TMI Blog2019 (10) TMI 1585X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deduction u/s 36(1)(viia) which is 10% of the aggregate rural advances of the bank. The aforesaid claim was allowable to the assessee as per the ratio laid down in Southern Technologies Ltd. [ 2010 (1) TMI 5 - SUPREME COURT] and Catholic Syrian Bank Ltd. [ 2012 (2) TMI 262 - SUPREME COURT] - Decided in favour of assessee. - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Revenue : Smti Sulekha Verma, CIT DR For the Assessee : Shri Vivek Gupta, CA ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A), Moradabad for the Assessment Year 2011-12. 2. The revenue has raised the following grounds of appeal:- 1. That the Ld. Assessing Officer er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee bank itself. 6. That the Ld. Assessing Officer erred both in law and on facts in not following the clear findings of Bangalore Bench of ITAT stating that the said decision does not belong to our jurisdictional ITAT, hence not binding on us particularly in view of the fact that there is no contrary decision of jurisdictional bench of the ITAT. 7. That the Ld. Assessing Officer erred both in law and on facts in not making any observation on the argument advanced by the assessee regarding interpretation of the provisions of section 36(l)(viia) vis-a-vis section 32(1) of the I.T. Act when the language used in both the Sections is identical. 8. That the Ld. Assessing Officer erred both in law and on facts in applying the ratio laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore he questioned the quantum of deduction and held that it would be restricted to the amount of reserve created in the books of account. Accordingly he computed the total income of the assessee at INR 1 76832400/ against the nil income returned by the assessee. Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT A who held that once a provision for bad and doubtful debt is made by a scheduled bank having rural branches, the assessee is entitled to deduction which is quantified not with respect to the amount provided for in the accounts, but with respect to a certain percentage of the total income and also certain percentage of the aggregate average advances made by the rural bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and as issue is squarely covered in favour of the assessee by the decision of the earlier benches of the tribunal, the same is required to be followed. Even otherwise he submitted that the deduction provided under the income tax act u/s 36 (1) (viia) of the act does not provide any limit but it is a blanket deduction provided to the banks lending in rural market through its rural branches. 6. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case the issue squarely covered by the decision of the coordinate bench in case of the assessee for assessment year 2012 13 in ITA number 5273/del/2015 dated 3/10/2018 which followed the decision of the coordinate bench in assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led bank or non-scheduled bank in relation to advances made by its rural branches, of a sum not exceeding a specified percentage of the aggregate average advances by such branches. Having regard to the increasing social commitment, section 36(1)(viia) has been amended to provide that in respect of provision for bad and doubtful debt made by a scheduled bank or a nonscheduled bank, an amount not exceeding a specified per cent, of the total income or a specified per cent, of the aggregate average advances made by rural branches, whichever is higher, shall be allowed as deduction in computing the taxable profits. 21. It is also an admitted fact that for the preceding year on an identical issue the ld. CIT invoked the provisions of Section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 36(1)(viia) by the finance Act, 1979, with effect from April 1,1980, Circular No. 258, dated June 14, 1979, was issued by the Central Board of Direct Taxes to clarify the application of the new provisions. The provisions were introduced in order to promote rural banking and assist scheduled commercial banks in making adequate provision from their current profits for risks in relation to their rural advances. The deductions were to be limited as specified in the section. The circular mentions that the provisions of new clause (viia) of section 36(1), relating to the deduction on account of provisions for bad and doubtful debts, is distinct and independent of the provisions of section 36(l)(vii) relating to allowance of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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