issue as under:- Income-tax (Amendment) Act, 1986 Modification in respect of deduction on provisions for bad and doub .....

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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, the deduction presently available under clause (viia) of sub-section (1) of .....

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