2023 (8) TMI 1360 - HC - Income Tax

Bad debts allowance - Appellate Tribunal allowing the bad debt claim of the assessee - Whether the debts in question were not trading debts of the assessee as required u/s.36(1) (viii) - Tribunal treating the hire purchases as stock in trade - Whether the Appellate Tribunal has failed to consider that the assessee is not a banking entity where bill discounting can be accepted to be trading receipt and the resultant debt be treated as bad trading debt ? - Depreciation on leased assets - Disallowance u/s 14A - Applicability of section 14A - theory of apportionment of expenses (including interest) - Whether the Appellate Tribunal has erred in not following the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd 2018 (3) TMI 805 - SUPREME COURT which has applied the theory of apportionment of expenses HELD THAT - Questions considered by us in a separate order passed 2018 (9) TMI 604 - GUJARAT HIGH COURT - All these questions are declined. Without separately recording reasons this appeal is also dismissed.

Summary

Issues involved:
The issues involved in the judgment are related to the assessment year 2004-05. The questions raised for consideration include:
- Whether the bad debt claim of the assessee was allowed correctly.
- Whether the hire purchases were treated as stock in trade.
- Whether certain disallowances of depreciation and under section 14A of the Act were justified.
- Whether the decision of the Hon'ble Supreme Court regarding the theory of apportionment of expenses was followed correctly.

Bad Debt Claim:
The Revenue filed an appeal questioning the allowance of the bad debt claim by the Appellate Tribunal. The Tribunal was criticized for not considering that the debts in question were not trading debts of the assessee as required under section 36(1)(viii) of the Act. Additionally, it was argued that the principal amount debited by the assessee could not appear as a debt on account of trade. These issues were addressed in a separate order passed by the court, and the appeal was dismissed.

Treatment of Hire Purchases:
Another issue raised was whether the Appellate Tribunal erred in treating the hire purchases as stock in trade. This matter was considered, and the decision of the Tribunal was upheld, leading to the dismissal of the appeal without separate reasons recorded.

Disallowance of Depreciation and Section 14A:
The Appellate Tribunal's decision to delete the disallowance of depreciation amounting to Rs. 925304 on leased assets and the disallowance of Rs. 2084028 under section 14A of the Act was challenged. These questions were dealt with in separate tax appeals and were ultimately declined, resulting in the dismissal of the present appeal without specific reasons provided.

Theory of Apportionment of Expenses:
The final issue pertained to whether the Appellate Tribunal correctly applied the "theory of apportionment" of expenses, including interest, based on the decision of the Hon'ble Supreme Court. This question was addressed in a separate tax appeal, and the decision of the Tribunal was upheld, leading to the dismissal of the present appeal without further elaboration.