“Section 36(1)(vii)”

Section References (mined)Section 36Section 36(1)(vii)853 judgments

The decision most relied on for Section 36(1)(vii) is TRF Ltd. v. CIT (323 ITR 397), cited in 714 judgments on BharatTax.

Leading authorities on Section 36(1)(vii)

TRF Ltd. v. CIT

323 ITR 397 · 2010 · Supreme Court

714

citing judgments

For claiming deduction for bad debts under section 36(1)(vii) of the Income Tax Act, it is sufficient for the assessee to write off the debt as irrecoverable in its accounts, and it is not necessary to prove that the debt has actually become irrecoverable.

Maxopp Investment Ltd. v. CIT

347 ITR 272 · 2012 · High Court

516

citing judgments

Disallowance under Section 14A cannot exceed the exempt income earned. The Assessing Officer must record satisfaction regarding the assessee's accounts before making any disallowance.

South Indian Bank Ltd. v. CIT

438 ITR 1 · 2021 · Supreme Court

508

citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

Vijaya Bank v. CIT

323 ITR 166 · 2010 · Supreme Court

392

citing judgments

A provision for bad and doubtful debts debited to the profit and loss account and reduced from advances on the balance sheet constitutes a write-off for deduction purposes. This is true even if individual debtor accounts are not closed.

Southern Technologies Ltd. v. JCIT

320 ITR 577 · 2010 · Supreme Court

353

citing judgments

The case concerns the allowability of deductions for provisions made under Section 36 of the Income Tax Act, 1961, especially those related to bad and doubtful debts. It distinguishes such deductions from the recognition of interest income on non-performing assets (NPAs).

Calcutta Co. Ltd. v. CIT

37 ITR 1 · 1959 · Supreme Court

341

citing judgments

When following the mercantile system of accounting, provisions for liabilities made on a scientific and rational basis are allowable as deductions, even if their actual quantification and discharge are deferred to a future date.

Catholic Syrian Bank Ltd. v. CIT

343 ITR 270 · 2012 · Supreme Court

326

citing judgments

For a bad debt deduction under Section 36(1)(vii), the debt must be actually written off as irrecoverable in the assessee's accounts, distinct from merely making a provision for bad and doubtful debts. The assessee bears the onus to satisfy the conditions under both Section 36(1)(vii) and Section 36(2) of the Income-tax Act.

United Commercial Bank v. CIT

240 ITR 355 · 1999 · Supreme Court

314

citing judgments

Liabilities accrued on a notional basis are allowable as deductions under the mercantile system of accounting even if their exact quantification or discharge is deferred to a future date or if the demand itself is disputed.

Judgments citing Section 36(1)(vii)

Living Media India Ltd., New Delhi vs. ACIT, Circle-15(2), New Delhi

The appeal is allowed and the consequences shall follow

ITA 7594/DEL/2018[2013-14]Status: DisposedITAT Delhi30 Jun 2023AY 2013-14

Bench: Sh. G. S. Pannu, Hon’Ble & Sh. Anubhav Sharmam/S. Living Media India Ltd. Vs. Acit, K-9, Connaught Circus, Circle-15(2), New Delhi-110001 New Delhi Pan : Aaacl0087H (Appellant) (Respondent)

Section 143(2)Section 143(3)Section 14ASection 37(1)

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘E’ : NEW DELHI) BEFORE SH. G. S. PANNU, HON’BLE PRESIDENT AND

M/S Union Bank of India, Mumbai vs. Deputy Commissioner of Income Tax, Circle-(Ltu) 2, Mumbai

The appeal of the assessee is allowed

ITA 923/MUM/2023[2009-10]Status: DisposedITAT Mumbai26 Jun 2023AY 2009-10

Bench: Shri Aby T. Varkey () & Ms. Padmavathy S. ()

