Sec 36 (1)(viia)

The deduction u/s 36(1)(viia) for scheduled banks is upto 7.5% of GTI before allowing this deduction plus 10% of aggregate avg adv made by Rural Branches, subject to the provision actually made in accounts.

In Catholic Syrian Bank Ltd Vs CIT (248 CTR 1) Apex Court ruled that the deduction u/s 36(1)(viia) applicable to rural advances only, and the deduction was introduced to promote rural banking.

The corollory of the above decision is that the deduction would not be avalilable to a scheduled bank if it has no rural branch.