Thursday, March 15, 2012

SC RELIEF TO BANKS ON BAD DEBTS

In a major relief to banks, the Supreme Court has held that they can claim deductions for entire bad
debts written off in respect of both rural and urban advances. It reversed the judgment of the full
bench of the Kerala High Court that held that banks can claim deduction of the bad and doubtful debts actually written off only to the extent it exceeds the credit balance created and allowed as deduction, in view of Section 36(1)(vii), which limits the  deduction allowable under the proviso to the excess over credit balance made under Clause (viia) of Section 36(1) of the Income Tax Act 1961.

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