Section 14ASection 154Section 250Section 36Section 36(1)(viia)Section 36(1)(viii)Section 80GSection 80L

hold that charging of provision in the profit and loss account is mandatory. Therefore, let us examine the wordings of the section 36(1)(vii) and 36(1)(viia): (a) Section 36(1)(vii) - Bad-debts written-off (b) Section 36(1)(viia) - Provision for Bad and Doubtful Debts Provision ... section 36(1)(vii) reads as under: (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year; Provision of section 36(1)(viia) reads as under

Yogendra Khandelwal, 1St Floor Somani Building Loha Mandi vs. Assisstant Commissioner Cercle 3 Jaipur, Jaipur

In the result the appeal of the assessee is allowed

ITA 202/JPR/2023[2011-12]Status: HeardITAT Jaipur14 Jun 2023AY 2011-12

Bench: The Date Of Hearing.”

For Appellant: Sh. P. C. Jain (FCA)For Respondent: Sh. A. S. Nehara(Addl. CIT)

Section 143(3)

were actually become bed and irrecoverable. The assessee has furnished only one page written submission. The assessee's reliance on the provisions of section 36(1)(vii) as they stood after 1989, is of no use here as these provisions 4 Yogendra Khandelwal vs. ACIT were already considered ... they are bound by the contention of the circular which reads as under:- “Subject:- Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961-reg. Proposals have been received by the Central Board of Direct Taxes

Asst CIT Cir 2(2)(1), Mumbai vs. State Bank of India, Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purposes

ITA 4564/MUM/2016[2009-10]Status: DisposedITAT Mumbai06 Jun 2023AY 2009-10

Bench: Shri B.R. Baskaran & Shri Sandeep Singh Karhail

For Appellant: S/Shri P.J. Pardiwala a/w Ninad PatadeFor Respondent: Ms. Surabhi Sharma

Section 142(1)Section 143(2)Section 143(3)Section 14ASection 250Section 36(1)Section 36(1)(vii)Section 36(1)(viia)

Assessing Officer in disallowing the appellant‟s claim in respect of depreciation of Rs.9,43,69,363 on leased assets. 5. Deduction under section 36(1)(vii) of Rs.1334,21,65,835 5.1 The learned CIT(A) erred in not allowing deduction of Rs. 1334,21,65,835, under section ... recovery of bad debts written off in terms of section 41(4), as the appellant had not claimed a deduction under section 36(1)(vii). 13.3 The learned CIT(A) erred in not directing the Assessing Officer to verify and allow the claim of the appellant. 14. Non-taxability

State Bank of India, Mumbai vs. Addl CIT RG 2(2), Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purposes

ITA 3645/MUM/2016[2009-10]Status: DisposedITAT Mumbai06 Jun 2023AY 2009-10

Bench: Shri B.R. Baskaran & Shri Sandeep Singh Karhail

For Appellant: S/Shri P.J. Pardiwala a/w Ninad PatadeFor Respondent: Ms. Surabhi Sharma

Section 142(1)Section 143(2)Section 143(3)Section 14ASection 250Section 36(1)Section 36(1)(vii)Section 36(1)(viia)

Deputy Commissioner of Income Tax 14(2)(1), Mumbai vs. India Debt Management Private Limited, Mumbai

ITA 5532/MUM/2017[2012-13]Status: DisposedITAT Mumbai30 May 2023AY 2012-13

For Appellant: Shri Vijay MehtaFor Respondent: Shri Purnesh Gururani

Section 143(3)Section 144C(3)

holding as under: “The write-off clearly represents a write-off of an amount receivable and accordingly, allowed as a deduction under section 36(1)(vii) of 18 the Act or at best it could even be considered as a business loss. The issue is covered by the decision ... written off during the relevant previous year, the Assessee was entitled to claim deduction for the same under Section 36(1)(vii) of the Act. We note that the CIT(A) had granted relief to the Assessee by relying upon the decision of the Mumbai Bench of the Tribunal

