DEPUTY COMMISSIONER OF INCOME TAX NON CORP CIRCLE II MADURAI, MADURAI vs VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED, VIRUDHUNAGAR

Income Tax Appellate Tribunal, B BENCH: CHENNAI

Before: MS. PADMAVATHY S & SHRI MANU KUMAR GIRI

For Respondent: Mr. Shiva Srinivas, CIT

Hearing: 20.01.2026Pronounced: 28.01.2026

आदेश/ O R D E R

PER MANU KUMAR GIRI, JM MANU KUMAR GIRI, JM: These appeals filed by the Revenue and the corresponding cross- These appeals filed by the Revenue and the corresponding cross These appeals filed by the Revenue and the corresponding cross

objections filed by the assessee objections filed by the assessee arise out of the orders passed by arise out of the orders passed by

the learned Commissioner of Income Tax (Appeals), NFAC, Delhi the learned Commissioner of Income Tax (Appeals), NFAC, Delhi the learned Commissioner of Income Tax (Appeals), NFAC, Delhi

[“Ld. CIT(A)”] dated 10.06.2025 for AY 2013 [“Ld. CIT(A)”] dated 10.06.2025 for AY 2013-14 and dated 14 and dated

17.07.2025 for AY 2015 17.07.2025 for AY 2015-16. Since the issues involved are common, 16. Since the issues involved are common,

both the appeals and cross both the appeals and cross-objections were heard together and are were heard together and are

disposed of by this consolidated order. disposed of by this consolidated order.

Facts of the Case are that the assessee 2. Facts of the Case are that the assessee is a co-operative bank operative bank

engaged in banking activities. For AY 2013 engaged in banking activities. For AY 2013-14, it filed its return of 14, it filed its return of

income electronically on 30.09.2013 declaring Nil income and income electronically on 30.09.2013 declaring Nil income and income electronically on 30.09.2013 declaring Nil income and

claiming carry forward of loss of claiming carry forward of loss of Rs.19,55,44,786/-. The return was . The return was

selected for scrutiny under CASS, initially to examine large interest selected for scrutiny under CASS, initially to examine large interest selected for scrutiny under CASS, initially to examine large interest

expenditure expenditure relatable relatable to to exempt exempt income income u/s. 14A. 14A. After After

examination, the Assessing Officer (“AO”) accepted the assessee’s examination, the Assessing Officer (“AO”) accepted the assessee’s examination, the Assessing Officer (“AO”) accepted the assessee’s

explanation and made no disallowance explanation and made no disallowance u/s. 14A.

However, the assessment culminated in disputes on two issues: However, the assessment culminated in disputes on two issues: However, the assessment culminated in disputes on two issues:

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Quantum of deduction allowable Quantum of deduction allowable u/s.36(1)(viia) of the Income of the Income-

tax Act, 1961 (“the Act”); and tax Act, 1961 (“the Act”); and

Non-allowance of brought forward losses allowance of brought forward losses of earlier assessment of earlier assessment

years on the ground that reassessment p years on the ground that reassessment proceedings for those roceedings for those

years were pending. years were pending.

During the assessment proceedings, the assessee originally claimed During the assessment proceedings, the assessee originally claimed During the assessment proceedings, the assessee originally claimed

deduction of Rs.21,03,27,765/ Rs.21,03,27,765/-u/s.36(1)(viia), computed at 36(1)(viia), computed at 7.5% of

total income plus 10% of aggregate average rural advances, as per total income plus 10% of aggregate average rural advances total income plus 10% of aggregate average rural advances

the statutory formula. The AO observed that the actual provision ormula. The AO observed that the actual provision ormula. The AO observed that the actual provision

created in the books of account for bad and doubtful debts was only created in the books of account for bad and doubtful debts was only created in the books of account for bad and doubtful debts was only

Rs.3,19,12,660/-.

Upon Upon Upon being being being confronted, confronted, confronted, the the the assessee assessee assessee furnished furnished furnished a a a revised revised revised

computation of income restricting the deduction computation of income restricting the deduction u/s. 36(1)(viia) 36(1)(viia) to

the amount of provision actually made in the books. The AO the amount of provision actually made in the books. The AO the amount of provision actually made in the books. The AO

accepted the revised computation and allowed deduction of accepted the revised computation and allowed deduction of accepted the revised computation and allowed deduction of

Rs.3,19,12,660/-, while disallowing set , while disallowing set-off of brought forward off of brought forward

losses. The assessment was completed determining a net profit of losses. The assessment was completed determining a net profit of losses. The assessment was completed determining a net profit of

Rs.7,31,89,990/- from banking business. from banking business.

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Aggrieved, the assessee carried the matter in appeal before the Ld. Aggrieved, the assessee carried the matter in appeal before the Ld. Aggrieved, the assessee carried the matter in appeal before the Ld.

CIT(A). The Ld. CIT(A) allowed the appeal. Against the relief so CIT(A). The Ld. CIT(A) allowed the appeal. Against the relief so CIT(A). The Ld. CIT(A) allowed the appeal. Against the relief so

granted, the Revenue is in appeal before the Tribunal, while the granted, the Revenue is in appeal before the Tribunal, while the granted, the Revenue is in appeal before the Tribunal, while the

assessee has filed cross- -objections.

The issues arising for our consideration are: The issues arising for our consideration are:

Whether the deduction Whether the deduction u/s. 36(1)(viia) is to be allowed 36(1)(viia) is to be allowed strictly

with reference to the provision actually made in the books of with reference to the provision actually made in the books of with reference to the provision actually made in the books of

account, subject to the statutory ceiling, or whether it can be , subject to the statutory ceiling, or whether it can be , subject to the statutory ceiling, or whether it can be

allowed independently based on the statutory percentages independently based on the statutory percentages, independently based on the statutory percentages

irrespective of the quantum of provision made irrespective of the quantum of provision made ?

The learned counsel for the assessee submitted that section The learned counsel for the assessee submitted that section The learned counsel for the assessee submitted that section

36(1)(viia) provides for a 36(1)(viia) provides for a statutory deduction, the quantum of which statutory deduction, the quantum of which

is determined by the prescribed percentages of total income and is determined by the prescribed percentages of total income and is determined by the prescribed percentages of total income and

aggregate average rural advances. According to the assessee, the aggregate average rural advances. According to the assessee, the aggregate average rural advances. According to the assessee, the

deduction is an incentive provision deduction is an incentive provision, independent of the actual , independent of the actual

provision recorded in the books, and reflects a deliberate legislative the books, and reflects a deliberate legislative the books, and reflects a deliberate legislative

departure from accounting principles governed by RBI norms.It was departure from accounting principles governed by RBI norms.It was departure from accounting principles governed by RBI norms.It was

argued that RBI provisioning norms regulate financial reporting, argued that RBI provisioning norms regulate financial reporting, argued that RBI provisioning norms regulate financial reporting,

whereas tax deductions are governed exclusively by the Income-tax whereas tax deductions are governed exclusively by the Income whereas tax deductions are governed exclusively by the Income

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Act. The assessee traced the legislative history of section 36(1)(viia) ssessee traced the legislative history of section 36(1)(viia) ssessee traced the legislative history of section 36(1)(viia)

through successive Finance Acts to demonstrate the consistent through successive Finance Acts to demonstrate the consistent through successive Finance Acts to demonstrate the consistent

intent of Parliament to incentivise rural banking. intent of Parliament to incentivise rural banking.Reliance was placed Reliance was placed

on decisions such as Syndicate Bank v. DCIT (ITAT Bangalore), on decisions such as Syndicate Bank v. DCIT (ITAT Bangalore), on decisions such as Syndicate Bank v. DCIT (ITAT Bangalore),

Southern Technologies Ltd. v. JCIT (SC), and Prathma Bank, Southern Technologies Ltd. v. JCIT (SC), and Prathma Bank, Southern Technologies Ltd. v. JCIT (SC), and Prathma Bank,

Moradabad v. ACIT, to contend Moradabad v. ACIT, to contend that the deduction is not restricted that the deduction is not restricted

to the book provision. It was emphasised that the Supreme Court in to the book provision. It was emphasised that the Supreme Court in to the book provision. It was emphasised that the Supreme Court in

Southern Technologies Southern Technologies recognised section 36(1)(viia) as an recognised section 36(1)(viia) as an

incentive-based deduction and observed that provisioning for NPAs based deduction and observed that provisioning for NPAs based deduction and observed that provisioning for NPAs

is first required to be added back and only thereafter deduction is to is first required to be added back and only thereafter deduction is to is first required to be added back and only thereafter deduction is to

be granted as per the statute. be granted as per the statute.

The assessee further submitted that restricting deduction to book The assessee further submitted that restricting deduction to book The assessee further submitted that restricting deduction to book

provision would amount to provision would amount to importing accounting standards into tax importing accounting standards into tax

law, which is impermissible unless expressly mandated by statute. law, which is impermissible unless expressly mandated by statute. law, which is impermissible unless expressly mandated by statute.

