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TMI Blog2013 (10) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in holding that the assessee had not discharged its onus to prove that the debts of Rs.63,62,810/- had become irrecoverable in the relevant previous year and thereby rejecting assessee's claim for deduction under section 36(1) (vii) of the I.T. Act? Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the sum of Rs.40,000/- representing the premium paid to the L.I.C. securing an insurance against the liabilities arising under the Payment of Gratuity Act, 1972 was not hit by the provisions of section 40A(7)(a) of the I.T. Act, 1961 and was an allowable deduction u/s 37(1) of the Act?" The dispute relates to the Assessment Year 1985-1986. The assessee corporation is a wholly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ultimately, it is the assessee who purchased the properties and deposited Rs.7,15,000/- and Rs.12 Lakhs with the District Authorities. The said amounts have not been received from the District Authorities and the assessee corporation has lost all hopes. In contra, Sri Shambhu Chopra, learned counsel for the department, submitted that it is a case where it cannot be said that the amount is irrecoverable in as much as the District Administration is seized of the amounts deposited by the assessee purchaser. Submission is that still there is some ray of hope, therefore, the order of the Tribunal is perfectly justified and calls for no interference. Considered the respective submissions of the learned counsel for the parties and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one for Rs.7,15,000/- and the second property for Rs.12 Lakhs. The money was deposited with the district administration and it is lying with them. The assessee could not recover the said amount from the district authorities. The Tribunal took the view that there is nothing on record to show that the district authorities have exhausted the properties of the defaulters, thus, hope for further recovery is not extinguished. The said approach of the Tribunal on the facts of the present case is not justified. The Tribunal ignored the fact that the assessee corporation is fully owned by the State Government. In state owned corporations no officer or corporation employee has any personal interest to look after the work of the corporation. They did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) are -- (i) The debt or loan should be in respect of a business which is carried on by the assessee in the relevant accounting year. (ii) The debt should have been taken into account in computing the income of the assessee1 of the accounting year, or of an earlier accounting year or should represent money lent in the ordinary course of his business of banking or money-lending. (iii) The amount of the debt or loan, or part thereof, which is claimed as a deduction, should have become bad. (iv) The amount should be written off as irrecoverable in the accounts of the assessee for that accounting year in which the claim for a deduction is made for the first time. The only objection raised by the department is that the debt has not beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence on record to hold that the outstanding dues have become bad debts and it cannot be realised. We, therefore, answer the question referred to us at the instance of the assessee in negative i.e. in favour of the assessee and against the department. So far as the second question is concerned, the learned counsel for the assessee fairly accepted that the said question has been decided against the assessee in the earlier Assessment Year 1984-1985 in ITR No.107 of 1999 decided on 18th of June, 2009. We, therefore, answer the second question in negative i.e. against the assessee and in favour of the Revenue. Thus, the question no.1 is decided in favour of the assessee and the question no.2 is decided in favour of the Revenue. The reference ..... X X X X Extracts X X X X X X X X Extracts X X X X
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