9911796707
|
Home
Issues:
1. Interpretation of section 155(6) of the Income-tax Act, 1961 regarding the allowance of bad debt deduction. Analysis: The judgment pertains to a dispute over the interpretation of section 155(6) of the Income-tax Act, 1961, concerning the allowance of a bad debt deduction for the assessment year 1964-65. The assessee claimed a bad debt of Rs. 10,305, which the Income-tax Officer disallowed, stating that the debt had become bad in the preceding previous year. The Appellate Assistant Commissioner directed the Income-tax Officer to rectify the assessment for the preceding year under section 155(6), allowing the deduction. The Revenue challenged this decision, arguing that the assessee should have accepted the Income-tax Officer's finding or filed an appeal or revision, making section 155(6) inapplicable. However, the Tribunal upheld the Appellate Assistant Commissioner's order, emphasizing that the language of section 155(6) did not restrict the assessee's right based on accepting or challenging the Income-tax Officer's finding. The key contention revolved around the interpretation of the phrase "if the assessee accepts such finding of the Income-tax Officer" in section 155(6). The Revenue's counsel argued that this condition limited the assessee's benefit under the provision to accepting the Income-tax Officer's finding without further recourse. However, the court rejected this interpretation, stating that the use of "may" in the provision implied an obligation on the Income-tax Officer to recompute the total income if satisfied about the bad debt. Additionally, the clause allowing the assessee to accept the finding was seen as providing an opportunity to appeal or revise the decision, without forfeiting the right to the deduction if the appeal was unsuccessful. Therefore, the court held that the assessee did not lose the right to claim a bad debt deduction for the relevant year by challenging the Income-tax Officer's finding through an appeal or revision. In conclusion, the court upheld the construction of section 155(6) by the Appellate Assistant Commissioner and the Tribunal, ruling in favor of the assessee. The judgment clarified that the assessee's right to a bad debt deduction was not contingent on accepting the Income-tax Officer's finding and that filing an appeal or revision did not preclude the assessee from availing the deduction if the challenge was unsuccessful.
|
