No Disallowance on account of Bad and Doubtful Debts claimed u/s 36(1)(viia) of Income Tax Act with respect to Non-Performing Assets: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that no  disallowance could be made on account of bad and doubtful debts claimed under Section 36(1)(viia) of Income Tax Act, 1961 with respect to Non-Performing Assets (NPA).

The assessee, Yes Bank Ltd return was revised and declared total income of Rs 22,75,02,02,660/-. Thereafter, the assessee's case was selected for scrutiny.

Finally, the AO passed an assessment order by disallowing bad and doubtful debts claimed by the assessee under Section 36(1)(viia) Income Tax Act of Rs.135,21,64,723/ with respect to non- performing assets (NPA).It was disallowed due to the assets being standard assets.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) {CIT(A)}, who remanded the issue back to the file of the AO for examining whether claims pertain to Rural or non-rural branches.

During the proceedings, Yogesh Thar, the  counsel for the assessee submitted that the claim pertains to only NPA and not standard assets.

Further, argued  that provision for standard advances is a separate line  of item in computation of income (COI) and the claim under Section 36(1)(viia) Income Tax Act of the assessee purely pertains to NPAs and claim has not been made for standard advances.

Kishor Dhule, Counsel for Revenue, supported the decision of lower authorities .

It was observed by the tribunal that the issue is already decided by the tribunal in favour of the assessee.

After reviewing the facts and submissions of the both parties, the two member bench of Om Prakash Kant (Accountant Member)  and Kavitha Rajagopal (Judicial Member) Held that  no  disallowance could be made on account of bad and doubtful debts claimed under Section 36(1)(viia) of Income Tax Act with respect to Non-Performing Assets.

It was also determined that deduction u/s 36 (1) (viia) of the Income Tax Act is not restricted to the banks only having the rural branches.

To Read the full text of the Order CLICK HERE

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