Catholic Syrian Bank Ltd. v. Commissioner of Incometax

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The Tax PublishersCivil Appeal Nos. 1143, 1147, 1151, 1155, 1156 to 1160, 1170 to 1190, 1193, 1194, 1396 & 1397 of 2011 2012 TaxPub(DT) 1623 (SC) : (2012) 046 (I) ITCL 0311 : (2012) 343 ITR 0270 : (2012) 248 CTR 0001 : (2012) 206 TAXMAN 0182 : (2012) 068 DTR 0001 Catholic Syrian Bank Ltd. v. Commissioner of Income-tax INCOME TAX ACT, 1961 Business deduction under section 36(1)(vii)- Bad Debts-Deduction under section 36(1)(vii), whether independent to deduction under section 36(1)(viia) Assessee bank had a provision for bad and doubtful debts under section 36(1)(viia). In return of income, it claimed deduction on account of bad debts. AO disallowed the deduction of bad debts written off in the accounts, in the view that bad debts did not exceed the credit balance in the provision for bad and doubtful debts account.CIT (A) observed that the entire bad debts written off by the bank under section 36(1)(vii) were pertaining to urban branches only and not to the provision made for rural branches under section 36(1)(viia), therefore assessee was entitled to the deduction of the full claimed amount. *Held:* The provisions of sections 36(1)(vii) and 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields. Bad debts written off in accounts, other than those for which provision was made under clause (viia), would be covered under section 36(1)(vii). Assessee would be entitled to general deduction upon an irrecoverable account which written off as bad debt in accounts of assessee for previous year under the provisions of section 36(2). Income Tax Act, 1961, Section 36(1) A.Y.: 2002-03 Decision: In favour of assessee. Case Law Analysis:South Indian Bank Ltd. v. CIT [2003] 262 ITR 579 / 130 Taxman 749 (para 40). SUBSCRIBE FOR FULL CONTENT

The Tax PublishersCivil Appeal Nos. 1143, 1147, 1151, 1155, 1156 to 1160, 1170 to 1190, 1193, 1194, 1396 & 1397 of 2011
2012 TaxPub(DT) 1623 (SC) : (2012) 046 (I) ITCL 0311 : (2012) 343 ITR 0270 : (2012) 248 CTR 0001 : (2012) 206 TAXMAN 0182 : (2012) 068 DTR 0001

Catholic Syrian Bank Ltd. v. Commissioner of Income-tax

INCOME TAX ACT, 1961

Business deduction under section 36(1)(vii)- Bad Debts-Deduction under section 36(1)(vii), whether independent to deduction under section 36(1)(viia)

Assessee bank had a provision for bad and doubtful debts under section 36(1)(viia). In return of income, it claimed deduction on account of bad debts. AO disallowed the deduction of bad debts written off in the accounts, in the view that bad debts did not exceed the credit balance in the provision for bad and doubtful debts account.CIT (A) observed that the entire bad debts written off by the bank under section 36(1)(vii) were pertaining to urban branches only and not to the provision made for rural branches under section 36(1)(viia), therefore assessee was entitled to the deduction of the full claimed amount. Held: The provisions of sections 36(1)(vii) and 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields. Bad debts written off in accounts, other than those for which provision was made under clause (viia), would be covered under section 36(1)(vii). Assessee would be entitled to general deduction upon an irrecoverable account which written off as bad debt in accounts of assessee for previous year under the provisions of section 36(2).

Income Tax Act, 1961, Section 36(1)

A.Y.: 2002-03
Decision: In favour of assessee.

Case Law Analysis:South Indian Bank Ltd. v. CIT [2003] 262 ITR 579 / 130 Taxman 749 (para 40).