The learned Departmental Representative (“DR”) strongly The learned Departmental Representative (“DR”) strongly The learned Departmental Representative (“DR”) strongly

supported the assessment order. It was submitted that supported the assessment order. It was submitted that making of a making of a

provision for bad and do provision for bad and doubtful debts is a condition precedent ubtful debts is a condition precedent for

claiming deduction u/s. u/s. 36(1)(viia). Where the provision actually 36(1)(viia). Where the provision actually

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made is less than the statutory ceiling, the deduction cannot exceed made is less than the statutory ceiling, the deduction cannot exceed made is less than the statutory ceiling, the deduction cannot exceed

the provision made.

The learned DR relied heavily on the The learned DR relied heavily on the jurisdictional co-ordinate Bench nate Bench

decision in the assessee’s own case decision in the assessee’s own case for AYs 2009-10, 2010 10, 2010-11,

2012-13 and 2014-15 in ITA Nos. 2789 to 2793/Chny/2024 dated 15 in ITA Nos. 2789 to 2793/Chny/2024 dated 15 in ITA Nos. 2789 to 2793/Chny/2024 dated

21.03.2025, wherein it was categorically held that deduction u/s. 21.03.2025, wherein it was categorically held that deduction 21.03.2025, wherein it was categorically held that deduction

36(1)(viia) is restricted to the actual provision made i 36(1)(viia) is restricted to the actual provision made in the books, n the books,

subject to the ceiling prescribed under the Act. subject to the ceiling prescribed under the Act.

Reliance was also placed on binding High Court judgments, including Reliance was also placed on binding High Court judgments, including Reliance was also placed on binding High Court judgments, including

CIT v. Syndicate Bank (Karnataka HC), CIT v. Vijaya Bank, and CIT v. Syndicate Bank (Karnataka HC), CIT v. Vijaya Bank, and CIT v. Syndicate Bank (Karnataka HC), CIT v. Vijaya Bank, and

State Bank of Patiala v. CIT (P&H), State Bank of Patiala v. CIT (P&H), all of which hold that the all of which hold that the

language of section 36(1)(viia) is clear and unambiguous and does anguage of section 36(1)(viia) is clear and unambiguous and does anguage of section 36(1)(viia) is clear and unambiguous and does

not permit deduction in excess of the provision actually created. not permit deduction in excess of the provision actually created. not permit deduction in excess of the provision actually created.

We have carefully considered the rival submissions and perused We have carefully considered the rival submissions and perused We have carefully considered the rival submissions and perused

the material on record.

Deduction u/s. 36(1)(viia) 36(1)(viia)

The issue before us is no longer res integra. A co The issue before us is no longer res integra. A co-ordinate Bench of ordinate Bench of this Tribunal, in the assessee’s own case this Tribunal, in the assessee’s own casefor AYs 2009-10, 2010 10, 2010-11,

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Common issues are raised i 4. Common issues are raised in these appeals, hence, they were heard n these appeals, hence, they were heard together and are being disposed off by this consolidated order. The together and are being disposed off by this consolidated order. The together and are being disposed off by this consolidated order. The solitary issue that is raised is whether deduction u/s.36(1)(viia) is to be solitary issue that is raised is whether deduction u/s.36(1)(viia) is to be solitary issue that is raised is whether deduction u/s.36(1)(viia) is to be allowed to the extent of 7.5% of total income and 10% of aggregate allowed to the extent of 7.5% of total income and 10% of aggregate allowed to the extent of 7.5% of total income and 10% of aggregate average rural advances of assessee bank irrespective of amount of ge rural advances of assessee bank irrespective of amount of ge rural advances of assessee bank irrespective of amount of provision debited to profit & loss account as per RBI norms. provision debited to profit & loss account as per RBI norms. 5. Brief facts of the case are as follows: 5. Brief facts of the case are as follows:- The assessee is a co is a co-operative bank engaged in the business of banking. For the assessment years 2009- bank engaged in the business of banking. For the assessment years 2009 bank engaged in the business of banking. For the assessment years 2009 10 to 2012-13 and 2014 13 and 2014- 15, the assessments were reopened by issuance 15, the assessments were reopened by issuance of notice u/s.148 of the Act. The reason for issuance of notice u/s.148 of of notice u/s.148 of the Act. The reason for issuance of notice u/s.148 of of notice u/s.148 of the Act. The reason for issuance of notice u/s.148 of the Act was that asse the Act was that assessee had claimed deduction u/s.36(1)(viia) of the ssee had claimed deduction u/s.36(1)(viia) of the Act, which is not correct and not as per provision debited for bad and Act, which is not correct and not as per provision debited for bad and Act, which is not correct and not as per provision debited for bad and doubtful debts in the profit and loss account. The assessments were doubtful debts in the profit and loss account. The assessments were doubtful debts in the profit and loss account. The assessments were completed u/s.143(3) r.w.s 147 of the Act by disallowing claim of the completed u/s.143(3) r.w.s 147 of the Act by disallowing claim of t completed u/s.143(3) r.w.s 147 of the Act by disallowing claim of t assessee u/s.36(1)(viia) of the Act, for the assessment years 2009-10 to assessee u/s.36(1)(viia) of the Act, for the assessment years 2009 assessee u/s.36(1)(viia) of the Act, for the assessment years 2009 2012-13 and 2014-15. In the above assessment years, the AO disallowed 15. In the above assessment years, the AO disallowed 15. In the above assessment years, the AO disallowed deduction as it did not represent actual provision for bad and doubtful deduction as it did not represent actual provision for bad and doubtful deduction as it did not represent actual provision for bad and doubtful debts created in the books of accounts debts created in the books of accounts of the assessee co-operative bank. operative bank. Aggrieved, the assessee filed an appeal before the First Appellate Aggrieved, the assessee filed an appeal before the First Appellate Aggrieved, the assessee filed an appeal before the First Appellate Authority. The CIT(A) dismissed the appeals filed by the assessee. Authority. The CIT(A) dismissed the appeals filed by the assessee. Authority. The CIT(A) dismissed the appeals filed by the assessee. Aggrieved, the assessee filed further appeal before the ITAT., Chennai. Aggrieved, the assessee filed further appeal before the ITAT., Chennai. Aggrieved, the assessee filed further appeal before the ITAT., Chennai. The Tribunal by consolidated order in ITA Nos.287 to 291/Chny/2018 y consolidated order in ITA Nos.287 to 291/Chny/2018 y consolidated order in ITA Nos.287 to 291/Chny/2018 (order dated 04.07.2018) restored the matter back to the files of AO (order dated 04.07.2018) restored the matter back to the files of AO (order dated 04.07.2018) restored the matter back to the files of AO observing that none of the authorities below have carefully gone through observing that none of the authorities below have carefully gone through observing that none of the authorities below have carefully gone through nature of provisions. The Tribunal directed to identity whether nature of provisions. The Tribunal directed to identity wheth nature of provisions. The Tribunal directed to identity wheth “provisions” created by the assessee bank are actual “provisions” made “provisions” created by the assessee bank are actual “provisions” made “provisions” created by the assessee bank are actual “provisions” made for bad and doubtful debts or something like creation of reserve. for bad and doubtful debts or something like creation of reserve. for bad and doubtful debts or something like creation of reserve. Subsequent to remand by the ITAT, Chennai, assessments were Subsequent to remand by the ITAT, Chennai, assessments were Subsequent to remand by the ITAT, Chennai, assessments were completed by the AO for the assessment years 2009 completed by the AO for the assessment years 2009-10 to 2012 2012-13 and 2014-15 by restricting the claim of deduction to the provisions made by 15 by restricting the claim of deduction to the provisions made by 15 by restricting the claim of deduction to the provisions made by the assessee bank in its books of account, as per RBI norms and not to the the assessee bank in its books of account, as per RBI norms and not to the the assessee bank in its books of account, as per RBI norms and not to the maximum deduction mentioned u/s.36(1)(viia) of the Act, (i.e. 7.5% of maximum deduction mentioned u/s.36(1)(viia) of the Act, (i.e. 7.5% of maximum deduction mentioned u/s.36(1)(viia) of the Act, (i.e. 7.5% of total income and 10% of agg total income and 10% of aggregate of average rural advances of the regate of average rural advances of the bank).

