TMI Blog2014 (10) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... he light of those clear words would not arise. Therefore, when once a provision is made for bad and doubtful debts and such a provision is less than the limit prescribed under the section what the assessee would be entitled to deduct would be the amount mentioned in the said provision and not the amount prescribed in the section. In that view of the matter, the orders passed by the authorities are not in accordance with law and the judgment of the Tribunal rendered in Syndicate Bank s case on which reliance is placed runs counter to the statutory provision and therefore, the said order passed by the Tribunal does not lay down the correct law. Decided against the assessee. Deduction u/s 36(1)(vii) without adjusting the said amount of bad debts against the provision available under Section 36(1)(viia) of the Act brought forwarded and created during the year - HELD THAT:- In view of the judgment of the Apex Court in the case of CATHOLIC SYRIAN BANK LTD., Vs. COMMISSIONER OF INCOME TAX, THRISSUR in [ 2012 (2) TMI 262 - SUPREME COURT] the issue has been correctly answered by the Tribunal in favour of the assessee and against the revenue. - ITA NO.1066 OF 2008 - - - Dated:- 21-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under Section 36(1)(viia), irrespective of the amount provided in the assessee s books towards the bad and doubtful debts, subject to provisions of the Section 36(1)(viia) read with clauses-(a), (b) (c) to the Rule-6ABA. The revenue preferred an appeal before the Tribunal who declined to interfere with the said finding as it was in conformity with the order passed by the CIT. Therefore, the revenue is in appeal. 4. The second ground is with reference to the deduction under Section 36(1)(vii). The assessee had claimed ₹ 1189073982 as deduction under Section 36(1)(vii). The assessee has given break-up written-off bad debts as below: Amount written off is 1225932274 Less - Amount already allowed in the assessment year 93-94 and 94-95 as 6726121 Less amount written-off in respect of rural advances for which a deduction under Section 36(1)(vii) was claimed in the earlier years 30132171 Balance claimed 1189073982 5. The assessee had claimed write-off of the aforesaid amount of ₹ 1189073982. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revolves around the interpretation of Section 36(1)(viia), which reads as follows: (viia) in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank [not being[* * *] a bank incorporated by or under the laws of a country outside India or a non- scheduled bank [or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank], 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 computed in the prescribed manner : Provided that a scheduled bank or a non-scheduled bank referred to in this subclause shall, at its option, be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent of the amount of such assets shown in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the case of STATE BANK OF PATIALA VS. COMMISSIONER OF INCOME TAX AND ANOTHER reported in ITR 2005 VOL 272 PAGE 54, where it was held as under:- A bare perusal of the above shows that the deduction allowable under the above provisions is in respect of the provision made. Therefore, making of a provision for bad and doubtful debt equal to the amount mentioned in this section is a must for claiming such deduction. The Tribunal has rightly pointed out that this issue stands further clarified from 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision is made, the assessee would not be entitled to the deduction. Once such a provision is made and the said amount is within the limit prescribed under statute, the assessee would be entitled to the amount that is provided for in the accounts. The argument is that when the provision made is less than the amount prescribed under the law, the assessee is entitled to the maximum as prescribed cannot be accepted. The language employed is clear and unambiguous. This is a provision in any fiscal legislation. Therefore, the question of going into the intention or object behind the provision in the light of those clear words would not arise. Therefore, when once a provision is made for bad and doubtful debts and such a provision is less than the limit prescribed under the section what the assessee would be entitled to deduct would be the amount mentioned in the said provision and not the amount prescribed in the section. In that view of the matter, the orders passed by the authorities are not in accordance with law and the judgment of the Tribunal rendered in Syndicate Bank s case on which reliance is placed runs counter to the statutory provision and therefore, the said order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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