9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (9) TMI 71 - HC - Income TaxDisallowance of bad debts - ITAT allowed the claim - Held that - As decided in T.R.F. LTD. Versus COMMISSIONER OF INCOME-TAX 2010 (2) TMI 211 - SUPREME COURT that after 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - as the certificate accepting the VDIS declaration was issued by the Commissioner after consultation with the Central Board of Direct Taxes and, therefore, the contention on behalf of the Revenue that assessee is not entitled to rely on VDIS declaration would not be tenable in law - in favour of assessee. Disallowance of claim of depreciation - sale and a lease back transaction - IATA allowed it - Held that - As the assessee has submitted the necessary evidence for the purchase and use of the machineries during the year the lease transactions were genuine and that the Department failed to adduce any evidence to prove that the transaction was not genuine or was a sham no disallowance can be warranted - the contention of Revenue that the Tribunal blindly followed the decision in Unimed Technologies Ltd. Versus Deputy Commissioner Of Income-Tax 1999 (4) TMI 104 - ITAT AHMEDABAD-A in spite of the facts being different, would not be tenable - in favour of assessee.
Issues:
1. Claim of bad debts under Section 36 of the Income Tax Act, 1961. 2. Claim of 100% depreciation on assets installed at Kalyani Seamless Tubes Limited. Issue 1: Claim of Bad Debts under Section 36 of the Income Tax Act, 1961 The appeal was filed by the Revenue against an order of the Income Tax Appellate Tribunal regarding the disallowance of bad debts claimed by the assessee for Assessment Year 1996-97. The assessee had written off fixed assets given on lease as bad debts under Section 36 of the Act. The Assessing Officer disallowed the claim stating various grounds, including lack of proof that the debt had actually become bad. The Commissioner of Income Tax (Appeals) ruled in favor of the assessee, highlighting that the debt had become bad and was written off. The Tribunal upheld the decision of the CIT (Appeals), leading to the Revenue's appeal. The key issue was whether the bad debt claim was valid without fulfilling the obligation to prove the debt had become bad. The Tribunal found in favor of the assessee, citing the acceptance of the VDIS declaration as a loan and the bad debt due to dishonored cheques from the parties. The High Court upheld the Tribunal's decision, emphasizing that post-1989, it is not necessary to prove the debt is irrecoverable, but the write-off in the accounts is sufficient. The matter was remitted to the AO for further consideration. Issue 2: Claim of 100% Depreciation on Assets Installed at Kalyani Seamless Tubes Limited The second substantial question of law in the appeal was related to the claim of 100% depreciation on assets installed at Kalyani Seamless Tubes Limited. The assessee purchased assets which were installed at Kalyani Seamless Tubes Limited's premises but were not delivered to the assessee. The Revenue contended that this was a sale and leaseback transaction and disallowed the depreciation claim. The CIT (A) and the Tribunal ruled in favor of the assessee, stating that the transactions were genuine. The Tribunal highlighted that the assessee provided evidence supporting the transactions and the lessor was entitled to depreciation. The Revenue's objection was dismissed, and the Tribunal confirmed the CIT (A)'s order. The High Court held that the genuineness of the lease transactions was a question of fact based on evidence, and since no contrary evidence was presented, the Tribunal's decision was upheld. The court found no legal infirmity in the Tribunal's order, dismissing the appeal. This detailed analysis of the judgment covers the issues of the claim of bad debts and the claim of 100% depreciation on assets, providing a comprehensive overview of the legal proceedings and decisions made by the authorities involved.
|
