2012 (10) TMI 1194 - AT - Income Tax

Summary

Issues Involved:
The judgment involves issues related to the claim of exemption u/s 10B of the Act, bad debt, disallowance towards contribution to provident fund and ESI, and disallowance of bad debts.

Claim of Exemption u/s 10B:
The Appellate Tribunal ITAT Cochin heard appeals from both the revenue and the taxpayer against the same order of the Commissioner of Income-tax(A) for the assessment year 2005-06. The revenue's appeal concerned the claim of exemption u/s 10B of the Act. The Tribunal noted that the High Court had set aside a previous order and directed a reconsideration due to lack of details. Consequently, the Tribunal remitted the issue back to the assessing officer for reconsideration, along with the claim for the assessment year 1999-2000.

Bad Debt Issue:
Regarding the taxpayer's appeal on bad debt, it was argued that the amount due from a sister concern was written off as there was no chance of recovery, claiming it as a business loss u/s 37 of the Act. The assessing officer disallowed the claim, stating it did not fall under section 36(1)(vii). The Tribunal upheld the decision, stating that the conditions of section 36(2) were not satisfied, and the claim was rightly denied.

Disallowed Contribution to Provident Fund and ESI:
The next issue concerned the disallowance of a contribution towards provident fund and ESI. The taxpayer claimed it was a statutory liability, but the assessing officer and Commissioner of Income-tax(A) disagreed. The Tribunal remitted the issue back to the assessing officer for further consideration, emphasizing the need for verification of payment details.

Disallowance of Bad Debts:
The Tribunal confirmed the disallowance of various bad debts due to the lack of material to satisfy the conditions under section 36(2) of the Act. The taxpayer failed to provide necessary details, leading to the confirmation of the Commissioner of Income-tax(A)'s decision.

Claim of Bad Debt Amount:
The Tribunal remanded the issue of a specific bad debt claim back to the assessing officer for re-examination, in line with the reconsideration of the exemption u/s 10B for the assessment year 1999-2000. The taxpayer's claim for this amount was to be decided afresh after considering the related issues.

Levy of Interest u/s 234B:
Lastly, the taxpayer raised a ground regarding the levy of interest u/s 234B, emphasizing the correct computation of interest. The Tribunal directed the assessing officer to compute the interest correctly in accordance with the law.

In conclusion, the appeal of the revenue was allowed for statistical purposes, while that of the taxpayer was partly allowed, with specific issues remitted back to the assessing officer for further examination and decision.