TMI Blog2004 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... , S. S. GREWAL. JUDGMENT The judgment of the court was delivered by N.K. Sud J. - The assessee has filed this appeal under section 260A of the Income-tax Act, 1961 (for short the "Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh (for short "the Tribunal"), dated August 4, 2003, whereby the action of the Assessing Officer in restricting its claim for deduction of the provision for bad debts to Rs. 1,19,36,000 under section 36(1)(viia) has been upheld. The facts of the case are that in the return of income for the assessment year 1985-86, the assessee had claimed deduction of Rs. 1,94,21,000 under section 36(1) (viia) of the Act. The Assessing Officer observed that in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel pointed out that the previous year of the assessee had ended on December 31, 1984, and the assessee was required to get its accounts finalised and audited within three months from the end of the accounting year to submit the same to the Reserve Bank of India. Accordingly, the balance-sheet of the assessee was finalised on February 14, 1985, in which provision had been made on the basis of the unamended section 36(1) (viia) of the Act. However, in view of the amendment of section 36(1)(viia) of the Act with effect from April 1, 1985, it filed a revised return on April 24, 1986, enhancing the claim for deduction from Rs. 1,19,36,000 to Rs. 1,94,21,000. Learned counsel explained that since the amendment in this section had been made afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the proviso to clause (vii) of section 36(1) of the Act, which reads as under: "Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause." This also clearly shows that making of provision equal to the amount claimed as deduction in the account books is necessary for claiming deduction under section 36(1) (viia) of the Act. The Tribunal has distinguished various authorities relied upon by the assessee wherein deductions had been allowed under various provisions which also required cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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