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TMI Blog2017 (11) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... owance u/s 14A of the Income-tax Act, 1961 (hereinafter also called 'the Act'). Briefly stated, the facts of the case are that the assessee earned exempt income of Rs. 12,04,27,196/-. The AO observed that no disallowance was offered u/s 14A of the Act. Considering the assessee's objections and after recording satisfaction, which aspect has not been disputed by the assessee, the AO invoked the provisions of Rule 8D for making disallowance u/s 14A amounting to Rs. 47.66 crore, consisting of interest expenditure disallowable to the tune of Rs. 43.55 crore; and Rs. 4.11 crore , being 0.5% of the average value of investments in balance sheet. The ld. CIT(A) deleted the disallowance of Rs. 43.55 crore, but, sustained the disallowance of Rs. 4.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.Y. 2007-08. Vide its order dated 04.11.2015 in ITA No.1937/Del/2011, the Tribunal has restored the matter to the file of AO for fresh verification. Respectfully following the precedent, we also set aside the impugned order to this extent and remit the matter to the file of AO for deciding it in conformity with the view taken by the Tribunal for the A.Y. 2007-08. 6. Next issue in the Revenue's appeal is against deletion of addition on account of disallowance of Rs. 4,00,00,000/- towards interest on overdue deposits. 7. Having heard the rival but common submissions and perused the relevant material, it is noticed that similar issue was raised in appeals for the A.Ys. 2008-09 and 2009-10. Relevant discussion has been made on pages 24 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubtful debts u/s 36(1)(viia) amounting to Rs. 637,56,78,375/-. Accordingly, claim u/s 36(1)(vii) up to the amount of deduction allowable u/s 36(1)(viia) was disallowed and the balance amount of bad debt written off in respect of the amount of deduction allowable u/s 36(1)(viia) amounting to Rs. 207,09,87,602/- (Rs.695,21,49,387 plus Rs. 27,46,115 minus Rs. 488,39,07,900/-) was held to be allowable u/s 36(1)(vii). Thus, the excess deduction of Rs. 488,11,61,785/- (Rs.695,21,49,387 minus Rs. 207,09,87,602/-) was disallowed. This was done by the AO considering the clarificatory amendment made by the Parliament vide Finance Act, 2013 by way of insertion of Explanation to section 37(1)(vii) of the Act which was held to have retrospective effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 36(1)(vii) in addition to the deduction u/s 36(1)(viia). This ground is not allowed. 11. The assessee has also raised a related issue in its appeal, which is against the computation of deduction u/s 36(1)(viia). The assessee claimed deduction u/s 36(1)(viia) amounting to Rs. 637,56,78,375/-, which is equal to 7.5% of the total income before making any deduction under this clause and 10% of average aggregate advances pertaining to rural branches. The ld. CIT(A) restricted such deduction only to the extent of Rs. 488,39,07,900/-, being the amount of 'Provision for bad and doubtful debts - rural branches.' The assessee is aggrieved against the less amount of relief allowed in the impugned order. 12. We find that the computation made in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is not confined to provision for rural branches only, we hold that the quantum of deduction has to be seen in the light of the total amount of provision consisting of both rural and non-rural branches. Viewed in this light, the action taken by the ld. CIT(A) in reducing the amount of deduction to the extent of provision for bad and doubtful debts in respect of rural branches alone, becomes unsustainable. We, therefore, direct that deduction of Rs. 637,56,78,375/- be allowed u/s 36(1)(viia). 13. Next issue in the assessee's appeal is against treating a sum of Rs. 12,29,18,367/- being software expenses to be capital in nature. The assessee incurred a sum of Rs. 13.94 crore on software expenses and claimed the same as revenue. Following th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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