Husk Power Systems Private Limited, New Delhi vs. DCIT, Circle-11(2), New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 5086/DEL/2019[2014-15]Status: DisposedITAT Delhi09 May 2023AY 2014-15

Bench: Shri C.M. Garg & Shri M. Balaganeshassessment Year: 2014-15 Husk Power Systems Pvt. Ltd., Vs Dcit, 145A, Gf, N Block, Circle-11(2), Greater Kailash, New Delhi. New Delhi. Pan: Aacch1699H

For Appellant: Shri Anand Suman, AdvocateFor Respondent: Shri Raghunath, Sr. DR

Section 143(3)Section 36(1)(vii)

treating it as irrecoverable by duly crediting to the account of concerned parties. Hence the assessee had duly complied with the provisions of section 36(1)(vii) r.w.s. 36(2) of the Act and accordingly would be entitled for deduction in the sum of Rs 13,51,601/- thereon

ACIT, Khandwa vs. M/S Jila Sahakari Kendriya Bank, Khargone

ITA 497/IND/2018[12-13]Status: DisposedITAT Indore28 Apr 2023

Bench: Ms. Suchitra Kamble & Shri B.M. Biyani(Conducted Through Virtual Court) Assessment Year: 2012-13 Acit M/S. Jila Sahakari Khandwa Kendriya Bank, बनाम/ Khandwa Raod, Khargone Vs. M.P. (Appellant /Revenue) (Respondent / Assessee) Pan: Aaatj 0529 K Revenue By Shri P.K. Mishra, Cit-Dr Assessee By Shri Subhash Jain & Milind Wadhwani, Ars Date Of Hearing 01.02.2023 Date Of Pronouncement 28.04.2023

Section 143(3)Section 147Section 148Section 36(1)(viia)Section 37

actual expenditure” or just a “provision/transfer of reserve” and under which provision of law it has to be considered i.e. section 36(1)(vii) or 1st limb of section 36(1)(viia) or 37(1). Now, the Ld. AR has also raised a newer pleading that the claim is saved ... definite conclusion. Thus, in such state of unclear findings, simply placing reliance on different alternative sections of income-tax act like section 36(1)(vii) or 1st limb of section 36(1)(viia) or 2nd limb of section 36(1)(viia) or 37(1) is a blind exercise. Needless

ADIT (I.T)-3(2), Mumbai vs. M/S. the Bank of Nova Scotia, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 651/MUM/2007[2002-2003]Status: DisposedITAT Mumbai21 Apr 2023AY 2002-2003

Bench: Shri Vikas Awasthy& Shri Amarjit Singh आअसं.6818/मुं/2006 ("न.व. 2002-03) The Bank Of Nova Scotia, Mittal Towers, B-Wing, Nariman Point, Mumbai 400 020. Pan: Aaacb-1536-H ...... अपीलाथ"/Appellant बनाम Vs. Deputy Director Of Income Tax (International Taxation)-3(2), Scindia House, Ballard Pier, Mumbai 400 038. ..... ""तवाद"/Respondent आअसं.651/मुं/2007 ("न.व. 2002-03) Adit(It)-3(2),Mumbai R. No.132, 1St Floor, N.M.Road, Mumbai – 400 038. ...... अपीलाथ"/Appellant बनाम Vs. The Bank Of Nova Scotia, Mittal Towers, B-Wing, Nariman Point, Mumbai 400 020. Pan: Aaacb-1536-H ..... ""तवाद"/Respondent

For Appellant: Shri Nishant Thakkar with Ms. Jasmin AmasadvalaFor Respondent: Shri Soumendu Kumar Dash

Section 14ASection 36(1)(vii)Section 40Section 44C

assessee has further placed reliance on the Instructions No.17/2008 (supra). The relevant part of said Instructions is extracted herein below: “(i) Under section 36(1)(vii) of the Act, deduction on account of bad debts which are written off as irrecoverable in the accounts of the assessee is admissible. However ... viia) of the Act , as required by section 36(2)(v) of the Act. (ii) While considering the claim for bad debts under section 36(1)(vii), the Assessing Officer should allow only such amount of bad debts written off as exceeds the credit balance available in the provision

