The Tax Publishers2020 TaxPub(DT) 4734 (Bang-Trib)

INCOME TAX ACT, 1961

Section 36(1)(viia)

Provision for bad and doubtful debts not actually debited in the Profit & Loss account by assessee could not be allowed as deduction under section 36(1)(vii).

Business deduction under section 36(1)(viia) - Provision for bad and doubtful debts - Sum claimed as deduction not having been debited to provision for bad and doubtful debts Account -

Assessee a rural regional bank claimed deduction on account of provision for bad and doubtful debts. AO disallowed this on the ground that sum claimed as deduction had not been debited to provision for bad and doubtful debts account. Held: Claim for deduction under section 36(1)(viia) cannot be greater than the amount debited to profit and loss account as provision. Provision for bad and doubtful debts under section 36(1)(viia) has to be allowed only to the extent such provision is actually debited in the Profit & Loss account by assessee for the relevant previous year. In the instant case, admittedly sum claimed as deduction has not been debited to the Provision for bad and doubtful debts account. Therefore, AO was justified in disallowing deduction under section 36(1)(vii).

Followed:State Bank of Patiala v. CIT 272 ITR 53 (P & H).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2014-15



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