| The Tax Publishers2019 TaxPub(DT) 1784 (Asr-Trib) INCOME TAX ACT, 1961
Section 36(1)(viia)
Where assessee had claimed deduction on account of bad debts, the same could not be disallowed under section 36(1)(viia) because assessee's provision qua rural advances, including that already made earlier, thus, did not exceed 10% as per the provisions, and matter was remanded back to AO for fresh adjudication in accordance with law.
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Business deduction under section 36(1)(viia) - Provision for bad debts - Assessee claimed bad debts write off relating to rural branches - Allowability
Assessee-bank had claim deduction with respect amount written off as bad debts relating to rural branches which was denied by AO under section 36(1)(viia) on the ground that the provision implies a contingent, and not an ascertained, liability, inadmissible in computing business income. Held: The profile or constitution of the rural advances recoverable admittedly changing with time, a provision in its' respect would only be with reference to that outstanding at any given point of time. As such, this part of provision, i.e., referable to rural advances, could not exceed 10% of advances. Assessee stated that provision qua rural advances, including that already made earlier, thus, did not exceed 10% of its' rural branch advances. Therefore, assessee's claim for deduction toward provision for bad and doubtful debts was to be allowed under section 36(1)(viiia) and matter was remanded back to AO for fresh adjudication in accordance with law.
Followed:M/s. Southern Technologies Ltd. v. Jt. CIT, Coimbatore (2010) 320 ITR 577 (SC) : 2010 TaxPub(DT) 1302 (SC)
REFERRED :
FAVOUR : In assessee's favour by way of remand
A.Y. :
IN THE ITAT, AMRITSAR BENCH
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