M/S. KARUR VYSYA BANK,KARUR vs. DCIT, CIRCLE-1, TRICHY

ITA 1502/CHNY/2025Status: DisposedITAT Chennai17 November 2025AY 2018-19Bench: SHRI ABY T VARKEY (Judicial Member), SHRI S. R. RAGHUNATHA (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the classification of branches as rural should be strictly based on population data from the latest census. It also ruled that stale draft accounts are not income of the assessee and ex-gratia payments are deductible. The issue of bad debts was remitted back to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, Karur Vysya Bank, filed its return of income. The Assessing Officer made several additions and disallowances, including depreciation on investments, provision for bad and doubtful debts, bad debts written off, stale drafts account, and ex-gratia payments. The assessee appealed to the CIT(A), who partly allowed the appeal.

What were the issues?

Whether branches falling within urban agglomerations can be considered rural for the purpose of Section 36(1)(viia); whether stale draft accounts constitute income; and whether ex-gratia payments are deductible expenses.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii),Section 36(1)(viia),Section 41(4),Section 37(1)

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

For Appellant: Shri. S. Ananthan, C.A. &, Ms. R. Lalitha, C.A
Hearing: 03.09.2025Pronounced: 17.11.2025

PER S. R. RAGHUNATHA, AM :

The captioned appeals are the cross appeals filed by the assessee and Department respectively against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [In short “the Ld. CIT(A)”] for the assessment year (A.Y.) 2018-19. :-2-

The order continues below.

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