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED 6. Aggrieved by the orders of assessments for the assessment years 2009- 6. Aggrieved by the orders of assessments for the assessment years 2009 6. Aggrieved by the orders of assessments for the assessment years 2009 10 to 2012-13 and 2014 13 and 2014-15, (subsequent to the ITAT order) the assessee 15, (subsequent to the ITAT order) the assessee preferred appeals before First Appellate Authority. The CIT(A) preferred appeals before First Appellate Authority. The CIT(A) preferred appeals before First Appellate Authority. The CIT(A) confirmed the view taken by the AO. The CIT(A) distinguished case laws nfirmed the view taken by the AO. The CIT(A) distinguished case laws nfirmed the view taken by the AO. The CIT(A) distinguished case laws relied on by the assessee and held claim of deduction u/s.36(1)(viia) of relied on by the assessee and held claim of deduction u/s.36(1)(viia) of relied on by the assessee and held claim of deduction u/s.36(1)(viia) of the Act, should be limited to actual provision created for bad and doubtful the Act, should be limited to actual provision created for bad and doubtful the Act, should be limited to actual provision created for bad and doubtful debts made in the books of account, su debts made in the books of account, subject to ceiling provided bject to ceiling provided u/s.36(1)(viia) of the Act. The CIT(A) in this context, relied on Mumbai u/s.36(1)(viia) of the Act. The CIT(A) in this context, relied on Mumbai u/s.36(1)(viia) of the Act. The CIT(A) in this context, relied on Mumbai Bench of the Tribunal order in the case of Yes Bank Vs. DCIT in ITA Bench of the Tribunal order in the case of Yes Bank Vs. DCIT in ITA Bench of the Tribunal order in the case of Yes Bank Vs. DCIT in ITA No.3501 & 3239/Mum/2018 (order dated 30.06.2023). The relevant No.3501 & 3239/Mum/2018 (order dated 30.06.2023). The relevant No.3501 & 3239/Mum/2018 (order dated 30.06.2023). The relevant finding of the CIT(A) read finding of the CIT(A) reads as follows:- “Decision on Ground Nos.1, 2 and 3: These grounds are taken up “Decision on Ground Nos.1, 2 and 3: These grounds are taken up “Decision on Ground Nos.1, 2 and 3: These grounds are taken up together as they are related to each other. The reliance of the together as they are related to each other. The reliance of the together as they are related to each other. The reliance of the Appellant on Southern Technologies Vs JCIT 228 ITR 440 Appellant on Southern Technologies Vs JCIT 228 ITR 440 Appellant on Southern Technologies Vs JCIT 228 ITR 440 (Supreme Court) is misplaced. The issue in this case was whether (Supreme Court) is misplaced. The issue in this case was w (Supreme Court) is misplaced. The issue in this case was w the benefit of section 36(i)(viia) can be extended to NBFCs. The the benefit of section 36(i)(viia) can be extended to NBFCs. The the benefit of section 36(i)(viia) can be extended to NBFCs. The appellant is selectively quoting a paragraph from the order to appellant is selectively quoting a paragraph from the order to appellant is selectively quoting a paragraph from the order to reinforce its point. The paragraph being relied upon by the reinforce its point. The paragraph being relied upon by the reinforce its point. The paragraph being relied upon by the Appellant is as follows: "Lastly, as stated above, even in the case of Appellant is as follows: "Lastly, as stated above, even in th Appellant is as follows: "Lastly, as stated above, even in th banks the provision for NPA has to be added back and only after banks the provision for NPA has to be added back and only after banks the provision for NPA has to be added back and only after such add back that deduction u/s. 36(1)(viia) can be claimed by the such add back that deduction u/s. 36(1)(viia) can be claimed by the such add back that deduction u/s. 36(1)(viia) can be claimed by the banks." Vide submission dated 03/02/2021 and 03/07/2023 banks." Vide submission dated 03/02/2021 and 03/07/2023 banks." Vide submission dated 03/02/2021 and 03/07/2023 Appellant maintains the fact that the Hon'ble Supreme Court has Appellant maintains the fact that the Hon'ble Supreme Cour Appellant maintains the fact that the Hon'ble Supreme Cour said that the amount needs to be added back and then deduction said that the amount needs to be added back and then deduction said that the amount needs to be added back and then deduction u/s 36(1)(viia) claimed. The relevant paragraph of the submission u/s 36(1)(viia) claimed. The relevant paragraph of the submission u/s 36(1)(viia) claimed. The relevant paragraph of the submission is quoted below "The point to be highlighted is that in the case of is quoted below "The point to be highlighted is that in the case of is quoted below "The point to be highlighted is that in the case of banks, by way of incentive, a provision for bad and d banks, by way of incentive, a provision for bad and doubtful debt is oubtful debt is given the benefit of deduction, however, subject to the ceiling given the benefit of deduction, however, subject to the ceiling given the benefit of deduction, however, subject to the ceiling prescribed as stated above. Lastly, the provision for NPA created prescribed as stated above. Lastly, the provision for NPA created prescribed as stated above. Lastly, the provision for NPA created by scheduled bank is added back and only thereafter deduction is by scheduled bank is added back and only thereafter deduction is by scheduled bank is added back and only thereafter deduction is made permissible u/s. 36(1)(viia) as claimed" made permissible u/s. 36(1)(viia) as claimed". As pointed out . As pointed out above, matter before the Supreme Court in the case of Southern above, matter before the Supreme Court in the case of Southern above, matter before the Supreme Court in the case of Southern Technologies Vs JCIT was whether in the case of NBFC Technologies Vs JCIT was whether in the case of NBFC Technologies Vs JCIT was whether in the case of NBFC section36(1)(viia) is applicable. Whereas in the present case the section36(1)(viia) is applicable. Whereas in the present case the section36(1)(viia) is applicable. Whereas in the present case the issue to be decided is whether the allowable sum is the actual issue to be decided is whether the allowable sum is the a issue to be decided is whether the allowable sum is the a provision for bad and doubtful debts made in the books of account provision for bad and doubtful debts made in the books of account provision for bad and doubtful debts made in the books of account subject to the ceiling provided u/s 36(1)(viia) or whether the subject to the ceiling provided u/s 36(1)(viia) or whether the subject to the ceiling provided u/s 36(1)(viia) or whether the allowable sum is the one determined u/s 36(1)(viia) irrespective of allowable sum is the one determined u/s 36(1)(viia) irrespective of allowable sum is the one determined u/s 36(1)(viia) irrespective of

