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TMI Blog2013 (9) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... fourth year onwards it will be treated as interest on a doubtful loan and will be added to the income only when it is actually received. There is no inconsisteny or contradiction between the circular so issued and section 145 of the Income-tax Act. In fact, the circular clarifies the way in which these amounts are to be treated under the accounting practice followed by the lender. The circular, therefore, cannot be treated as contrary to sec. 145 of the Income tax Act or illegal in any form. It is meant for a uniform administration of law by all the income-tax authorities in a specific situation and is, therefore, validly issued u/s119 of the Income-tax Act. As such, the circular would be binding on the Department - Following decision of UCO Bank vs. CIT [1999 (5) TMI 3 - SUPREME Court] - Decided against Revenue. Computation of book profit - Minimum alternate Tax (MAT) u/s 115JB - Held that:- the decision of Special Bench in the case of Usha Martin Ind. Ltd. (2006 (12) TMI 171 - ITAT CALCUTTA) is not applicable. - AO had rightly added both the provisions debited to Profit & Loss Account viz. provision for doubtful debts (Rs. 3,61,30,700/-) and provision for servicing securitiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) has erred in sustaining the disallowance of Rs. 1,43,98,650/- towards provision for doubtful assets made by the appellant in compliance with mandatory prudential norms issued by the Reserve Bank of India. 5.1 Ground no. 1 is general. Therefore, does not require any adjudication. 6. Brief facts apropos ground no. 2 are that in the course of assessment proceedings, the assessee company was asked to furnish the details of vehicles leased out by the assessee company on which depreciation was claimed. The assessee submitted sample invoice, lease agreement and registration certificate for leased cars along with legal submissions of allowability of claim of depreciation to the assessee company. The AO denied the assessee s claim for the following reasons: 1. the lease transaction in effect was a finance transaction; 2. vehicles were registered in the name of respective lessees; 3. the vehicles were directly delivered to the lessee and the lessee bore the insurance and held the warranty and retained the right to use to the exclusion of the lessor; 4. repairs were to be carried out at the sole expense of the lessee; 5. the sale invoice was raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vo in view of the decision of Hon ble Supreme Court in the case of ICDS Ltd. 8.3 In the result, this ground is allowed for statistical purposes. 9. Brief facts apropos ground no. 3 are that assessee had claimed deduction in regard to provision for doubtful debts aggregating to Rs. 3,61,30,702/-. The assessee had explained that it was a non-banking finance company registered with RBI and was, therefore, bound by the provisions of NBFC prudential norms (Reserve Bank) Directions, 1998 issued by RBI. Accordingly, as per the mandatory requirements of these directions, the assessee had made a provision for doubtful debts at a specified percentage based on the classification of assets viz. sub standard, doubtful and loss assets. The AO disallowed the assessee s claim treating the same as contingent liability. 10. Ld. CIT(A) confirmed the AO s action, inter-alia, observing that only in such cases and in such year when the accounts are written off in the books of account that such claims could be considered as an expenditure. 10.1 At the time of hearing, ld. Counsel for the assesee fairly conceded that this issue is covered against the assessee by the decision of Hon ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income on accrual basis, and further that his predecessor confirmed such addition made in the AYs.1998-99 and 2001-02. 14.1 Brief facts apropos ground no. 1 are that assessee had not recognized the income in respect of sticky loans and advances on the basis of prudential norms prescribed by the Reserve Bank of India. The interest pertaining to these sticky loans aggregating to Rs. 41,69,332/- was as under: 1. interest on loans Rs. 17,41,437/- 2. hire purchase (interest portion) Rs. 24,27,895/- 15. The assessee s contention was that this income had not accrued and, therefore, was not accounted for in the books of account. The assessee, inter-alia, had placed reliance on following decisions: 1. UCO Bank Ltd. (SC) 237 ITR 889; 2. Karnataka High Court 242 ITR 623; 3. Bombay High Court of American Express Bank 258 ITR 601; 4. Godhra Elect. Company 225 ITR 746. 15.1 However, following the order for AY 1998-99, the AO made an addition of Rs. 41,69,332/-. 16. Ld. CIT(A) following the decision of Hon ble Supreme Court in UCO Bank vs. CIT 234 ITR 889 allowed the assessee s appeal. 16.1 We have considered the submissions of both the parties and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. That on the facts and circumstances of the case and in law, the ld. CIT(A)-XV, New Delhi erred in confirming the disallowance of depreciation on leased vehicles amounting to Rs. 10,37,68,711/-. 2.1That the CIT(A) erred in facts and in law in ignoring the effect of the legal transaction between the parties and in concluding that the appellant s ownership of the asset had to be ignored as the transaction was merely a loan transaction. 3. That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in sustaining the disallowance of Rs. 3,61,30,709/- towards provision for doubtful debts made by the appellant in pursuance with mandatory prudential norms issued by Reserve Bank of India. 4. That on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in upholding the action of AO of levying interest u/s 234D of the Act. 20. Ground no. 1 is general in nature. 21. Brief facts apropos ground no. 2 and 2.1 are identical to ground no. 2 for AY 2000-01 vide ITA No.3192/Del/2007 and, therefore, for the reasons given therein, this issue is restored to the file of AO with similar directions. 21.1 In the result, this gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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