Case Law Details
Brief of the Case
ITAT Delhi held In the case of Oriental Bank of Commerce vs. ACIT that any loss arising to banks on account of classification of securities form one category to another category in compliance with RBI directions is an allowable expense. Financial institutions like banks are expected to maintain accounts in terms of the RBI Act and its regulations. The form in which, accounts have to be maintained is prescribed under the aforesaid legislation. Therefore, the account had to be in conformity with the said requirements.
Facts of the Case
Claim of Bad debts (Additional ground)
The appellant is a Nationalized Bank and in return filed for AY 2007-08 appellant ’s claim of bad debt of Rs. 4,48,73,33,446/ – pertaining to non- rural branches has been set off against the provisions of Rs. 2,74,32,77,945/- with respect to rural branches u/s 36(1) (viia) of the Income Tax Act , 1961. The appellant set off this amount under impression that according to provisions of Section 36(1) (vii) the bad debt in respect of non- rural branches are also required to be restricted to the extent of such debt or part thereof exceeds the credit balance in the account of provision of bad and doubtful debts made u/s 36(1) (viia).
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