2019 (7) TMI 640 - HC - Income Tax

Payments due from defaulting subscribers treated as bad debt - whether there is no relationship of creditor and debtor between them? - HELD THAT - It is squarely stated by the learned counsel for the Revenue that the above substantial question of law has been answered against the Revenue in the assessee's own case for the assessment year 1995-96.

Summary

Issues:
1. Interpretation of bad debt treatment under the Income Tax Act, 1961.

Analysis:
The High Court of Madras, comprising Mr. Justice T.S. Sivagnanam and Mrs. Justice V. Bhavani Subbaroyan, heard a tax case appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961. The appeal challenged an order by the Income Tax Appellate Tribunal regarding the treatment of payments due from defaulting subscribers as bad debt for the assessment year 2002-03. The appeal was admitted based on the substantial question of law, questioning the correctness of treating these payments as bad debt in the absence of a creditor-debtor relationship.

During the hearing, Mr. T.R. Senthil Kumar, assisted by Mrs. K.G. Usha Rani, represented the appellant/revenue, while Mr. R. Sivaraman appeared for the respondent/assessee. The counsel for the Revenue acknowledged that a similar substantial question of law had been decided against the Revenue in the assessee's previous case for the assessment year 1995-96. As a result, the Court dismissed the Tax Case Appeal, upholding the previous decision and answering the substantial question of law against the Revenue. No costs were awarded in this judgment.

In conclusion, the High Court of Madras affirmed the treatment of payments due from defaulting subscribers as bad debt, even in the absence of a creditor-debtor relationship, based on the precedent set in the assessee's prior case. The judgment highlights the importance of consistency in legal interpretations and the application of precedents in tax matters under the Income Tax Act, 1961.