9911796707
TMI Blog2015 (7) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank (2010 (4) TMI 46 - SUPREME COURT) is not applicable considering the facts of the assessee’s case. In that case, the assessee is a bank who draws its account as per the guidelines provided by the Reserve Bank of India (RBI). There are legal implications for writing off the debts in the accounts of bank by crediting the debtor’s accounts. The system of accounting is also different. Various classifications with respect to debtors are drawn in the books of accounts as per the norms specified by the RBI. In such circumstances, the Hon’ble Apex Court had held that it would suffice to reduce the bad debts in the statement of accounts and actual write off bad debts in the books of accounts would not be necessary. With respect to other assessees, the Hon’ble Apex Court had categorically held in the case TRF Ltd. Vs. DCIT reported in [2010 (2) TMI 211 - SUPREME COURT ] that “it is not necessary for the assessee to establish the debt had become irrecoverable. It is enough if the bad debts are written off as irrecoverable in the books of accounts of the assessee.” For the above reasons, we find that the action of the Revenue is appropriate in the case of the assessee which is not a Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he normal provisions of the Act. 2. The Ld. CIT (A) erred in confirming the order of the Ld. Assessing Officer who had disallowed the provision for doubtful debts amounting to ₹ 1,42,321/-. 3. The Ld. CIT (A) erred in disallowing 5% of the dividend income U/s.14A of the Act as expenses incurred for earning the exempt dividend income. 2.2 The Revenue has raised three grounds in its appeal, however, the crux of the issues is concised as follows:- 1) The Ld. CIT (A) had erred in deleting the disallowance U/s.14A of the Act by holding that invoking the provisions of Rule 8D is not in order. 3. The brief facts of the case are that the assessee is a public limited company, engaged in the business of manufacturing and trading in petrochemicals, filed its return of income for the assessment year 2007-08 on 25.10.2007, admitting book profit U/s.115JB of the Act of ₹ 22,53,69,497/-. Subsequently, revised return was filed on 16.05.2008 29.07.2008 admitting the same book profit. The case was taken up for scrutiny and assessment was made U/s.143(3) of the Act wherein the Ld. Assessing Officer made certain additions. 4.1 Ground No.1 Provisions for wage arrears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case we find that the liability in question cannot be construed to be a statutory liability. I can only be termed as a contractual l liability, as it emanates out of a contact. The memorandum of understanding is only a prelude to the contract. Actually the contract was entered into in the subsequent year on the basis of the memorandum of understanding. Therefore, in our opinion the liability did not crystallize in the year under consideration. It can be allowed only consequent upon the crystallization within the framework of law. Subject to this remark we uphold the impugned order on this count. The facts of the appellant are similar to the facts of the above case. As admitted by the appellant the dispute between the appellant and labour unions was referred to Industrial Tribunal. The appellant has filed a SLP before the Hon ble Supreme Court which is still pending for final disposal. When the order was passed by the A.O, the A.O has rightly held that it was not an ascertained liability. The liabilities had also not crystallized during the year. Hence, respectfully following the decision of the Hon ble Tribunal, the ground is dismissed. 4.3 Before us Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute was referred to the Industrial Tribunal by G.O dated 12.12.2006 which is in the F.Y 2006-07 and accordingly, the liability to the Appellant as per the Draft Wage Settlement has crystallized in F.Y 2006-07. 2. Quantification: The amount of as per the revised pay scale proposed for the year 2005 2006 in the Draft Wage Settlement was computed and fprs made in the books of account as it is an ascertained liability. Hence the provision is for an accrued liability and should be allowed both for the normal computation as well as in the computing Book Profits. Accounting Standard by CBDT 218 ITR 1 St. Bharath Earth Movers 245 ITR 428 SC Neyveli Lignite Corporation 93 TTJ 685 Chennai IBP Co Ltd 78 TTJ 158 Cal. Further the Ld. A.R. relied in the decisions of the case of IBP Co. Ltd. Vs. ACIT reported in [2003] 78 TTJ(Cal.) 158 and Neyveli Lignite Corporation Ltd. Vs. ACIT in (2005) 93 TTJ (Chennai) 685 and argued by stating that to the extent of ₹ 81 lakhs the liability is ascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . D.R stoutly opposed to the submissions of the Ld. A.R and argued by stating that the assessee had not written off its bad debts in its books of accounts and therefore the same cannot be allowed as deduction while computing the income of the assessee. 5.3. We have heard both the parties and carefully perused the materials available on record and the decision cited by the Ld. A.R. The decision rendered by the Hon ble Apex court in the case of M/s.Vijaya Bank (supra) is not applicable considering the facts of the assessee s case. In that case, the assessee is a bank who draws its account as per the guidelines provided by the Reserve Bank of India (RBI). There are legal implications for writing off the debts in the accounts of bank by crediting the debtor s accounts. The system of accounting is also different. Various classifications with respect to debtors are drawn in the books of accounts as per the norms specified by the RBI. In such circumstances, the Hon ble Apex Court had held that it would suffice to reduce the bad debts in the statement of accounts and actual write off bad debts in the books of accounts would not be necessary. With respect to other assessees, the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
