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Issues involved:
Appeal by Revenue against additional deduction for provisions u/s 36(1)(vii)(a) of the Income Tax Act, 1961 and Cross Objections by assessee regarding provision for investment depreciation reserve. Details of the judgment: 1. The Co-operative Bank filed returns for the Assessment Years (A.Y.) 2007-08 and 2009-10 with certain provisions claimed. Assessing Officer disallowed these provisions as not eligible for deduction. However, allowed deduction u/s 36(1)(vii)(a) at 7.5% of total income. 2. Assessee appealed, claiming entitlement to provisions under section 36(1)(vii)(a) including 10% of average advances by rural branch. CIT(A) accepted the claim based on the branch classification as rural. 3. Revenue contested, arguing provisions were not for bad debts and doubtful debts, a prerequisite for deduction u/s 36(1)(viia). Also, disputed the rural branch classification claim not raised before Assessing Officer. 4. Assessee's representative argued that provisions for NPA and standard assets were akin to bad debts. CIT(A) failed to address the claim on investment depreciation and fluctuation reserves. 5. Revenue contended that fresh claims cannot be made post-assent to additions. Assessee's representative cited legal precedents to support their position. 6. The Tribunal noted the provisions of Sec. 36(1)(viia) and the requirement for bad and doubtful debts for allowance. The maximum allowable amount was determined based on this provision. 7. The Tribunal highlighted the need for a fresh assessment by the Assessing Officer to verify the nature of provisions made by the assessee and their eligibility for deduction u/s 36(1)(viia). 8. The Tribunal emphasized the importance of considering provisions representing actual diminution in asset value and directed a reevaluation by the Assessing Officer. 9. The Tribunal set aside the previous orders and remitted the issues back to the Assessing Officer for a fresh assessment in accordance with the law. 10. Both the Revenue's appeal and the assessee's Cross Objections were allowed for statistical purposes. Order pronounced on Thursday, the 21st March, 2013 at Chennai.
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