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TMI Blog2023 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed u/s 36(2) of the Act stand fulfilled. Section 36(1)(vii) and Section 36(1)(viia) of the Act are distinct and independent provisions. In this case, the first proviso appended to Section 36(1)(vii) has no applicability, as there was no provision made for bad and doubtful debts. As is well recognised, ordinarily, the Act does not allow for deduction on account of a mere provision for bad and doubtful debts in computation of taxable profits. Notably, Sub-section 2(v) states that where a debt or part of debt relates to advances made by an assessee to which clause (viia) of Section 36(1) applies, no such deduction would be allowed unless the assessee has debited the amount of such debt or part of the debt in the previous year in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;BLE MR. JUSTICE GIRISH KATHPALIA For the Appellant Through: Ms Shashi M Kapila, Adv. For the Respondents Through: Mr Aseem Chawla, Sr Standing Counsel with Ms Pratishtha Chaudhary, Mr Rishabh Nangia, Ms Anuja Pethia, and Mr Aditya Gupta, Advs. RAJIV SHAKDHER, J. (ORAL): 1. We have heard the counsels for the parties for some time. According to us, the appeal requires to be admitted. 1.1 It is ordered accordingly. 2. The following question of law is framed for the consideration by this court: (i) Whether the Income Tax Appellate Tribunal [in short, Tribunal ] misdirected itself on facts and in law in disallowing the deduction of Rs. 10,78,12,465/- [sic. Rs. 10,78,12,469/-], to the appellant/assessee, for As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrative, since the appellant/assessee was aggrieved by the aforementioned addition made qua bad debts by the AO, it preferred an appeal with the Commissioner of Income Tax (Appeals) [in short, CIT(A) ]. CIT(A), via the order dated 31.10.2018, sustained the assessment order. 5. The appellant/assessee carried the matter in appeal to the Tribunal. The Tribunal, via, the impugned order dated 01.08.2022, sustained the decision of the CIT(A). 6. It is in these circumstances that the appellant/assessee has preferred the present appeal under Section 260A of the Act. 7. Ms Shashi M. Kapila, who appears on behalf of the appellant/assessee, has submitted that the authorities below have committed factual and legal errors. 7.1 In this cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent/revenue, says he cannot but accept that patent errors of fact have been made by the Tribunal. 12. It is Mr Chawla s contention that, therefore, the matter could be remitted to the AO for correction of errors and the consequent result would follow thereafter. 13. We have heard the learned counsels for the parties and perused the material on record. 14. The following facts are not in dispute: (i) In AY 2002-03, the appellant/assessee had filed a loss return. (ii) The AO had passed an order dated 18.03.2005, whereby the loss claimed by the appellant/assessee for AY 2002-03 was disallowed. (iii) There was clearly no provision made for bad debts available in the succeeding period i.e., AY 2003-04. (iv) In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its. 15.3. However, the legislature gave this leeway, inter alia, to banks and public financial institutions and Non-Banking Financial Companies(NBFCs) referred to, inter alia, in various sub-clauses of clause (viia) of Section 36(1), albeit, up to a specified percentage. Illustratively, sub-clause (a) incudes, inter alia, scheduled and non-scheduled banks and cooperative banks whose rural branches have given advances. Likewsie, sub-clause (b) of clause (viia) of Section 36(1) alludes to a bank incorporated by or under laws of a country outside India. Since the appellant/assessee was incorporated under laws of the UK, it would thus, fall under the aforementioned sub-clause. 15.4. Notably, Sub-section 2(v) states that where a debt or p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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