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Issues:
1. Whether the sum of Rs. 11,33,190 is allowable as bad or doubtful debts or as trading loss for the year ended 31st March, 1974. 2. Whether the sur-tax payable was a deductible expenditure for the computation of profits for the year ended 31st March, 1974. Analysis: Issue 1: Allowability of Bad or Doubtful Debts The main contention in this appeal is the allowability of Rs. 11,33,190 as a bad or doubtful debt for the year ending 31st March, 1974. The lower authorities argued that the debt only became bad in the assessment year 1975-76 and thus could not be claimed as a deduction in 1974-75. The Department Representative contended that due to the Sick Textile Undertaking Act of 1974, the debt might have become irrecoverable in 1975-76 but was not bad as of 31st March, 1974. However, the assessee argued that the debt had become bad and doubtful by 31st March, 1974, due to the nationalization of the debtor mills and their financial insolvency. The Tribunal referred to previous cases and held that the debt had indeed become bad and doubtful by 31st March, 1974, making it a valid deduction for the assessment year 1974-75. Issue 2: Deductibility of Sur-Tax Regarding the deductibility of sur-tax as an expenditure for profit computation, the Tribunal noted that the Madras Benches consistently held that sur-tax was not deductible. The assessee failed to provide any favorable authority. Consequently, the claim for sur-tax as a deductible expenditure was disallowed. In conclusion, the Tribunal allowed the assessee's appeal concerning the bad or doubtful debts, amounting to Rs. 11,33,190, for the year ending 31st March, 1974. However, the claim for sur-tax as a deductible expenditure was rejected.
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