2009 (12) TMI 974 - AT - Income Tax

Summary

Issues involved:
1. Interpretation of interest under section 234B and 234C of the Income Tax Act, 1961 in relation to income computed under section 115JA for Assessment Years 1997-1998 and 2000-2001.
2. Permissibility of deduction for provision for bad debts of Rs. 15,84,669/- in the assessment year 1999-2000.

Interpretation of interest under section 234B and 234C:
The Third Member, in agreement with the Accountant Member, held that interest under section 234B and 234C of the Income Tax Act, 1961 is applicable when computing income under section 115JA for the Assessment Years 1997-98 and 2000-2001. The majority view supported the levy of interest by the Assessing Officer under these sections. Consequently, certain grounds in the appeals of the Revenue for the mentioned assessment years were allowed, while a ground in the appeal of the assessee for the AY 2000-01 was dismissed.

Permissibility of deduction for provision for bad debts:
Regarding the deduction for provision for bad debts of Rs. 15,84,669/- in the assessment year 1999-2000, the Third Member agreed with the view that this deduction is not permissible. However, it was noted that once the debts are written off in the books of account, the Assessing Officer should allow the deduction of bad debts in the year when all bad debts are actually written off. The provision for bad debts amounting to Rs. 15,84,669/- was rightly disallowed by the Assessing Officer for the assessment year in question. The majority view directed the Assessing Officer to allow the amount of bad debt in subsequent assessment years when the bad debts are actually written off in the books of accounts. The Assessing Officer was instructed to act accordingly.

Other grounds/appeals:
There were no differences between the Accountant Member and Judicial Member in respect of other grounds/appeals for all the assessment years. A typographical error in the proposed order of the Judicial Member was noted, which was corrected for statistical purposes. As a result, all the appeals of the revenue and assessee were treated as partly allowed.

This judgment was pronounced in open Court on the 18th of December, 2009.