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED the provision made. AO has relied on a decision of the Hon'ble the provision made. AO has relied on a decision of th the provision made. AO has relied on a decision of th Punjab and Haryana High Court where the issue was exactly the Punjab and Haryana High Court where the issue was exactly the Punjab and Haryana High Court where the issue was exactly the same and was the subject matter of appeal. In the case of Southern same and was the subject matter of appeal. In the case of Southern same and was the subject matter of appeal. In the case of Southern Technologies Vs JCIT it was not the subject matter of appeal and Technologies Vs JCIT it was not the subject matter of appeal and Technologies Vs JCIT it was not the subject matter of appeal and the context in which the above statement was made is also the context in which the above statement was made is the context in which the above statement was made is different. Even in the case of Southern Technologies vs JCIT on different. Even in the case of Southern Technologies vs JCIT on different. Even in the case of Southern Technologies vs JCIT on which reliance is placed by the Appellant the fact that Hon'ble SC which reliance is placed by the Appellant the fact that Hon'ble SC which reliance is placed by the Appellant the fact that Hon'ble SC has mentioned that the actual provision be added back before has mentioned that the actual provision be added back before has mentioned that the actual provision be added back before allowing deduction u/s 36(1)(viia) is to ensure that Appellant does allowing deduction u/s 36(1)(viia) is to ensure that Appel allowing deduction u/s 36(1)(viia) is to ensure that Appel not get the benefit of double deduction. Also the amount u/s not get the benefit of double deduction. Also the amount u/s not get the benefit of double deduction. Also the amount u/s 36(1)(viia) will vary as the Total Income itself will change 36(1)(viia) will vary as the Total Income itself will change 36(1)(viia) will vary as the Total Income itself will change depending on whether actual provision is added back or not. depending on whether actual provision is added back or not. depending on whether actual provision is added back or not. Moreover, the Hon'ble Supreme Court in the same case i.e Moreover, the Hon'ble Supreme Court in the same case i.e Moreover, the Hon'ble Supreme Court in the same case i.e Southern Technologies Vs JCIT 228 ITR 440(SC) on Page 55 of the n Technologies Vs JCIT 228 ITR 440(SC) on Page 55 of the n Technologies Vs JCIT 228 ITR 440(SC) on Page 55 of the order has observed as follows order has observed as follows- "So also, as stated above, Section "So also, as stated above, Section 36(1) (viia) provides for a deduction not only in respect of written 36(1) (viia) provides for a deduction not only in respect of written 36(1) (viia) provides for a deduction not only in respect of written off bad debt but in case of banks it extends the allowance also to off bad debt but in case of banks it extends the allowance also off bad debt but in case of banks it extends the allowance also any Provision for bad and doubtful debts 'made' by banks which any Provision for bad and doubtful debts 'made' by banks which any Provision for bad and doubtful debts 'made' by banks which incentive is not given to NBFCs. Therefore the judgement incentive is not given to NBFCs. Therefore the judgement incentive is not given to NBFCs. Therefore the judgement unequivocally emphasizes that provision for bad and doubtful unequivocally emphasizes that provision for bad and doubtful unequivocally emphasizes that provision for bad and doubtful debts has to be "made" by banks. In the absence of any provision debts has to be "made" by banks. In the absence of any provision debts has to be "made" by banks. In the absence of any provision for bad and doubtful debt made there would be no allowance u/s and doubtful debt made there would be no allowance u/s and doubtful debt made there would be no allowance u/s 36(1)(viia). Going by the appellant's logic even in cases where no 36(1)(viia). Going by the appellant's logic even in cases where no 36(1)(viia). Going by the appellant's logic even in cases where no provision is made by the banks for bad and doubtful debts provision is made by the banks for bad and doubtful debts provision is made by the banks for bad and doubtful debts allowance u/s 36(i)(viia) will still be available. This is clearly not allowance u/s 36(i)(viia) will still be available. This is clearly not allowance u/s 36(i)(viia) will still be available. This is clearly not the case as pointed out above. The appellant has conveniently case as pointed out above. The appellant has conveniently case as pointed out above. The appellant has conveniently omitted this part of the judgement. The appellant vide submission omitted this part of the judgement. The appellant vide submission omitted this part of the judgement. The appellant vide submission dated 18/07/2024 relied on a decision of Hon'ble ITAT Bangalore dated 18/07/2024 relied on a decision of Hon'ble ITAT Bangalore dated 18/07/2024 relied on a decision of Hon'ble ITAT Bangalore in the case of Syndicate Bank Vs Deputy Commissioner of Income in the case of Syndicate Bank Vs Deputy Commissioner of Income in the case of Syndicate Bank Vs Deputy Commissioner of Income tax 78 ITD(BANG). However as quoted above the Hon'ble Punjab 8 ITD(BANG). However as quoted above the Hon'ble Punjab 8 ITD(BANG). However as quoted above the Hon'ble Punjab and Haryana High Court in the case of State Bank of Patiala vs and Haryana High Court in the case of State Bank of Patiala vs and Haryana High Court in the case of State Bank of Patiala vs CIT[2005] 272 ITR 54 has clearly held that "9. We are, therefore, CIT[2005] 272 ITR 54 has clearly held that "9. We are, therefore, CIT[2005] 272 ITR 54 has clearly held that "9. We are, therefore, satisfied that the Tribunal was right in holding that since the satisfied that the Tribunal was right in holding that since the satisfied that the Tribunal was right in holding that since the assessee had made a provision of Rs. 1,19,36,000 for bad and e had made a provision of Rs. 1,19,36,000 for bad and e had made a provision of Rs. 1,19,36,000 for bad and doubtful debts, its claim for deduction u/s. 36(1) (viia) of the Act doubtful debts, its claim for deduction u/s. 36(1) (viia) of the Act doubtful debts, its claim for deduction u/s. 36(1) (viia) of the Act had to be restricted to that amount only. Since the language of the had to be restricted to that amount only. Since the language of the had to be restricted to that amount only. Since the language of the statute is clear and is not capable of any other interpretation, we statute is clear and is not capable of any other interpretation, statute is clear and is not capable of any other interpretation, are satisfied that no substantial question of law arises in this are satisfied that no substantial question of law arises in this are satisfied that no substantial question of law arises in this appeal for consideration by this court." The Hon'ble ITAT at appeal for consideration by this court." The Hon'ble ITAT at appeal for consideration by this court." The Hon'ble ITAT at

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED Mumbai had an occasion to deal with this issue in the case of Yes Mumbai had an occasion to deal with this issue in the case of Yes Mumbai had an occasion to deal with this issue in the case of Yes Bank Vs DCIT for AY 2014 Bank Vs DCIT for AY 2014-15. The relevant portion of the orde 15. The relevant portion of the order dated 30/06/2023 is quoted below 17. The ground Nos. 9 to 14 of dated 30/06/2023 is quoted below 17. The ground Nos. 9 to 14 of dated 30/06/2023 is quoted below 17. The ground Nos. 9 to 14 of the appeal of the assessee and ground No. 3 of the appeal of the the appeal of the assessee and ground No. 3 of the appeal of the the appeal of the assessee and ground No. 3 of the appeal of the Revenue are connected with the issue of deduction u/s Revenue are connected with the issue of deduction u/s Revenue are connected with the issue of deduction u/s 36(1)(1)(viia) of the Act. 17.1 Briefly stated facts qua the issue in 36(1)(1)(viia) of the Act. 17.1 Briefly stated facts qua the issue in 36(1)(1)(viia) of the Act. 17.1 Briefly stated facts qua the issue in dispute are that the ground pertains to disallowance of provision of ispute are that the ground pertains to disallowance of provision of ispute are that the ground pertains to disallowance of provision of bad and doubtful debts claimed by the assessee u/s 36(1)(visa) of bad and doubtful debts claimed by the assessee u/s 36(1)(visa) of bad and doubtful debts claimed by the assessee u/s 36(1)(visa) of Rs. 135,21,64,723/ Rs. 135,21,64,723/-with respect to non-performing assets (NPA). performing assets (NPA). The Assessing Officer disallowed the same on the premises that the The Assessing Officer disallowed the same on the premises The Assessing Officer disallowed the same on the premises same pertain to Standard Assets and hence should not be allowed. same pertain to Standard Assets and hence should not be allowed. same pertain to Standard Assets and hence should not be allowed. The Ld. CIT(A) remanded the issue back to the file of the AO for The Ld. CIT(A) remanded the issue back to the file of the AO for The Ld. CIT(A) remanded the issue back to the file of the AO for examining whether claim pertain to Rural v. non examining whether claim pertain to Rural v. non-rural branches. rural branches. Before us, the Ld. Counsel of the assessee submitted Before us, the Ld. Counsel of the assessee submitted that the claim that the claim pertains to only NPA and not standard assets. He submitted that pertains to only NPA and not standard assets. He submitted that pertains to only NPA and not standard assets. He submitted that provision for standard advances is a separate line of item in provision for standard advances is a separate line of item in provision for standard advances is a separate line of item in computation of income (COI) and the claim u/s 36(1)(viia) of the computation of income (COI) and the claim u/s 36(1)(viia) of the computation of income (COI) and the claim u/s 36(1)(viia) of the assessee purely pertains to NPAs and claim has not assessee purely pertains to NPAs and claim has not been made for been made for standard advances. He further submitted the there is no such standard advances. He further submitted the there is no such standard advances. He further submitted the there is no such requirement that u/s. 36(1)(viia) of the Act deduction can be requirement that u/s. 36(1)(viia) of the Act deduction can be requirement that u/s. 36(1)(viia) of the Act deduction can be claimed only with respect to rural branches. The Ld. Counsel claimed only with respect to rural branches. The Ld. Counsel claimed only with respect to rural branches. The Ld. Counsel further submitted that the issue in dispute is covered in assessee's further submitted that the issue in dispute is covered in further submitted that the issue in dispute is covered in own case for AY 2011 own case for AY 2011-12 to 2013-14. The Ld. DR also could not 14. The Ld. DR also could not controvert this fact. 18. We have heard rival submission of the controvert this fact. 18. We have heard rival submission of the controvert this fact. 18. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on parties on the issue in dispute and perused the relevant material on parties on the issue in dispute and perused the relevant material on record. The identical issue has been decided by t record. The identical issue has been decided by the Tribunal in he Tribunal in favour of the assessee for AY 2011 favour of the assessee for AY 2011-12 to 2013-14. The relevant 14. The relevant finding of the Tribunal is reproduced as under: "085. We have finding of the Tribunal is reproduced as under: "085. We have finding of the Tribunal is reproduced as under: "085. We have carefully considered the rival contention and perused the orders of carefully considered the rival contention and perused the orders of carefully considered the rival contention and perused the orders of the lower authorities. The only reason why the deduction is the lower authorities. The only reason why the d the lower authorities. The only reason why the deduction is disallowed to the assessee is that assessee does not have any rural disallowed to the assessee is that assessee does not have any rural disallowed to the assessee is that assessee does not have any rural branches, we find that deduction u/s 36 (1) (viia) of the act is not branches, we find that deduction u/s 36 (1) (viia) of the act is not branches, we find that deduction u/s 36 (1) (viia) of the act is not restricted to the banks only having the rural branches. This has restricted to the banks only having the rural branches. This has restricted to the banks only having the rural branches. This has been dealt with in 42 taxmann.com 303 as u been dealt with in 42 taxmann.com 303 as under :- "34. It can be "34. It can be seen from the history of Sec.36(1)(vita) of the Act that at stage-l the seen from the history of Sec.36(1)(vita) of the Act that at stage seen from the history of Sec.36(1)(vita) of the Act that at stage deduction was allowed in respect of any provision for bad and deduction was allowed in respect of any provision for bad and deduction was allowed in respect of any provision for bad and doubtful debts made by a scheduled bank in relation to the doubtful debts made by a scheduled bank in relation to the doubtful debts made by a scheduled bank in relation to the advances made by its rural branches. At advances made by its rural branches. At this stage the PBDD had this stage the PBDD had to be linked to the advances made by Bank's rural branches. At to be linked to the advances made by Bank's rural branches. At to be linked to the advances made by Bank's rural branches. At