M/S. the Bank of Nova Scotia, Mumbai vs. DDIT (I.T) - 3(20, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 6818/MUM/2006[2002-2003]Status: DisposedITAT Mumbai21 Apr 2023AY 2002-2003

For Appellant: Shri Nishant Thakkar with Ms. Jasmin AmasadvalaFor Respondent: Shri Soumendu Kumar Dash

Section 14ASection 36(1)(vii)Section 40Section 44C

Oriental Bank of Commerce, Gurgaon vs. ACIT, Spl. Range-07, New Delhi

In the result, the appeal filed by the Assessee stands allowed

ITA 740/DEL/2020[2016-17]Status: DisposedITAT Delhi31 Mar 2023AY 2016-17

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhryassessment Year: 2016-17

For Appellant: Sh. KVSR Krishna, Ld. CA &For Respondent: Ms. Sarita Kumar, Ld. CIT/DR

Section 115JSection 14ASection 250Section 36

write off. Further, the ld. CIT(A) has relied on the CBDT Circular No.314 of 2014 and the amendment to section 36(1 )(vii) wherein Explanation- 2 was inserted by the Finance Act, 2013 with effect from A.Y. 2014- 15 which [CIT(A)’s order at page 67] is again ... very reason why the Explanation stood inserted. Prior to the Finance Act, 2001 many assessees used to take the benefit of deduction under section 36(1)(vii) by merely debiting the impugned bad debt to the profit and loss account and, therefore, the Parliament stepped in by way of Explanation

Fedbank Financial Services Limited, Ernakulam vs. The DCIT Circle 1(1), Kochi

In the result, the appeal of the assessee is allowed

ITA 838/COCH/2022[2017-2018]Status: DisposedITAT Cochin08 Mar 2023AY 2017-2018

Bench: Shri George George K. & Ms. Padmavathy S.Assessment Year : 2017-18

For Appellant: Ms. K. Parvathy Ammal, CAFor Respondent: Shri Prashanth V.K., CIT(DR)

Section 143(3)Section 263Section 36Section 36(1)(viia)Section 37

there are irrecoverable loans - bad debts. Section 36(1)(vi) provides for deduction in computing the income under Profit and Gains of business. Section 36(1)(vii) provides that “the amount of any bad debt or part thereof which is written off as irrecoverable in the books of accounts

M/S. Grid Corporation of Orissa Limited, Bhubaneswar vs. ACIT-(TDS), Bhubaneswar

In the result, appeal of the assessee stands allowed

ITA 323/CTK/2019[2009-10]Status: DisposedITAT Cuttack20 Feb 2023AY 2009-10

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year : 2009-2010 2010 Grid Corporation Of Orissa Grid Corporation Of Orissa Vs. Acit (Tds), Acit (Tds), Ltd., Ltd., Gridco Gridco House, House, Bhubaneswar. Bhubaneswar. Janapath, Bhubaneswar. Janapath, Bhubaneswar. Pan/Gir No. Pan/Gir No.Aabcg 5398 P (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : S/Shri Ved Jain/P.Venugopal Rao /P.Venugopal Rao, Ars Revenue By : Shri M.K.Gautam, M.K.Gautam, Cit Dr Date Of Hearing : 20/0 02/2023 Date Of Pronouncement : 20/0 /02/2023 O R D E R Per Bench This Is An Appeal Filed By The Assessee Against The Order Of The Ld This Is An Appeal Filed By The Assessee Against The Order Of The Ld This Is An Appeal Filed By The Assessee Against The Order Of The Ld Cit(A)-1, Bhubaneswar, 1, Bhubaneswar, Dated 12.7.2019 In Appeal No. In Appeal No.0035/17-18 For The Assessment Year The Assessment Year 2009-2010. 2. S/Shri Ved Jain & P.Venugopal Rao, S/Shri Ved Jain & P.Venugopal Rao, Ld Ar Ld Ars Appeared For The Assessee & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue. Assessee & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue. Assessee & Shri M.K.Gautam, Ld Cit Dr Appeared For The Revenue.

