Case Law Details
Oriental Bank of Commerce Vs ACIT (ITAT Delhi)
The recent decision by the Income Tax Appellate Tribunal (ITAT) Delhi in the case of Oriental Bank of Commerce vs. ACIT (ITAT Delhi) has significant implications for the treatment of bad debts claimed by the bank under section 36(1)(vii) of the Income Tax Act, 1961. The appeal pertained to the Assessment Year 2017-18 and was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)].
The crux of the matter revolved around the disallowance of a bad debts claim amounting to Rs. 4545.89 crores under section 36(1)(vii) by the Assessing Officer (AO). The CIT(A) upheld the disallowance, citing various reasons including the applicability of Explanation 2 below section 36(1)(vii) introduced by the Finance Act, 2013. However, the ITAT Delhi found merit in the appellant’s arguments, supported by legal precedents and factual consistency.
The ITAT’s decision emphasized that the bad debts claimed by the appellant were distinct from those covered under section 36(1)(viia), and hence, the deduction under section 36(1)(vii) should be allowed. The tribunal also noted that the appellant had satisfied the conditions laid down by the Supreme Court in the case of Vijaya Bank vs. CIT regarding the actual write-off of bad debts.
Furthermore, the ITAT relied on its previous decisions and the dismissal of Revenue’s appeals by the Hon’ble Delhi High Court in similar cases for preceding assessment years, indicating a consistent judicial stance on the issue. The tribunal reiterated that no substantial question of law arose in the present case, aligning with its previous rulings and the High Court’s decisions.
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