The assessee, a scheduled commercial bank, claimed deduction for bad debts written off under Section 36(1)(vii) after reducing the amount by the opening balance in its provision for bad and doubtful debts account. It also claimed a separate deduction under Section 36(1)(viia) for a fresh provision made in the current year. The Revenue contended that the bad debt write-off should be reduced by both the opening balance and the current year’s provision. The High Court rejected the Revenue’s view, holding that the deductions under clauses (vii) and (viia) of Section 36(1) are distinct and independent. It clarified that the proviso to Section 36(1)(vii) requires an adjustment only against the opening credit balance of the provision account. The fresh provision made during the year is an independent deduction under Section 36(1)(viia), which is to be adjusted against the bad debt write-off of the subsequent year to prevent double deduction. Thus, both deductions as claimed by the assessee were held to be allowable. (AY. 1993-94,  1994-95)