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TMI Blog2017 (11) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... items of deduction and operate in their respective fields. It is relevant to note that Explanation 2 has been inserted by the Finance Act, 2013 w.e.f. 01.04.2014 diluting the position laid down in Catholic Syrian Bank (supra). Such an insertion has been made prospectively and hence cannot be applied retrospectively to the year under consideration. No contrary decision has been brought on record by the ld. DR in which such Explanation has been held to be retrospective. We, therefore, countenance the view taken by the ld. CIT(A), in principle, in allowing deduction u/s 36(1)(vii) in addition to the deduction u/s 36(1)(viia). Computation of deduction u/s 36(1)(viia)- Held that:- Total provision made by the assessee stands at ₹ 934.38 crore. As section 36(1)(viia) grants deduction in respect of total provision for bad and doubtful debts and the same is not confined to provision for rural branches only, we hold that the quantum of deduction has to be seen in the light of the total amount of provision consisting of both rural and non-rural branches. Viewed in this light, the action taken by the ld. CIT(A) in reducing the amount of deduction to the extent of provision for bad and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rule 8D for making disallowance u/s 14A amounting to ₹ 47.66 crore, consisting of interest expenditure disallowable to the tune of ₹ 43.55 crore; and ₹ 4.11 crore , being 0.5% of the average value of investments in balance sheet. The ld. CIT(A) deleted the disallowance of ₹ 43.55 crore, but, sustained the disallowance of ₹ 4.11 crore. Both the sides are in appeal in support of their respective stands. 3. We have heard the rival submissions and perused the relevant material on record. It is seen that the assessment year under consideration is 2011-12 and the provisions of rule 8D are applicable. It is common submission that similar treatment was given by the respective authorities below for the A.Ys. 2008-09 and 2009-10. The Tribunal has upheld the action of the CIT(A) for such years, meaning thereby that disallowance of interest got deleted and disallowance @ 0.5% of the average value of investment got sustained. In the absence of any change in the factual scenario and respectfully following the precedent, we uphold the impugned order. To put it simply, the respective grounds raised by both the sides stand dismissed. 4. Next issue in the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s favour by upholding the order passed by the CIT(A). In the absence of any distinguishing facts and respectfully following the precedent, we uphold the impugned order on this score. 9. The last issue in the Revenue s appeal is against allowing excess deduction claimed u/s 36(1)(vii) of ₹ 448,11,61,785/-. The facts apropos this issue are that the assessee claimed separate deduction u/s 36(1)(vii) in respect of bad debts of advance of non-rural branches of ₹ 695.12 crore without setting of bad debts against provision for bad and doubtful debts u/s 36(1)(viia) amounting to ₹ 637,56,78,375/-. Accordingly, claim u/s 36(1)(vii) up to the amount of deduction allowable u/s 36(1)(viia) was disallowed and the balance amount of bad debt written off in respect of the amount of deduction allowable u/s 36(1)(viia) amounting to ₹ 207,09,87,602/- (Rs.695,21,49,387 plus ₹ 27,46,115 minus ₹ 488,39,07,900/-) was held to be allowable u/s 36(1)(vii). Thus, the excess deduction of ₹ 488,11,61,785/- (Rs.695,21,49,387 minus ₹ 207,09,87,602/-) was disallowed. This was done by the AO considering the clarificatory amendment made by the Parliament vide Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 36(1)(viia) gives the total amount of deduction at ₹ 637,56,78,375/-, which fact has not been disputed also. However, the ld. CIT(A) restricted the addition to the tune of ₹ 488.39 crore on the ground that the total amount of provision for bad and doubtful debts in respect of rural branches is only to this extent and, hence, deduction cannot exceed it. We are not agreeable with the view canvassed by the ld. CIT(A) in view of the language of section 36(1)(viia) which opens with the expression that: in respect of any provision for bad and doubtful debts made by . It is amply clear from the language of section 36(1)(viia) that the deduction is with respect of Provision for bad and doubtful debts and the same is not restricted to the provision for bad and doubtful debts - Rural branches. Such a total provision includes both for rural and nonrural branches. Page 122 of the paper book is a copy of the Annual report of the assessee for the year under consideration, which shows t he amount of Provision towards NPA at ₹ 934.38 crore. Break-up of this amount is given at page 121 of the paper book, which comprises of Provision for bad and doubtful debts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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