For Appellant: S/Shri Ved Jain/P.Venugopal RaoFor Respondent: Shri M.K.Gautam

Section 154Section 244ASection 244A(2)

Unless amount of bad and doubtful debts is debited to the provision for bad and doubtful debts account and the deduction admissible under section 36(1)(vii) is limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful ... amount of bad and doubtful debts is debited to the provision for bad and doubtful debts account and the deduction admissible under section 36(1)(vii) is limited to the amount by which such debt or part thereof exceeds credit balance in the provision for bad and doubtful debts account

Deputy Commissioner of Income Tax Central Circle-1, Jalandhar vs. Measage Bhagwati Lacto Vegetarian Exports (P) Limited, Ferozepur Cantt

In the result, the appeal filed by the Revenue is dismissed

ITA 1/ASR/2020[2016-17]Status: DisposedITAT Amritsar17 Feb 2023AY 2016-17

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

For Appellant: None (Written submission)For Respondent: Sh. Rohit Mehra, CIT DR

Section 36Section 36(1)(vii)

Vegetarian Exports P. Ltd. deletion of the disallowance of bad debts of Rs. 1,98,63,037/- in contravention into the provisions of section 36(1)(vii) of the I.T. Act, 1961. 2. Briefly, the facts of the case are that the record of the appellant- company filed return ... issue and relevant part of which is reproduced below: “Subject: Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income Tax Act, 1961 -reg. Proposals have been received by the Central Board of Direct Taxes regarding filing of appeals/pursuing

Serco India Pvt. Ltd., Pune vs. ACIT, Circle-4(1), Gurgaon

In the result, the appeal of the assessee is dismissed

ITA 1187/DEL/2018[2014-15]Status: DisposedITAT Delhi16 Feb 2023AY 2014-15

Bench: Shri Chandra Mohan Garg & Shri Pradip Kumar Kedia

For Appellant: Shri Suraj Bhan Nain, AdvFor Respondent: Shri Kumar Pranav, Sr.DR

Section 115BSection 143(3)Section 271(1)(c)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR

Shri Rajkot District Cooperative Bank Ltd., Rajkot-Gujarat vs. The Pr. Commr. of Income Tax-1, Rajkot-Gujarat

In the result, appeal of the assessee is dismissed

ITA 123/RJT/2016[2011-12]Status: DisposedITAT Rajkot15 Feb 2023AY 2011-12

Bench: Smt.Annapurna Gupta & Shri T.R. Senthil Kumarassessment Year :2011-12 Shri Rajkot District Cooperative Vs. Pr.Cit, Rajkot-1 Bank Ltd. Rajkot. ‘Jilla Bank Bhavan’, Kasturba Road Opp: Chaudhari High School Rajkot. Pan : Aaaar 0564 K 0 अपीलाथ"/ (Appellant) "" यथ"/(Respondent) Assesseeby : Shri S.N. Soparkar, Ld.Ar Revenue By : Shri Shramdeep Sinha, Ld.Cit-Dr सुनवाई क" तार"ख/Date Of Hearing : 17/11/2022 घोषणा क" तार"ख /Date Of Pronouncement: 15/02/2023

For Appellant: Shri S.N. Soparkar, ld.ARFor Respondent: Shri Shramdeep Sinha, ld.CIT-DR

Section 143(3)Section 263Section 36

facto write backs of such provisions could not be treated as incomes. In this regard our attention was drawn to • the provisions of section 36(1)(vii) of the Act which provides for allowance of bad and doubtful debts along with provision of section 41(4) of the Act which ... Apex Court in the case of Catholic Syrian Bank Ltd. Vs. CIT, (2012) 343 ITR 0270 for the interplay and interpretation of section 36(1)(vii) and (viia) r.w.s 36(2) of the Act. It was contended that the Hon’ble Court had held the two provisions to operate