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED stage-ll of Sec. 36(1) (vita), the deduction while computing the ll of Sec. 36(1) (vita), the deduction while computing the ll of Sec. 36(1) (vita), the deduction while computing the taxable profits was allowed of an amount not exceeding ten per taxable profits was allowed of an amount not exceeding ten per taxable profits was allowed of an amount not exceeding ten per cent of the total income (computed before cent of the total income (computed before making any deduction making any deduction under the proposed new provision) or two per cent of the under the proposed new provision) or two per cent of the under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such aggregate average advances made by rural branches of such aggregate average advances made by rural branches of such banks, whichever is higher. At this stage also the PBDD had to be banks, whichever is higher. At this stage also the PBDD had to be banks, whichever is higher. At this stage also the PBDD had to be created and debited to the profit and loss account bu created and debited to the profit and loss account but it was not t it was not required to be done in relation to advances made by Bank's rural required to be done in relation to advances made by Bank's rural required to be done in relation to advances made by Bank's rural branches and can be in relation to any debt. PBDD need not be in branches and can be in relation to any debt. PBDD need not be in branches and can be in relation to any debt. PBDD need not be in relation to rural advances but can be in relation to any advances relation to rural advances but can be in relation to any advances relation to rural advances but can be in relation to any advances both rural and non both rural and non-rural advances. The two percent AAA made by ent AAA made by rural branches of such banks had to be computed and the PBDD rural branches of such banks had to be computed and the PBDD rural branches of such banks had to be computed and the PBDD made in books has to be in relation to rural advances. The other made in books has to be in relation to rural advances. The other made in books has to be in relation to rural advances. The other eligible sum which can be considered for deduction u/s.36(1) (viia) eligible sum which can be considered for deduction u/s.36(1) (viia) eligible sum which can be considered for deduction u/s.36(1) (viia) of the Act viz., ten per cent of the total inc of the Act viz., ten per cent of the total income (computed before ome (computed before making any deduction under the proposed new provision) does not making any deduction under the proposed new provision) does not making any deduction under the proposed new provision) does not require computation in relation to rural advances. Nevertheless the require computation in relation to rural advances. Nevertheless the require computation in relation to rural advances. Nevertheless the debit of PBDD to Profit and Loss account is necessary of the debit of PBDD to Profit and Loss account is necessary of the debit of PBDD to Profit and Loss account is necessary of the higher of the two sums to claim deduction higher of the two sums to claim deduction u/s.36(1)(viia) of the Act. u/s.36(1)(viia) of the Act. If the concerned bank does not have rural branches then they could If the concerned bank does not have rural branches then they could If the concerned bank does not have rural branches then they could not claim the deduction. Therefore the deduction was confined only not claim the deduction. Therefore the deduction was confined only not claim the deduction. Therefore the deduction was confined only to banks that had rural branches. 35. At Stage to banks that had rural branches. 35. At Stage-III of the provisions III of the provisions of Sec.36(1)(viia) of the of Sec.36(1)(viia) of the Act, the deduction allowed earlier was Act, the deduction allowed earlier was enhanced. The enhancement of the deduction was consequent to enhanced. The enhancement of the deduction was consequent to enhanced. The enhancement of the deduction was consequent to representation to the Government that the existing ceiling in this representation to the Government that the existing ceiling in this representation to the Government that the existing ceiling in this regard i.e. 10% of the total income or 2% of the aggregate average regard i.e. 10% of the total income or 2% of the aggregate average regard i.e. 10% of the total income or 2% of the aggregate average advances made by the advances made by the rural branches of Indian banks, whichever is rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the higher, should be modified. Accordingly, by the Amending Act, the higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under cl. (viia) of sub deduction presently available under cl. (viia) of sub-s. (1) of s. 36 s. (1) of s. 36 of the IT Act has been split into two separate provisions. One of of the IT Act has been split into two separate provisions. One of of the IT Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% (as it its the deduction to an amount not exceeding 2% (as it its the deduction to an amount not exceeding 2% (as it existed originally, now it is 10%) of the aggregate average existed originally, now it is 10%) of the aggregate average existed originally, now it is 10%) of the aggregate average advances made by rural branches of the banks concerned. This will advances made by rural branches of the banks concerned. This will advances made by rural branches of the banks concerned. This will imply that all scheduled or non imply that all scheduled or non-scheduled banks having rural scheduled banks having rural branches would branches would be allowed the deduction (a) upto 2% (now 10%) be allowed the deduction (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) of the aggregate average advances made by such branches and (b) of the aggregate average advances made by such branches and (b) a further deduction upto 5% of their total income in respect of a further deduction upto 5% of their total income in respect of a further deduction upto 5% of their total income in respect of provision for bad and doubtful debts. The further deduction of 5% provision for bad and doubtful debts. The further deduction of 5% provision for bad and doubtful debts. The further deduction of 5% of total income was available to banks which did not have rural e was available to banks which did not have rural e was available to banks which did not have rural

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED branches. 36. Therefore after 1.4.1987, scheduled or non- branches. 36. Therefore after 1.4.1987, scheduled or non branches. 36. Therefore after 1.4.1987, scheduled or non scheduled banks having rural branches were allowed deduction., scheduled banks having rural branches were allowed deduction., scheduled banks having rural branches were allowed deduction., (a) upto 2% (now 10%) of the aggregate average advances made (a) upto 2% (now 10%) of the aggregate average advances made (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) by such branches and (b) Schedule or non-scheduled banks scheduled banks whether it had rural branches or not a deduction upto 5% of their whether it had rural branches or not a deduction upto 5% of their whether it had rural branches or not a deduction upto 5% of their total income in respect of provision for bad and doubtful debts. total income in respect of provision for bad and doubtful debts. total income in respect of provision for bad and doubtful debts. Even under the new provisions creating a PBDD in the books of Even under the new provisions creating a PBDD in the books of Even under the new provisions creating a PBDD in the books of accounts is necessary. 37. Thou accounts is necessary. 37. Though under Stage-II and Stage II and Stage-III of the provisions of Sec. 36(1)(viia) of the Act, PBDD has to be the provisions of Sec. 36(1)(viia) of the Act, PBDD has to be the provisions of Sec. 36(1)(viia) of the Act, PBDD has to be created by debiting the profit and loss account of the sum claimed created by debiting the profit and loss account of the sum claimed created by debiting the profit and loss account of the sum claimed as deduction, the condition that the provision should be in respect as deduction, the condition that the provision should be in respect as deduction, the condition that the provision should be in respect of rural advances is not of rural advances is not necessary. At stage-II of the provisions of II of the provisions of Sec.36(1)(viia) of the Act, this condition was done away with and it Sec.36(1)(viia) of the Act, this condition was done away with and it Sec.36(1)(viia) of the Act, this condition was done away with and it was only necessary to create PBDD in the books of accounts and was only necessary to create PBDD in the books of accounts and was only necessary to create PBDD in the books of accounts and debit to profit and loss account. The quantification of the maximum debit to profit and loss account. The quantification of the maximum debit to profit and loss account. The quantification of the maximum deduction permissible u/s.36(1)(viia) of the Act had to be done. ermissible u/s.36(1)(viia) of the Act had to be done. ermissible u/s.36(1)(viia) of the Act had to be done. Firstly it has to be ascertained as to what is 10% of the aggregate Firstly it has to be ascertained as to what is 10% of the aggregate Firstly it has to be ascertained as to what is 10% of the aggregate average advances made by rural branches, if the Bank has rural average advances made by rural branches, if the Bank has rural average advances made by rural branches, if the Bank has rural branches, otherwise that part of the deduction u/a.36(1)(viia) of the branches, otherwise that part of the deduction u/a.36(1)(viia) of the branches, otherwise that part of the deduction u/a.36(1)(viia) of the Act will not be available to the bank. The second part of the ct will not be available to the bank. The second part of the ct will not be available to the bank. The second part of the deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven deduction u/s.36(1)(viia) has to be ascertained viz., 7.5% seven and one-half per cent of the total income (computed before making half per cent of the total income (computed before making half per cent of the total income (computed before making any deduction under this clause and Chapter VI any deduction under this clause and Chapter VI-A). The above are A). The above are the permissible upper limits of deductions u/s.36(1)(via) of the Act. the permissible upper limits of deductions u/s.36(1)(via) of the Act. the permissible upper limits of deductions u/s.36(1)(via) of the Act. The actual provision made in the books by the Assessee on account The actual provision made in the books by the Assessee on account The actual provision made in the books by the Assessee on account of PBDD (irrespective of whether it is rural or non murath has to of PBDD (irrespective of whether it is rural or non murath has to of PBDD (irrespective of whether it is rural or non murath has to be seen. To the extent PBDD is so created, then subject to the be seen. To the extent PBDD is so created, then subje be seen. To the extent PBDD is so created, then subje permissible upper limits referred to above, the deduction has to be permissible upper limits referred to above, the deduction has to be permissible upper limits referred to above, the deduction has to be allowed to the Assessee. The question of bifurcating the PBDD as allowed to the Assessee. The question of bifurcating the PBDD as allowed to the Assessee. The question of bifurcating the PBDD as one relating to rural advances and other advances (Non-rural one relating to rural advances and other advances (Non one relating to rural advances and other advances (Non advances) does not arise for consideration." In view advances) does not arise for consideration." In view of the above I of the above I agree with the decision of the AO that deduction u/s 36(1)(viia) is agree with the decision of the AO that deduction u/s 36(1)(viia) is agree with the decision of the AO that deduction u/s 36(1)(viia) is restricted to the actual provisions created by the assessee for bad restricted to the actual provisions created by the assessee for bad restricted to the actual provisions created by the assessee for bad & doubtful debts subject to the limit prescribed u/s 36(1) (viia). & doubtful debts subject to the limit prescribed u/s 36(1) (viia). & doubtful debts subject to the limit prescribed u/s 36(1) (viia). These grounds are decided against the These grounds are decided against the appellant.” 7. Aggrieved by the order of the CIT(A), the assessee has filed present 7. Aggrieved by the order of the CIT(A), the assessee has filed present 7. Aggrieved by the order of the CIT(A), the assessee has filed present appeals before the Tribunal. The learned AR has filed paper book appeals before the Tribunal. The learned AR has filed paper book appeals before the Tribunal. The learned AR has filed paper book enclosing therein the memorandum explaining provision of introduction enclosing therein the memorandum explaining provision of introduction enclosing therein the memorandum explaining provision of introduction

