Case Law Details
State Bank of India Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that deduction u/s 36(1)(via) is to be allowed on the total outstanding advances at the end of each month considering the opening balances.
Facts-
The assessee is a scheduled bank and has claimed deduction u/s. 36(1)(viia) of the Act in respect of provision made for bad and doubtful debts. The assessee, while claiming aforesaid deduction u/s. 36(1)(viia) of the Act, calculated the ‘aggregate monthly average advances’ by taking into consideration the outstanding balances of the previous month, i.e., the opening balance for computing the amount of advance as outstanding at the end of each month as per the language of Rule 6 ABA of the Income Tax Rules, 1962.
AO rejected the computation of the assessee and held that only incremental advances made during the month can be considered while calculating the figure of ‘aggregate monthly average advances’. The First Appellate Authority upheld the reasoning of AO on this issue. Being aggrieved, the assessee preferred further appeal before the Tribunal.
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