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Co -operative Banks

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G. SAI LEKH RAJ

G. SAI LEKH RAJ (Querist)
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22 September 2007 Can co operative bank create reserve for NPA and reserve for over due interest against its net profit
Is it an allowable expenditure for calculation of Taxable income

Mallidi Ramabrahmananda Reddy

Mallidi Ramabrahmananda Reddy (Expert)
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24 September 2007 Creation of reserve is appropriation of profit. Provision is chargeable to Profit. Provision for bad debts made by co operative Bank is allowable u/s 36 (viia) of the Income tax Act 1961. Creation of reserve is management's decision subject to RBI guidelines.

CA LOKESH KASAT, FCA, M.Com

CA LOKESH KASAT, FCA, M.Com (Expert)
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26 March 2009 I believe its not better to create it, and will be disllowed expenditure in income tax subject to provided u/s 36(vii)

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