:-13-:

ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED of section 36(1)(viia) of the Act an of section 36(1)(viia) of the Act and various amendments made to the d various amendments made to the said section over the period of time etc. The learned AR reiterated said section over the period of time etc. The learned AR reiterated said section over the period of time etc. The learned AR reiterated submissions made before the AO and CIT(A). submissions made before the AO and CIT(A). 8. The learned DR, on the other hand, submitted that issue whether 8. The learned DR, on the other hand, submitted that issue whether 8. The learned DR, on the other hand, submitted that issue whether deduction u/s.36(1)(viia) of the Act is to be deduction u/s.36(1)(viia) of the Act is to be allowed to the extent of 7.5% allowed to the extent of 7.5% of the total income and 10% of aggregate of average total advance, of the total income and 10% of aggregate of average total advance, of the total income and 10% of aggregate of average total advance, irrespective of the amount of provisions debited to the profit & loss irrespective of the amount of provisions debited to the profit & loss irrespective of the amount of provisions debited to the profit & loss account as per RBI norms is no longer res integra, as the same is covered account as per RBI norms is no longer res integra, as the same is covered account as per RBI norms is no longer res integra, as the same is covered in favour of the Revenue by the judgements of the Hon’ble Karnataka he Revenue by the judgements of the Hon’ble Karnataka he Revenue by the judgements of the Hon’ble Karnataka High Court in the case of CIT Vs.Syndicate Bank reported in (2020) 422 High Court in the case of CIT Vs.Syndicate Bank reported in (2020) 422 High Court in the case of CIT Vs.Syndicate Bank reported in (2020) 422 ITR 460 (Kar), in the case of CIT Vijaya Bank in ITA No.1066 of 2008 ITR 460 (Kar), in the case of CIT Vijaya Bank in ITA No.1066 of 2008 ITR 460 (Kar), in the case of CIT Vijaya Bank in ITA No.1066 of 2008 (judgement dated 21.10.2024) and judgement of the Hon’ble Punjab & (judgement dated 21.10.2024) and judgement of the Hon’ble Punj (judgement dated 21.10.2024) and judgement of the Hon’ble Punj Haryana High Court in the case of State Bank of Patiala Vs.CIT reported Haryana High Court in the case of State Bank of Patiala Vs.CIT reported Haryana High Court in the case of State Bank of Patiala Vs.CIT reported in (2005) 272 ITR 54 (P&H). in (2005) 272 ITR 54 (P&H). 9. We have heard rival submissions and perused material on record. As 9. We have heard rival submissions and perused material on record. As 9. We have heard rival submissions and perused material on record. As mentioned earlier, the solitary issue that has raised for our adjudication is mentioned earlier, the solitary issue that has raised for our adjudication is mentioned earlier, the solitary issue that has raised for our adjudication is whether deduction u/s.36(1)(viia) of the Act is actual provision for bad ether deduction u/s.36(1)(viia) of the Act is actual provision for bad ether deduction u/s.36(1)(viia) of the Act is actual provision for bad and doubtful debts made in the books of account, subject to ceiling and doubtful debts made in the books of account, subject to ceiling and doubtful debts made in the books of account, subject to ceiling provided u/s.36(1)(viia) of the Act, or whether allowable sum is the same provided u/s.36(1)(viia) of the Act, or whether allowable sum is the same provided u/s.36(1)(viia) of the Act, or whether allowable sum is the same as determined u/s.36(1)(viia) of the Act, i as determined u/s.36(1)(viia) of the Act, irrespective of the provision rrespective of the provision made by the assessee in its books of account. The claim of the assessee made by the assessee in its books of account. The claim of the assessee made by the assessee in its books of account. The claim of the assessee before us is that irrespective of quantum of “provision” made, it should before us is that irrespective of quantum of “provision” made, it should before us is that irrespective of quantum of “provision” made, it should be allowed as deduction based on the maximum amount prescribed be allowed as deduction based on the maximum amount prescribed be allowed as deduction based on the maximum amount prescribed u/s.36(1)(viia) of the Act. The case laws relied on by the assessee has the Act. The case laws relied on by the assessee has the Act. The case laws relied on by the assessee has been distinguished by the CIT(A) in the impugned orders at page 39 to 44 been distinguished by the CIT(A) in the impugned orders at page 39 to 44 been distinguished by the CIT(A) in the impugned orders at page 39 to 44 and we approve the CIT(A) order in distinguishing the same. The and we approve the CIT(A) order in distinguishing the same. The and we approve the CIT(A) order in distinguishing the same. The Hon’ble Karnataka High Court in the case of CIT Vs Syndicate Bank Hon’ble Karnataka High Court in the case of CIT Vs Syndicate Bank Hon’ble Karnataka High Court in the case of CIT Vs Syndicate Bank reported in (2020) 422 ITR 460 (Kar) considered an identical issue and reported in (2020) 422 ITR 460 (Kar) considered an identical issue and reported in (2020) 422 ITR 460 (Kar) considered an identical issue and has categorically held that conditions precedent for claiming deduction has categorically held that conditions precedent for claiming deduction has categorically held that conditions precedent for claiming deduction u/s.36(1)(viia) of the Act is that there should have been “provision” made u/s.36(1)(viia) of the Act is that there should have been “provision” made u/s.36(1)(viia) of the Act is that there should have been “provision” made and if the “provision” so made is exce and if the “provision” so made is excess of prescribed limit made u/s., ss of prescribed limit made u/s., then deduction will be allowed only to the extent of limit so prescribed. then deduction will be allowed only to the extent of limit so prescribed. then deduction will be allowed only to the extent of limit so prescribed. However, if the “provision” made is lower than the prescribed limit, then However, if the “provision” made is lower than the prescribed limit, then However, if the “provision” made is lower than the prescribed limit, then deduction can be only to the extent of “provision” made. It was further deduction can be only to the extent of “provision” made. It was further deduction can be only to the extent of “provision” made. It was further held by Hon’ble High Court that language employed in section ld by Hon’ble High Court that language employed in section ld by Hon’ble High Court that language employed in section 36(1)(viia) of the Act is very clear and unambiguous and there is no need 36(1)(viia) of the Act is very clear and unambiguous and there is no need 36(1)(viia) of the Act is very clear and unambiguous and there is no need to go into intention or object behind said section. It was concluded by the to go into intention or object behind said section. It was concluded by the to go into intention or object behind said section. It was concluded by the

:-14-:

ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED Hon’ble Court that in absence of any “provision Hon’ble Court that in absence of any “provision” made, deduction ” made, deduction u/s.36(1)(viia) of the Act cannot be allowed. The relevant finding of the u/s.36(1)(viia) of the Act cannot be allowed. The relevant finding of the u/s.36(1)(viia) of the Act cannot be allowed. The relevant finding of the Hon’ble Karnataka High Court reads as follows: Hon’ble Karnataka High Court reads as follows:- “8. Thus, a conjoint reading of provision contained in section “8. Thus, a conjoint reading of provision contained in section “8. Thus, a conjoint reading of provision contained in section 36(1)(viia) and explanatory note dated 30 36(1)(viia) and explanatory note dated 30-6-1982 it is evident that is evident that deduction provided in section 36(1)(viia) shall be allowed in deduction provided in section 36(1)(viia) shall be allowed in deduction provided in section 36(1)(viia) shall be allowed in respect of the matters dealt therein in computing the income. The respect of the matters dealt therein in computing the income. The respect of the matters dealt therein in computing the income. The condition precedent for elaiming deduction u/s. 36(1)(viia) of the condition precedent for elaiming deduction u/s. 36(1)(viia) of the condition precedent for elaiming deduction u/s. 36(1)(viia) of the Act is that a provision for bad and doubtful Act is that a provision for bad and doubtful debt should be made in debt should be made in the accounts of the assessee. The aforesaid section mentions the the accounts of the assessee. The aforesaid section mentions the the accounts of the assessee. The aforesaid section mentions the maximum amount for which such a provision should be made. If a maximum amount for which such a provision should be made. If a maximum amount for which such a provision should be made. If a provision is made in excess of the limits prescribed under the provision is made in excess of the limits prescribed under the provision is made in excess of the limits prescribed under the section, the assessee would not be entitle section, the assessee would not be entitled to deduction of the d to deduction of the excess amount. Once a provision is made and the amount of excess amount. Once a provision is made and the amount of excess amount. Once a provision is made and the amount of deduction is within the limit prescribed under the Act, the assessee deduction is within the limit prescribed under the Act, the assessee deduction is within the limit prescribed under the Act, the assessee would be entitled to deduction of the amount for which provision is would be entitled to deduction of the amount for which provision is would be entitled to deduction of the amount for which provision is made in the books of accounts. made in the books of accounts. 9. The language employed in section 36(1)(viia) of the Act is clear language employed in section 36(1)(viia) of the Act is clear language employed in section 36(1)(viia) of the Act is clear and unambiguous. It is well established Rule of interpretation and unambiguous. It is well established Rule of interpretation and unambiguous. It is well established Rule of interpretation stated by LORD CAIRNS that "if the person sought to be taxed stated by LORD CAIRNS that "if the person sought to be taxed stated by LORD CAIRNS that "if the person sought to be taxed comes within the letter of the law he must be taxed, however great comes within the letter of the law he must be taxed, however great comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hardship may appear to the judicial mind to be. On the other hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the hand, if the Crown seeking to recover the tax, cannot bring the hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however subject within the letter of the law, the subject is free, however subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear apparently within the spirit of law the case might otherwise app apparently within the spirit of law the case might otherwise app to be. It is equally well settled legal proposition that "in a taxing to be. It is equally well settled legal proposition that "in a taxing to be. It is equally well settled legal proposition that "in a taxing act once has to look merely as what is said There is no room for act once has to look merely as what is said There is no room for act once has to look merely as what is said There is no room for any intendment. There is no equity about a tax. There is no any intendment. There is no equity about a tax. There is no any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be presumption as to tax. Nothing is to be read in, nothing presumption as to tax. Nothing is to be read in, nothing implied. One can only look fairly at the language used." [SEE: CIT implied. One can only look fairly at the language used." [SEE: CIT implied. One can only look fairly at the language used." [SEE: CIT v. Kasturi & Sons Ltd. [1999] 103 Taxman 342/237 ITR 24 (SC) v. Kasturi & Sons Ltd. [1999] 103 Taxman 342/237 ITR 24 (SC) v. Kasturi & Sons Ltd. [1999] 103 Taxman 342/237 ITR 24 (SC) and Mahim Patram (P.) Ltd. v. Union of India 2008 taxmann.com and Mahim Patram (P.) Ltd. v. Union of India 2008 taxmann.com and Mahim Patram (P.) Ltd. v. Union of India 2008 taxmann.com 1074 (SC)] [See: Principles of statutory interpretation, 1074 (SC)] [See: Principles of statutory interpretation, justice G.P. justice G.P. Singh, 14th edition, page 879). Therefore, the question of going Singh, 14th edition, page 879). Therefore, the question of going Singh, 14th edition, page 879). Therefore, the question of going into intention or object behind the provision viz., section 36(1) into intention or object behind the provision viz., section 36(1) into intention or object behind the provision viz., section 36(1) (viia) of the Act does not arise. (viia) of the Act does not arise.

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED 10. The submission that even in the absence of any provision, the 10. The submission that even in the absence of any provision, the 10. The submission that even in the absence of any provision, the assessee is entitled to deduction cannot be accepted. The assessee entitled to deduction cannot be accepted. The assessee entitled to deduction cannot be accepted. The assessee is entitled to deduction to the extent provision made in the accounts is entitled to deduction to the extent provision made in the accounts is entitled to deduction to the extent provision made in the accounts subject to limit mentioned in section 36(viia) of the Act.” subject to limit mentioned in section 36(viia) of the Act.” subject to limit mentioned in section 36(viia) of the Act.” 10. The aforesaid judgement of the Hon’ble Karnataka High Court refers 10. The aforesaid judgement of the Hon’ble Karnataka High Court refer 10. The aforesaid judgement of the Hon’ble Karnataka High Court refer to its earlier judgement in the case of CIT Vs. Vijaya Bank in ITA to its earlier judgement in the case of CIT Vs. Vijaya Bank in ITA to its earlier judgement in the case of CIT Vs. Vijaya Bank in ITA No.1066 of 2008 (judgement dated 21.10.2014), wherein it was held that No.1066 of 2008 (judgement dated 21.10.2014), wherein it was held that No.1066 of 2008 (judgement dated 21.10.2014), wherein it was held that when quantum of “provision” made for bad and doubtful debts is less when quantum of “provision” made for bad and doubtful debts is less when quantum of “provision” made for bad and doubtful debts is less than the limit prescribed under the said section than the limit prescribed under the said section, then deduction can be , then deduction can be allowed only to the extent of “provision” so made and not to the extent of allowed only to the extent of “provision” so made and not to the extent of allowed only to the extent of “provision” so made and not to the extent of amount prescribed under the said section. The relevant finding of the amount prescribed under the said section. The relevant finding of the amount prescribed under the said section. The relevant finding of the Hon’ble Karnataka High Court in the case of Vijaya Bank cited supra Hon’ble Karnataka High Court in the case of Vijaya Bank cited supra Hon’ble Karnataka High Court in the case of Vijaya Bank cited supra reads as follows:- “10. Therefore, it is clear that to claim deduction u/s. 36(1)(viia), “10. Therefore, it is clear that to claim deduction u/s. 36(1)(viia), “10. Therefore, it is clear that to claim deduction u/s. 36(1)(viia), the condition precedent is a provision for bad and doubtful debts the condition precedent is a provision for bad and doubtful debts the condition precedent is a provision for bad and doubtful debts should have been made in the accounts of the assessee. The Section should have been made in the accounts of the assessee. The Section should have been made in the accounts of the assessee. The Section speaks about the maximum amount under which such a provision speaks about the maximum amount under which such a p speaks about the maximum amount under which such a p should be made. If a provision is made in excess of the limits should be made. If a provision is made in excess of the limits should be made. If a provision is made in excess of the limits prescribed under the section, the assessee would not be entitled to prescribed under the section, the assessee would not be entitled to prescribed under the section, the assessee would not be entitled to deduction of the excess amount. At the same time, when the section deduction of the excess amount. At the same time, when the section deduction of the excess amount. At the same time, when the section speaks about the deductions in respect of any pro speaks about the deductions in respect of any provision for bad and vision for bad and doubtful debts made unless such a provision is made, the assessee doubtful debts made unless such a provision is made, the assessee doubtful debts made unless such a provision is made, the assessee would not be entitled to the deduction. Once such a provision is would not be entitled to the deduction. Once such a provision is would not be entitled to the deduction. Once such a provision is made and the said amount is within the limit prescribed under made and the said amount is within the limit prescribed under made and the said amount is within the limit prescribed under statute, the assessee would be entitled to t statute, the assessee would be entitled to the amount that is he amount that is provided for in the accounts. The argument is that when the provided for in the accounts. The argument is that when the provided for in the accounts. The argument is that when the provision made is less than the amount prescribed under the law, provision made is less than the amount prescribed under the law, provision made is less than the amount prescribed under the law, the assessee is entitled to the maximum as prescribed cannot be the assessee is entitled to the maximum as prescribed cannot be the assessee is entitled to the maximum as prescribed cannot be accepted. The language employed is clear and unam accepted. The language employed is clear and unambiguous. This biguous. This is a provision in any fiscal legislation. Therefore, the question of is a provision in any fiscal legislation. Therefore, the question of is a provision in any fiscal legislation. Therefore, the question of going into the intention or object behind the provision in the light going into the intention or object behind the provision in the light going into the intention or object behind the provision in the light of those clear words would not arise. Therefore, when once a of those clear words would not arise. Therefore, when once a of those clear words would not arise. Therefore, when once a provision is made for bad and doubtful debt provision is made for bad and doubtful debts and such a provision s and such a provision is less than the limit prescribed under the section what the assessee is less than the limit prescribed under the section what the assessee is less than the limit prescribed under the section what the assessee would be entitled to deduct would be the amount mentioned in the would be entitled to deduct would be the amount mentioned in the would be entitled to deduct would be the amount mentioned in the said provision and not the amount prescribed in the section. In that said provision and not the amount prescribed in the section. In that said provision and not the amount prescribed in the section. In that view of the matter, the order view of the matter, the orders passed by the authorities are not in s passed by the authorities are not in

