Proviso to Sec 36(1)(vii) does not restrict deduction for bad debts to banks in respect of urban advances; Proviso applicable only to bad debts in respect of which provision claimed u/s 36(1)(viia); Provisions of Section 36(1)(vii) and 36(1)(viia) distinct and independent items of deduction : SC
In a significant ruling pronounced earlier today, a three judge bench of Supreme Court held that the banks are entitled to claim deduction for bad debts u/s 36(1)(vii), irrespective of limit specified in the proviso thereto, if bad debts written off relate to debts other than those for which provision is made u/s 36(1)(viia).
ThisSC ruling has the effect of reversing Kerala HC full bench decision in South Indian Bank Ltd (2010) 233 CTR (Ker)(FB) 214, wherein it was held that the banks which are entitled to claim deduction of provision for bad debts u/s 36(1)(viia) are covered by the proviso to clause (vii), irrespective of the nature of advances with respect to which the bad debt written off is claimed as deduction.
Catholic Syrian Bank Ltd [TS-91-SC-2012]
In a significant ruling pronounced earlier today, a three judge bench of Supreme Court held that the banks are entitled to claim deduction for bad debts u/s 36(1)(vii), irrespective of limit specified in the proviso thereto, if bad debts written off relate to debts other than those for which provision is made u/s 36(1)(viia).
ThisSC ruling has the effect of reversing Kerala HC full bench decision in South Indian Bank Ltd (2010) 233 CTR (Ker)(FB) 214, wherein it was held that the banks which are entitled to claim deduction of provision for bad debts u/s 36(1)(viia) are covered by the proviso to clause (vii), irrespective of the nature of advances with respect to which the bad debt written off is claimed as deduction.
Catholic Syrian Bank Ltd [TS-91-SC-2012]
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