Section 36 of Income Tax Act, 1961— In the instant case, assessee claimed  deduction u/s 36(1)(viia) of the Income Tax Act, 1961 of Rs. 16,06,72,355/-. The Assessing Officer disallowed this amount on the grounds that no provision made under the head “Provision for bad and doubtful debts for the year under consideration”. It is held by the Assessing Officer that the net balance of other provisions have actually decreased in respect of last year balance and since it shows overall decrease in provisions, the same needs to be disallowed.

Held that—In our considered opinion, the assessee has created provision for bad and doubtful debts may be under different nomenclature. This will not dis-entitle the assessee for claiming deduction under the provisions of Section 36(l)(viia)(a). The purpose for creation of reserve for NPA is same i.e., creating provision towards bad and doubtful debts.

Thus, in view of the facts of the case and judicial pronouncements in the above state cases the assessee will be entitled to deduction u/s 36(l)(viia) to the extent of provision made for bad and doubtful debts of Rs. 16,06,72,355/-. The A.O is therefore directed to allow the full deduction of Rs. 16,06,72,355/- as claimed by the assessee in the computation of income and not to restrict it on Rs. 1,33,93,000/.[ACIT CIRCLE 2 MEERUT VERSUS SARVA UP GRAMIN BANK][2019] 20 ITCD Online (19) [ITAT DELHI]