M/S Vijaya Bank vs C.I.T & Anr

The Supreme Court addressed whether a bank must individually close the accounts of debtors to claim a deduction for bad debts under Section 36(1)(vii) of the Income Tax Act, 1961. The Court held that it is sufficient for the bank to reduce the Loans and Advances or Debtors on its Balance Sheet to reflect the provision for bad debts, without needing to write off each individual account. The ruling clarified that the creation of a provision and its reflection in the financial statements constitutes an actual write-off as required by the statute.