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TMI Blog2016 (1) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer who did not allow the deduction of Rs. 41,12,596/- under section 36(2)(viia) of the Income Tax Act 1961 being 7.5% of the gross total income. 2. That the ld Commissioner of Income Tax (Appeals) has erred in law to upheld the order of the Assessing Officer who wrongly has held that the allowable deduction under section 36(1)(viia) of the Income Tax Act 1961 is only 7.5% of total income or 10% of average Rural Advance whichever is higher while the deduction of both the amount is allowable as per amended provisions of section 36(1)(viia) of the Income Tax Act 1961." 2. This appeal is filed late by 9 days by assessee and for which an application of condonation dated 21.06.2013 is filed submitting that delay has been ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals), who upheld the order of the Assessing Officer. Aggrieved, assessee is before us. 4. Ld AR of the appellant submitted that according to the provisions of section 36(1) (via) of the Income Tax Act, assessee bank is eligible for deduction of 7.5 % of the Income and 10 % of the aggregate average rural advances. For this he relied on the provision of this section amended by The Income Tax (Amendment) Act 1986, CBDT circular No 464 dated 18/07/1986 and also the decision of ITAT Jaipur bench in case of ACIT V Jaipur Central Cooperative bank dated 7.3.2012. Therefore he submitted that bank should be allowed deduction of 7.5 % of the total income and a further deduction of 10 % of aggregate average rural advances of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case of the assessee it is not disputed that whether the assessee is eligible for deduction or not. Only issue is that whether assessee is eligible for deduction of 10 % of the amount of aggregate average rural advances of the bank and a further deduction of 7.5 % of the Income. Circular no 464 dated 18/7/1986 explaining the provision of The Income Tax (Amendment) Act 1986 has answered this issue as under:- "Income-tax (Amendment) Act, 1986 Modification in respect of deduction on provisions for bad and doubtful debts made by the banks 5. Under the existing provisions of clause (viia) of sub-section (1) of section 36 of the Income-tax Act inserted by the Finance Act, 1979, provision for bad and doubtful debts made by scheduled or a non-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banks having rural branches would be allowed the deduction up to 2 per cent of the aggregate average advances made by such branches and a further deduction up to 5 per cent of their total income in respect of provision for bad and doubtful debts." There is no change in law except the percentages subsequent to this circular. Therefore it is apparent that section 36(1) (viia) clearly provides for deduction of 7.5 % of the total income and a further deduction of 10 % of the aggregate of average rural advances of the specified banks. Further Ld AR has relied on the decision of Jaipur bench of ITAT in case of ACIT V Jaipur central Cooperative bank limited for AY 2008-09 dated 7.03.2012 in ITA no 817/Jp/2011. Ld DR could not controvert that issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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