JUDGEMENT

S.H. Kapadia, J.—

Leave granted.

2.Whether it is imperative for the assessee-Bank to close the individual account of each of it’s debtors in it’s books or a mere reduction in the Loans and Advances or Debtors on the asset side of it’s Balance Sheet to the extent of the provision for bad debt would be sufficient to constitute a write off is the question which we are required to answer in these civil appeals?

3.In these civil appeals, we are concerned with Assessment Years 1993-1994 and 1994-1995. For the Assessment Year 1994-1995, the Assessing Officer disallowed a sum of Rs.7,10,47,161/- which the assessee-Bank had reduced from Loans and Advances or Debtors on the ground that the impugned bad debt had not been written off in an appropriate manner as required under the Accounting principles. According to him, the impugned bad debt supposedly written off by the assessee- Bank was a mere provision and the same could not be equated with the actual write off of the bad debt, as per the requirement of Section 36(1)(vii) of the Income Tax Act, 1961 [‘1961 Act’, for short] read with Explanation thereto which Explanation stood inserted in 1961 Act by Finance Act, 2001 with effect from