2009 (4) TMI 974 - HC - Income Tax

Summary

Issues involved:
1. Allowance of bad debts u/s 36(1)(vii) of the Income Tax Act, 1961
2. Applicability of section 40(a)(i) read with section 195 for payment to parent company
3. Requirement of TDS deduction u/s 195 for payment to parent company

Allowance of Bad Debts:
The appeal raised a substantial question of law regarding the allowance of bad debts amounting to Rs. 19,08,150 out of a total claim of Rs. 23,42,008 u/s 36(1)(vii) of the Income Tax Act. The ITAT's decision to allow the assessee's claim was challenged, but the counsel for the appellant acknowledged that a similar issue had been addressed in a previous Division Bench judgment. Consequently, the court dismissed this aspect of the appeal based on the precedent.

Applicability of Section 40(a)(i) and Section 195:
The issues related to the applicability of section 40(a)(i) read with section 195 of the Income Tax Act for a payment made to the parent company for the supply of printing material. The ITAT concluded that these provisions were not applicable as the payment was considered a reimbursement of costs without any embedded profit. The court noted that questions (b) and (c) centered around the appreciation of evidence, particularly highlighted in paragraph No. 9 of the Tribunal's order. Consequently, the court found no substantial question of law in this regard and dismissed the appeal without costs.

TDS Deduction Requirement:
Regarding the requirement of TDS deduction u/s 195 for the payment made to the parent company for the supply of printing material, the ITAT had held that no TDS was to be deducted. However, the court did not find any error in the Tribunal's decision on this matter, as it was intertwined with the appreciation of evidence. Therefore, the appeal was dismissed on this issue as well.