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Section 36 (1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment years 1993-94 and 1994-95 - Whether in case of scheduled bank, deduction under section 36(1)(vii) is allowable independently and irrespective of provision for bad and doubtful debts created by it in relation to advances made by its rural branches, subject to limitation that an amount should not be deducted twice under section 36(1)(vii) and 36(1)(viia) simultaneously - Held, yes FACTS The assessee, a scheduled bank, claimed deduction of certain sum as bad debts actually written off. It had also claimed provision for bad and doubtful debts under section 36(1)(viia). Its claim for deduction of debts, actually written off was disallowed. On appeal, the Commissioner (Appeals) upheld the disallowance. On second appeal, the Tribunal allowed the assessee's claim holding that deduction under section 36(1)(vii) was allowable independently and irrespective of provisions for bad and doubtful debts created by the assessee in relation to the advances made by its rural branches, subject to the limitation that an amount should not be deducted twice under section 36(1)(vii) and 36(1)(viia) simultaneously. On revenue's appeals : HELD In view of the decision of the Kerala High Court in South Indian Bank Ltd. v. CIT [2003] 262 ITR 579/ 130 Taxman 749 , the Tribunal was right in holding that deduction under section 36(1)(vii) is allowable independently and irrespective of provisions for bad and doubtful debts created by the assessee in relation to the advances of the rural branches, subject to the limitation that an amount should not be deducted twice under section 36(1)(vii) and 36(1)(viia ) simultaneously. [Para 7] However, on account of lack of evidence, it was not possible to grant full relief to the assessee as the amount written off did not categorically reflect whether that amount was pertaining to rural debt or urban debt. Even though it was contended by the assessee before the Tribunal that the aforesaid amount pertained to other than rural debt, yet the same was not substantiated by any other evidence in that regard. In the absence of any evidence, it could not be recorded by the Tribunal or by…

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