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2015 (8) TMI 1294 - ITAT HYDERABAD

2015 (8) TMI 1294 - ITAT HYDERABAD - TMI - Eligibility of claim of deduction u/s 36(1)(viia) - Held that:- . On a reference to the provisions of section 36(1)(viia) of the Act, it is very much clear that for claiming deduction under the said provision, assessee has to create a provision for bad and doubtful debts in its books of account. Therefore, contention of ld. AR that there is no need for making any provision for bad and doubtful debts for claiming deduction u/s 36(1)(viia) is not acceptab .....

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s in its books of account, then, assessee would not be eligible for any deduction u/s 36(1)(viia) in view of the ratio laid down by the Hon’ble P&H High Court in case of State Bank of Patiala Vs. CIT (2004 (5) TMI 12 - PUNJAB AND HARYANA High Court ). With the aforesaid observations, we remit the issue back to the file of AO for deciding afresh - Decided in favour of revenue for statistical purposes. - ITA No. 610/Hyd/2013 - Dated:- 12-8-2015 - SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJ .....

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s 254(2) of the Act seeking rectification of the order passed by the Tribunal on the ground that ITAT while deciding department s appeal has failed to decide ground No. 7 relating to allowance of assessee s claim of deduction u/s 36(1)(viia). ITAT after considering the submissions of the parties disposed of the miscellaneous application vide order dated 19/09/14 passed in MA No. 122/Hyd/2014 recalling the order passed in ITA No. 610/Hyd/2013 for the limited purpose of deciding ground No. 7 raise .....

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claimed by assessee, it filed a revised return of income in terms with section 139(5) of the Act claiming deduction u/s 36(1)(viia). AO, however, completed the assessment u/s 143(3) of the Act ignoring the revised return. Assessee, therefore, filed a petition u/s 154 of the Act seeking rectification of the assessment order for having not considered the revised return. AO, however, dismissed the petition filed by assessee vide order dated 13/01/2012 stating therein that assessee s revised return .....

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g that assessee is eligible to claim such deduction. 5. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other material on record. The specific contention of ld. DR before us is, assessee having not made any provision for bad and doubtful debts relating to rural advances in its books of account it is not eligible to claim deduction u/s 36(1)(viia). In support of his contention, ld. DR relied upon the decision of the Hon ble P&a .....

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ee has to create a provision for bad and doubtful debts in its books of account. Therefore, contention of ld. AR that there is no need for making any provision for bad and doubtful debts for claiming deduction u/s 36(1)(viia) is not acceptable. The Hon ble P&H High Court in case of State Bank of Patiala Vs. CIT (supra) while examining the provisions of section 36(1)(viia) held that for claiming deduction under the said provision, assessee bank has to make a provision for bad and doubtful deb .....

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provision for bad and doubtful debts to the extent of an amount not exceeding 7.5% of the total income computed before making any deduction under S.36(1)(viia) and Chapter VIA and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. A perusal of the impugned order of the learned CIT(A) however, shows that it was stated by the assessee before the learned CIT(A) that no provision was made towards average rural adv .....

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essee of having adjusted the amount of ₹ 22.24 crores towards bad debts written off during the year under consideration against the opening balance of the provision of ₹ 40.13 crores was also made by the assessee for the first time before the learned CIT(A), and the Assessing Officer did not have any opportunity to verify the same. Having regard to all these facts and circumstances of the case, we are of the view that it would be fair and proper and in the interests of justice to res .....

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