DCIT 3 (1), Bhopal vs. M/S Narmada Switchgear P Ltd, Bhopal

Accordingly, this ground is also dismissed

ITA 307/IND/2020[2013-14]Status: DisposedITAT Indore03 Feb 2023AY 2013-14

Bench: Shri Chandra Mohan Garg & Shri B.M. Biyaniassessment Year: 2013-14 Dcit-3(1) M/S Narmada Switchgear Bhopal Pvt. Ltd., बनाम/ Plot No.3, Industrial Estate, Govindpura Vs. Bhopal (Appellant / Assessee) (Respondent / Revenue) Pan: Aabcn0635N Assessee By Shri S.S. Deshpande, Ca Revenue By Shri P.K. Mishra, Cit-Dr Date Of Hearing 09.11.2022 Date Of Pronouncement 03.02.2023

Section 143(2)Section 143(3)

advanced by the assessee had, in fact, become irrecoverable. That position got altered by deletion of the word "established", which earlier existed in Section 36(1)(vii) of the Income Tax Act, 1961 ['Act', for short]. For the sake of clarity, we re-produce herein below provisions of Section 36 ... light of applicable provisions, we note that the Ld. CIT(A) has adequately considered the factual aspects as well as the provision of section 36(1)(vii) and the interpretation thereof taken by Hon’ble Supreme Court in the case of TRF Ltd. CA No. 5293/2003, according to which

DCIT, Moradabad vs. M/S. Badaun Zila Sahkari Bank Ltd., Badaun

In the result, the appeal of the Revenue in ITA No

ITA 5272/DEL/2015[2010-11]Status: DisposedITAT Delhi30 Jan 2023AY 2010-11

Bench: Shri Chandra Mohan Garg & Shri N.K. Billaiya

For Appellant: NoneFor Respondent: Shri Kanv Bali, Sr. DR

Section 143(3)Section 36(1)(vii)Section 36(1)(viia)

directly on the facts under consideration. 10. The Hon'ble Supreme Court has observed as under: “Analysis of Section 36(1)(viia) Section 36(1)(vii) provides for a deduction in the computation of taxable profits for the debt established to be a bad debt. Section 36(1)(viia) provides

DCIT, Jaipur vs. Rajasthan Financial Corporation, Jaipur

In the result, the appeal of the revenue is dismissed

ITA 199/JPR/2022[2019-20]Status: DisposedITAT Jaipur12 Jan 2023AY 2019-20

Bench: The Hearing.”

For Appellant: Shri Sanjeev Mathur (C.A.)For Respondent: Shri Sanjay Dhariwal (CIT)

Section 115JSection 129(1)Section 143(1)Section 2(17)Section 2(18)

ITAT, Jaipur. The same issues are also pertaining to this year i.e. 2016-17 wherein Assessing Officer made disallowance under section 36(1)(vii)(a)(c) of Rs. 34,62,000/- on account of bad debts written off and applied provision of section 115JB of the Act. 2.3.1 In appellate

M/S K.M. Khadim & Co., Kolkata vs. PCIT-1, Kolkata

In the result, the appeal of the assessee is allowed

ITA 278/KOL/2022[2014-15]Status: DisposedITAT Kolkata21 Dec 2022AY 2014-15

Bench: Shri Rajesh Kumar & Shri Sonjoy Sarma]

Section 143(3)Section 263

that neither in the first reassessment nor in the second reassessment was any issue raised or decided in respect of the deductions under section 36(1)(vii), (viia) and the foreign exchange rate 8 I.T.A. No. 278/Kol/2022 Assessment Year: 2014-15 M/s K. M . Khadim & Co. difference. The order