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Judgment
The Court :- In view of the good grounds shown, the marginal delay of 80 days in preferring the appeal is condoned. GA No. 3498 of 2016 is allowed
accordingly. The question that is sought to be raised by the Revenue is:
Whether in course of making any provision for bad and doubtful debts, a co-operative bank has to show some part of the bad or doubtful debts to be
attributable to its rural branches?
On a plain reading of Section 36(1)(vii-a) of the Income Tax Act, 1961, it is evident that the permissible deductions under the relevant head have been
divided into two categories: the first permitting a specified amount to be deducted irrespective of the concerned bank having a rural branch; and, the
second part permitting a further provision for bad or doubtful debts provided that the bank has a rural branch. What is of importance is that the second
part of the provision, in so far as it allows deductions on account of bad or doubtful debts, has nothing to do with the bad or doubtful debts of the rural
branches, but provides for the aggregate advance in the rural branches to be made as a measure for the quantum of deductions that may be
permissible.
The legal position has been succinctly dealt with at paragraph 9.3 of the Commissioner’s order in the appeal preferred by the assessee against the
assessing officer restricting the quantum of deductions to a percentage of the bad and doubtful debts pertaining to the aggregate advance in the rural
branches.
The Appellate Tribunal has referred to previous matters where the legal position has been discussed and has accepted the Commissioner’s order.
Since the Commissioner appropriately interpreted Section 36(1)(vii-a) of the Act, there is no merit in the Revenue’s appeal for such aspect of the
matter to be gone into again. ITAT No. 424 of 2016 and GA No. 3499 of 2016 are dismissed.There will be no order as to costs.