9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 1231 - AT - Income TaxDisallowance of the provision for bad or doubtful debts u/s 36(2)(1) of the Act - Held that - The decision assessee s own case for the previous years has been followed - Bad debt in respect of sales turnover which has been recognized as income is allowable subject to furnishing of details required in this behalf - the amount written off in respect of bad debts is allowable even though the individual account of debtor is not written off but a consolidated entry is passed in respect of the same by debit to P&L account - The issue need to be reconsidered thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Disallowance of the provision for warranty and filed services - Disallowance u/s 37(2A) of the Act Entertainment expenses - Held that - Following the decision in assessee s own case for the previous year, the order of CIT(A) has been confirmed and the AO is directed to re-work the disallowance on account of provision made for warranty and field services matter remitted back to the AO for fresh adjudication Decided in favour of Assessee. Disallowance made under Rule 6D of the Act Held that - The decision in Aorow India ltd. Vs CIT 1997 (7) TMI 92 - BOMBAY High Court followed - The computation has to be made in accordance with rule 6D the decision of the CIT(A) upheld Decided against Assessee. Deduction u/s 80-O of the Act Net income from service Held that - the decision in Commissioner of Income-Tax Versus Asian Cables Corporation Ltd. (No. 2) 2003 (3) TMI 87 - BOMBAY High Court followed - for special deduction gross receipts cannot constitute the basis for deduction u/s. 80-O of the Act - Deduction to be allowed is only on net income basis Decided against Assessee. Disallowance of depreciation on assets on lease - Held that - The claim of the depreciation by the assessee is totally based on paper evidence whereas the AO has rejected the claim based on the categorical denial by Gujarat Energy Development Agency (GEDA) which is an autonomous body of the State of Gujarat - the lower authorities have accepted this to be a financial transaction, in that case, the other claims of the assessee has to be verified thus, the matter remitted back to the AO for fresh adjudication Decided partly in favour of Assessee. Disallowance towards cost of sales Held that - There is no dispute that such expenditure is allowable as deduction, provided it is in regard to an expenditure incurred during the year, even if it is not due for payment on account of bill/debit note having not been received - However, no such evidence was brought before the lower authorities nor before us there was no reason to interfere with the findings of the Ld. CIT(A) Decided against Assessee. Deletion made on account of fees paid for technical services Deletion on disallowance of notional Interest - Held that - The issue has already been settled in assessee s own case for the previous years, and was decided in the favour of Assessee Thus, the Appeal of the Revenue dismisses Decided against Revenue.
Issues Involved:
1. Disallowance of provision for doubtful debts. 2. Disallowance of provision for warranty and field services. 3. Disallowance under Rule 6D. 4. Disallowance of guest house expenses. 5. Deduction under Section 80-O. 6. Disallowance of entertainment expenses under Section 37(2A). 7. Disallowance of depreciation on leased assets. 8. Disallowance towards cost of sales. 9. Exclusion of unutilized provision for warranty and field services disallowed in 1989-90. 10. Deletion of disallowance on fees paid for technical services. 11. Deletion of disallowance of notional interest. Detailed Analysis: 1. Disallowance of Provision for Doubtful Debts: The assessee's appeal for A.Y. 1997-98 involved the disallowance of Rs. 50,27,986/- for doubtful debts. The AO disallowed the claim as the amounts were not written off as irrecoverable in the debtor's accounts. The CIT(A) upheld this disallowance. The Tribunal restored the issue back to the AO for verification in line with its earlier decisions in assessee's own case and directed consideration of relevant case laws. This issue was similarly restored for A.Y. 1999-2000. 2. Disallowance of Provision for Warranty and Field Services: For A.Y. 1997-98, the AO allowed only the actual amount utilized and added back the entire provision of Rs. 2,08,32,829/-. The CIT(A) confirmed this. The Tribunal directed the AO to rework the disallowance following earlier Tribunal directions. This issue was similarly restored for A.Y. 1998-99 and 1999-2000. 3. Disallowance under Rule 6D: The AO made an adhoc disallowance of Rs. 1,50,000/- for want of details, upheld by CIT(A) based on the jurisdictional High Court decision. The Tribunal found no reason to interfere and dismissed the ground. 4. Disallowance of Guest House Expenses: The AO disallowed Rs. 3,60,000/- as guest house rent under Section 37(4), confirmed by CIT(A). The Tribunal upheld the CIT(A)'s findings as no distinguishing facts were presented. 5. Deduction under Section 80-O: The assessee claimed deduction on gross service charges, but the AO allowed it on net income. The CIT(A) confirmed this. The Tribunal dismissed the ground, following the jurisdictional High Court decision that deduction under Section 80-O is on net income basis. 6. Disallowance of Entertainment Expenses under Section 37(2A): The AO made an additional disallowance of Rs. 53,871/-, confirmed by CIT(A). The Tribunal upheld the CIT(A)'s findings, following its earlier decisions in assessee's own case. 7. Disallowance of Depreciation on Leased Assets: The AO disallowed Rs. 1,30,00,000/- claimed as depreciation for a wind electric generator, concluding it was a bogus claim. The CIT(A) sustained this disallowance. The Tribunal restored the issue to the AO to verify claims of bad debts and business loss due to alleged cheating by the lessee. This issue was similarly restored for A.Y. 1999-2000. 8. Disallowance towards Cost of Sales: The AO disallowed Rs. 26,50,685/- as excess provision towards cost of sales, confirmed by CIT(A). The Tribunal upheld the CIT(A)'s findings due to lack of evidence for the provision. This issue was similarly dismissed for A.Y. 1998-99 and 1999-2000. 9. Exclusion of Unutilized Provision for Warranty and Field Services Disallowed in 1989-90: The Tribunal restored this issue to the AO, directing to follow its earlier decision in assessee's own case for A.Y. 1991-92. 10. Deletion of Disallowance on Fees Paid for Technical Services: The CIT(A) deleted the disallowance of Rs. 56,70,115/- following earlier Tribunal decisions in assessee's favor. The Tribunal confirmed the CIT(A)'s findings for A.Y. 1997-98, 1998-99, and 1999-2000. 11. Deletion of Disallowance of Notional Interest: The CIT(A) deleted the addition of Rs. 35.70 lakhs, following predecessor's decision for earlier years. The Tribunal confirmed this deletion, following its earlier decisions in assessee's favor. Conclusion: The appeals filed by the assessee were partly allowed for statistical purposes, and the appeals filed by the Revenue were dismissed.
|
