9911796707
TMI Blog2014 (9) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts of the assessee shall not include in the provisions of bad and doubtful debts made in the accounts of the assessee. Claim of the assessee that the bad debt was debited into the P L Account and the same amount was reduced from the total loans and advances in Schedule VII in the balance sheet and it shall be allowed as deduction u/s 36(1)(vii) of the Act. In our opinion, the case of the assessee is squarely covered by the decision in the case of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT ] and Kirloskar Systems Ltd [2013 (12) TMI 9 - KARNATAKA HIGH COURT] had considered similar issue. Being so, the case of the assessee is to be allowed. - Decided in favour of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Vijaya bank vs CIT & another reported in 323 ITR 166 where the provisions made for bad and doubtful debts from the total income is allowable as deduction u/s 36(1)(vii) of the Act. He also relied on the decision of the Hon'ble Karnataka High Court in the case of CIT vs Yokogawa India Ltd reported in 204 Taaxman 305 and submitted that even it is applicable for other thank banks also when the assessee debited to the P&L Account and deduct the same from the schedule of the loans and advances. He also relied on the decision of the Hon'ble Karnataka High Court in the case of CIT vs Kirloskar Systems Ltd reported in 220 Taxman 1. The ld AR of the assessee also relied on the following decisions: i) In the case of Arrow Coated P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -off of an actual debt. However, if an assessee debits "provision for doubtful debts" to the profit and loss account and makes a corresponding credit to the "Current liabilities and provisions" on the liabilities side of the balance sheet, then it would constitute a provision for doubtful debt. In the latter case the assessee would not be entitled to deduction after April 1, 1989. The income-tax is a tax on "real income", i.e., the profits arrived at on commercial principles subject to the provisions of the Act. Therefore, if by the Explanation to section 36(1)(vii) a provision for doubtful debt is kept out of the ambit of bad debt which is written off, then one has to take into account the Explanation in com ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
