2020 (4) TMI 547 - HC - Income Tax

Addition of CENVAT receivable made u/s 145A - HELD THAT - ADMIT following substantial question of law arises for consideration - Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in upholding the deletion of addition of CENVAT receivable on ₹ 2,98,57,398/- made under section 145A of the Income Tax Act, 1961? Disallowance u/s 14A read with rule 8D - assessee suo moto disallowed expenditure incurred for earning exempt income, on the ground that the assessee had not provided the fund flow statement - HELD THAT - As assessee had suo motu disallowed the amount of ₹ 20,25,500/-, being the expenditure incurred for earning exempt income, which was 8.50% of such income, it is not possible to state that there is any infirmity in the impugned order passed by the Tribunal upholding the order of the Commissioner (Appeals) qua this ground of appeal. Proposed question B , therefore, does not give rise to any question of law. Disallowance of provision of doubtful debts u/s 36(1)(vii) - HELD THAT - In the light of the fact that the Commissioner (Appeals) has merely applied the decision of the Supreme Court in the case of CIT v. Vijaya Bank 2010 (4) TMI 46 - SUPREME COURT to the facts of the present case and directed the Assessing Officer to ascertain the entitlement of the benefit of deduction under section 36(1)(vii) of the Act, no infirmity can be said to have been committed qua this ground of appeal so as to give rise to any question of law. Accordingly, this ground of appeal is also rejected.

Summary

Issues:
1. Addition of CENVAT receivable under section 145A of the Income Tax Act, 1961.
2. Deletion of disallowance under section 14A of the Income Tax Act, 1961.
3. Disallowance of provision for doubtful debts under section 36(1)(vii) of the Income Tax Act, 1961.

Analysis:

1. Issue 1 - Addition of CENVAT receivable:
The primary question was whether the Income Tax Appellate Tribunal was correct in upholding the deletion of the addition of CENVAT receivable. The court admitted the appeal based on a similar question of law from a previous order. The substantial question of law was whether the Tribunal was justified in upholding the deletion of the CENVAT receivable.

2. Issue 2 - Deletion of disallowance under section 14A:
The second issue revolved around the deletion of disallowance under section 14A of the Income Tax Act, 1961. The Assessing Officer initially disallowed expenses under section 14A, even though the assessee had already disallowed a certain amount. The Commissioner (Appeals) directed the Assessing Officer to delete the additional disallowance based on the assessee's prior actions and the Tribunal concurred with this decision.

3. Issue 3 - Disallowance of provision for doubtful debts:
The final issue pertained to the disallowance of a provision for doubtful debts under section 36(1)(vii) of the Act. The Assessing Officer disallowed the provision, but the Commissioner (Appeals) allowed the ground of appeal by following a Supreme Court decision. The Commissioner directed the Assessing Officer to verify the entries in the profit and loss account and balance sheet to ensure compliance with the law. The Tribunal agreed with this decision, concluding that no question of law arose from this issue.

In summary, the judgment addressed multiple issues related to income tax law, including the treatment of CENVAT receivable, disallowance under section 14A, and provision for doubtful debts. The court analyzed each issue in detail, considering previous decisions and legal provisions to reach its conclusions.