2002 (7) TMI 218 - AT - Income Tax

Summary

Issues Involved:
1. Bad debts written off
2. Disallowance under Section 37(2A) pertaining to entertainment expenditure
3. Computation of income under Section 115J
4. Levy of additional tax under Section 143(1A)
5. Grant of interest under Section 244A
6. Depreciation on flats with unregistered title deeds
7. Accrued interest income on securities
8. Addition of fictitious deposits and interest thereon
9. Disallowance under Section 43B pertaining to interest payable to IDBI
10. Addition of interest on sticky loans
11. Disallowance of license fee paid to SEBI

Detailed Analysis:

1. Bad Debts Written Off:
- Assessee's Appeal (1990-91, 1991-92, 1992-93): The assessee's claim for bad debts written off was initially dismissed. The Tribunal, however, directed that the computation of bad debts should be reconsidered in line with the previous year's accepted practices. For the years 1991-92 and 1992-93, the Tribunal held that the provisions under Section 36(1)(vii) and 36(1)(viia) are distinct and independent, allowing the assessee to claim bad debts written off without adjusting against the provision for bad and doubtful debts.
- Revenue's Appeal (1990-91): The Tribunal upheld the CIT(A)'s decision to not add accrued interest income on securities, following the precedent set in the assessee's own case for earlier years.

2. Disallowance under Section 37(2A) Pertaining to Entertainment Expenditure:
- Assessee's Appeal (1990-91, 1991-92, 1992-93): The Tribunal directed the AO to recompute the disallowance under Section 37(2A) in accordance with the principle followed in the earlier year, allowing 50% of the balance expenditure.
- Revenue's Appeal (1991-92): The Tribunal dismissed the Revenue's ground, following the same reasoning as in the assessee's appeal.

3. Computation of Income under Section 115J:
- Assessee's Appeal (1990-91): The Tribunal restored the issue back to the CIT(A) to deal with the merits of the adjustments made by the AO to the returned computation under Section 115J.

4. Levy of Additional Tax under Section 143(1A):
- Assessee's Appeal (1990-91): The Tribunal restored the matter to the AO to pass appropriate orders as per law, considering the modifications to additional tax computed earlier.

5. Grant of Interest under Section 244A:
- Assessee's Appeal (1990-91, 1991-92): The Tribunal directed the AO to verify the claim and compute the interest payable under Section 244A in accordance with the law.

6. Depreciation on Flats with Unregistered Title Deeds:
- Assessee's Appeal (1991-92, 1992-93): The Tribunal allowed the depreciation claim, following the Supreme Court's decision in CIT vs. Poddar Cements (P) Ltd. and Mysore Minerals Ltd. vs. CIT.

7. Accrued Interest Income on Securities:
- Revenue's Appeal (1990-91, 1991-92): The Tribunal upheld the CIT(A)'s decision, following the Supreme Court's decision in Vijaya Bank Ltd. vs. CIT and the Karnataka High Court's decision in CIT vs. Canara Bank.

8. Addition of Fictitious Deposits and Interest Thereon:
- Revenue's Appeal (1990-91, 1991-92, 1992-93): The Tribunal dismissed the Revenue's ground, following the Tribunal's decision in the assessee's own case for earlier years, holding that the Department must identify the real person behind the deposits.

9. Disallowance under Section 43B Pertaining to Interest Payable to IDBI:
- Revenue's Appeal (1990-91): The Tribunal upheld the AO's disallowance, holding that the interest amount was not payable within the accounting year and hence, not deductible under Section 43B.

10. Addition of Interest on Sticky Loans:
- Revenue's Appeal (1990-91): The Tribunal directed the AO to reconsider the issue, following the Tribunal's directions in the assessee's own case for earlier years.

11. Disallowance of License Fee Paid to SEBI:
- Revenue's Appeal (1991-92): The Tribunal upheld the CIT(A)'s decision, holding that the license fee paid to SEBI was a revenue expenditure, facilitating the continuation of the existing business and not a new business venture.

Conclusion:
The appeals were disposed of with directions to recompute or reconsider several issues based on established precedents and legal principles, ensuring that the assessee's claims were evaluated fairly and in accordance with the law.