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ITA 2699 & 2700 Chny 2025 FY 2013-14, 2015-16 ITA 2699 & 2700 Chny 2025 FY 2013 In CO-92 Cheny 2025 in ITA No 2699 Chny 2025 2025 in ITA No 2699 Chny 2025 CO OP BANK LIMITED DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL DCIT NON CIRCLE II MADURAI VS VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED accordance with law and the judgment of the Tribunal rendered in accordance with law and the judgment of the Tribunal rendered in accordance with law and the judgment of the Tribunal rendered in Syndicate Bank's case on which reliance is placed runs counter to Syndicate Bank's case on which reliance is placed runs counter to Syndicate Bank's case on which reliance is placed runs counter to the statutory provision and therefore, the said order passed by the the statutory provision and therefore, the said order passed by the the statutory provision and therefore, the said order passed by the Tribunal does not Tribunal does not lay down the correct law.” 11. Similar view was also taken by the Hon’ble Punjab & Haryana High 11. Similar view was also taken by the Hon’ble Punjab & Haryana High 11. Similar view was also taken by the Hon’ble Punjab & Haryana High Court in the case of State Bank of Patiala Vs.CIT reported in (2005) 272 Court in the case of State Bank of Patiala Vs.CIT reported in (2005) 272 Court in the case of State Bank of Patiala Vs.CIT reported in (2005) 272 ITR 54 (P&H). The Hon’ble Punjab & Haryana High Court had held that ITR 54 (P&H). The Hon’ble Punjab & Haryana High Court had held that ITR 54 (P&H). The Hon’ble Punjab & Haryana High Court had held that making of “provision” for bad and doubtful debts is a condition precedent on” for bad and doubtful debts is a condition precedent on” for bad and doubtful debts is a condition precedent for claiming deduction u/s.36(1)(viia) of the Act and in absence of any for claiming deduction u/s.36(1)(viia) of the Act and in absence of any for claiming deduction u/s.36(1)(viia) of the Act and in absence of any “provision” made, deduction cannot be allowed. It was further held by the “provision” made, deduction cannot be allowed. It was further held by the “provision” made, deduction cannot be allowed. It was further held by the Hon’ble High Court that language of section 36(1)(viia Hon’ble High Court that language of section 36(1)(viia) of the Act is very ) of the Act is very clear and it is not capable of any other interpretation to allow deduction in clear and it is not capable of any other interpretation to allow deduction in clear and it is not capable of any other interpretation to allow deduction in absence of provision. The relevant finding of the Hon’ble Punjab & absence of provision. The relevant finding of the Hon’ble Punjab & absence of provision. The relevant finding of the Hon’ble Punjab & Haryana High Court reads as follows: Haryana High Court reads as follows:- “6. A bare perusal of the above shows that the dedu “6. A bare perusal of the above shows that the deduction allowable ction allowable under the above provisions is in respect of the provision made. under the above provisions is in respect of the provision made. under the above provisions is in respect of the provision made. Therefore, making of a provision for bad and doubtful debt equal Therefore, making of a provision for bad and doubtful debt equal Therefore, making of a provision for bad and doubtful debt equal to the amount mentioned in this section is a must for claiming such to the amount mentioned in this section is a must for claiming such to the amount mentioned in this section is a must for claiming such deduction. The Tribunal has rightly pointed deduction. The Tribunal has rightly pointed out that this issue out that this issue stands further clarified from the proviso to clause (vii) of section stands further clarified from the proviso to clause (vii) of section stands further clarified from the proviso to clause (vii) of section 36(1) of the Act, which reads as under: 36(1) of the Act, which reads as under: “Provided that in the case of an assessee to which clause “Provided that in the case of an assessee to which clause “Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any (viia) applies, the amount of the deduction relating to any (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by bt or part thereof shall be limited to the amount by bt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in which such debt or part thereof exceeds the credit balance in which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made the provision for bad and doubtful debts account made the provision for bad and doubtful debts account made under that clause." under that clause." 7. This also clearly shows that making of provision equal to the 7. This also clearly shows that making of provision equal to the 7. This also clearly shows that making of provision equal to the amount claimed as deduction in the account books is necessary for mount claimed as deduction in the account books is necessary for mount claimed as deduction in the account books is necessary for claiming deduction u/s. 36(1)(viia) of the Act. The Tribunal has claiming deduction u/s. 36(1)(viia) of the Act. The Tribunal has claiming deduction u/s. 36(1)(viia) of the Act. The Tribunal has distinguished various authorities relied upon by the assessee distinguished various authorities relied upon by the assessee distinguished various authorities relied upon by the assessee wherein deductions had been allowed under various provisions wherein deductions had been allowed under various provisions wherein deductions had been allowed under various provisions which also required creation of reserve after the assessee had ch also required creation of reserve after the assessee had ch also required creation of reserve after the assessee had created such reserve in the account books before the completion of created such reserve in the account books before the completion of created such reserve in the account books before the completion of the assessment. It has been correctly pointed out that in all those the assessment. It has been correctly pointed out that in all those the assessment. It has been correctly pointed out that in all those

:-17-:

of the Hon’ble Karnataka High Court in of the Hon’ble Karnataka High Court in CIT v. Syndicate Bank and CIT v. Syndicate Bank and

CIT v. Vijaya Bank, as well as the Hon’ble Punjab & Haryana High , as well as the Hon’ble Punjab & Haryana High , as well as the Hon’ble Punjab & Haryana High

Court in State Bank of Patiala v. CIT State Bank of Patiala v. CIT, which unequivocally hold that , which unequivocally hold that

the deduction allowable the deduction allowable u/s. 36(1)(viia) cannot exceed the provision 36(1)(viia) cannot exceed the provision

actually made in the books.The language of section 36(1)(viia) actually made in the books.The language of section 36(1)(viia) actually made in the books.The language of section 36(1)(viia)

refers to “any provision for bad and doubtful debts made”, thereby refers to “any provision for bad and doubtful debts made”, thereby refers to “any provision for bad and doubtful debts made”, thereby

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clearly linking the deduc clearly linking the deduction to the existence and quantum of such tion to the existence and quantum of such

provision. While the provision is undoubtedly incentive provision. While the provision is undoubtedly incentive-oriented, the oriented, the

statutory incentive operates statutory incentive operates within the framework expressly laid within the framework expressly laid

down by Parliament, which requires a provision to be made as a , which requires a provision to be made as a , which requires a provision to be made as a

condition precedent.

In view of the binding nature of the High Court decisions and the In view of the binding nature of the High Court decisions and the In view of the binding nature of the High Court decisions and the

co-ordinate Bench ruling in the assessee’s own case, we respectfully ordinate Bench ruling in the assessee’s own case, we respectfully ordinate Bench ruling in the assessee’s own case, we respectfully

follow the same. Accordingly, the deduction follow the same. Accordingly, the deduction u/s. 36(1)(viia) is 36(1)(viia) is

restricted to the provision actually made in the restricted to the provision actually made in the books of account, books of account,

subject to the statutory ceiling. subject to the statutory ceiling.

Therefore, the order of the Ld.CIT(A) allowing deduction beyond the Therefore, the order of the Ld.CIT(A) allowing deduction beyond the Therefore, the order of the Ld.CIT(A) allowing deduction beyond the

book provision cannot be sustained. book provision cannot be sustained.

The appeals filed by the Revenue are allowed appeals filed by the Revenue are allowed. The cross The cross- objections filed by the assessee are objections filed by the assessee are dismissed.

Order pronounced on the 28th day of January, 2026, in Chennai. Order pronounced on the , in Chennai.

Sd/- Sd/- (प�ावती एस) (मनुकुमारिग�र मनुकुमारिग�र) (PADMAVATHY S) (MANU KUMAR GIRI MANU KUMAR GIRI) लेखासद-य/ACCOUNTANT MEMBER �या�यकसद-य/JUDICIAL MEMBER /ACCOUNTANT MEMBER /JUDICIAL MEMBER

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चे�नई/Chennai, .दनांक/Dated: 28th JANUARY JANUARY, 2026. SNDP, Sr PS आदेश क$ "�त/ल0प अ1े0षत/Copy to Copy to:

अपीलाथ�/Assessee 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

DEPUTY COMMISSIONER OF INCOME TAX NON CORP CIRCLE II MADURAI, MADURAI vs. VIRUDHUNAGAR DISTRICT CENTRAL CO OP BANK LIMITED, VIRUDHUNAGAR