2019 (7) TMI 1254 - AT - Income Tax

Addition on account of assessee s claim for bad debts written off - HELD THAT - As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2009-10, we respectfully follow the order of Coordinate Bench of this Tribunal for A.Y. 2009-10 and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of bad debts written off. The appeal of the Revenue is accordingly dismissed. Addition u/s 14A read with Rule 8D(2)(iii) - whether no exempt income was actually earned by the assessee during the year under consideration and, therefore, the disallowance made under section 14A read with Rule 8D(2)(iii) is not sustainable? - D.R. contended that this claim is being made on behalf of the assessee for the first time before the Tribunal and, therefore, the Assessing Officer may be given an opportunity to verify the same - HELD THAT - We find merit in this contention of the ld. D.R. The impugned order of the ld. CIT(Appeals) on this issue is accordingly set aside and the matter is restored to the file of the Assessing Officer for verifying the claim of the assessee made for the first time before the Tribunal and decide the issue accordingly. Ground No. 1 of the assessee s appeal is accordingly treated as allowed for statistical purposes. Provision made for diminution in the value of quoted shares in the earlier years - HELD THAT - We direct the Assessing Officer to verify the claim of the assessee of having not claimed any deduction in the earlier years on account of the provision made for diminution in the value of quoted shares and if it is found correct on such verification, the Assessing Officer shall delete the addition made on account of write back of the said provision in the year under consideration while computing the total income of the assessee under the normal provisions of the Act. Ground No. 2 of the assessee s appeal is accordingly treated as allowed for statistical purposes. Set off and carry forward of brought forward losses and unabsorbed depreciation - HELD THAT - Since the ld. D.R. has also agreed for sending the matter back to the Assessing Officer for verification, we direct the Assessing Officer to consider the claim of the assessee for the set off/carry forward of the brought forward losses and unabsorbed depreciation after due verification of the relevant facts and figures. Ground No. 3 of the assessee s appeal is accordingly treated as allowed for statistical purposes.

Issues involved:
1. Disallowance of bad debts written off by the Assessing Officer.
2. Disallowance of administrative expenses under section 14A read with Rule 8D(2)(iii).
3. Treatment of provision for diminution in the value of quoted shares written back.
4. Set off/carry forward of brought forward losses and unabsorbed depreciation.

Analysis:

Issue 1: Disallowance of bad debts written off
The case involved cross-appeals, one by the assessee and the other by the Revenue, against the order of the Commissioner of Income Tax (Appeals) regarding the addition of ?1,50,00,000 made by the Assessing Officer on account of bad debts written off. The assessee explained that the debt was written off in parts due to mutual understanding with the debtor. The Assessing Officer disallowed the claim, citing it as a devise to reduce taxable profit. However, the Commissioner of Income Tax (Appeals) deleted the disallowance, referring to a similar case where the disallowance was deleted based on the amended section 36(1)(vii) of the Income Tax Act. The Tribunal upheld the Commissioner's decision, stating that the issue and facts were similar to a previous year's case, thus dismissing the Revenue's appeal.

Issue 2: Disallowance of administrative expenses
The assessee's appeal raised concerns about the disallowance of ?10,77,574 under section 14A read with Rule 8D(2)(iii) by the Assessing Officer. The contention was that no exempt income was earned during the year, challenging the sustainability of the disallowance. The Tribunal set aside the Commissioner's order on this issue, directing the Assessing Officer to verify the claim made for the first time and decide accordingly.

Issue 3: Treatment of provision for diminution in the value of quoted shares
The assessee contended that the provision for diminution in the value of quoted shares made in earlier years was never claimed as a deduction. The Tribunal directed the Assessing Officer to verify this claim and allow relief if found correct, specifically for the computation of income under the normal provisions of the Act.

Issue 4: Set off/carry forward of brought forward losses and unabsorbed depreciation
The appeal raised concerns about the non-decision by the Commissioner regarding the set off and carry forward of brought forward losses and unabsorbed depreciation. Both parties agreed to send the matter back to the Assessing Officer for verification of relevant facts and figures. The Tribunal treated this issue as allowed for statistical purposes.

In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was treated as allowed for statistical purposes, with specific directions given for further verification and decisions on the various issues raised.

← Previous Next →