CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann
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ank. It follows that if the amount of bad debt<br />
actually written off relates to urban advances,<br />
such claim is not affected, controlled or limited<br />
in any way by the proviso to clause (vii).<br />
CONCLUSION<br />
6. The decision of the Apex Court provides<br />
finality and would be binding in nature. In<br />
simple terms, bad debts written off relating to<br />
urban advances are eligible for deduction as<br />
per section 36(1)(vii), read with section 36(2).<br />
It is not controlled by section 36(1)(viia).<br />
In respect of rural advances for which the<br />
banks are expected to maintain a provision<br />
towards bad and doubtful debts, any bad debt<br />
written off will be adjusted only in the provision<br />
account. Only when the bad debt write off<br />
claim exceeds the provision maintained by the<br />
assessee such an excess is deductible and it<br />
is mandatory as per the proviso to section<br />
36(1)(vii).<br />
The decision provides a conceptual clarity and<br />
would set at rest the controversy surrounding<br />
these two sub-sections. The proviso contained<br />
in section 36(1)(vii) if it was incorporated in<br />
section 36(1)(viia) the confusion or controversy<br />
might have been avoided. Similarly, the<br />
Explanation to section 36(1)(viia) saying that<br />
the deduction is in addition to section 36(1)(vii)<br />
would have eliminated any controversy<br />
whatsoever on this issue.<br />
• DT - Secs. 36(1)(vii), 36(1)(viia), 36(2)<br />
•••<br />
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 39<br />
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