9911796707
TMI Blog2008 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... does not have a case that it is not written off in the accounts and the claim was only a provision for bad debt, we are of the view that the claim is prima facie inadmissible under Section 36(1)(vii) as the Section does not authorize granting of deduction of any debt unless it is written off in the accounts for the previous year - claim is rightly treated as prima facie inadmissible and no enquiry or hearing is required to disallow the claim - 245 of 2002 - - - Dated:- 28-5-2008 - C. N. RAMACHANDRAN NAIR and V. K. MOHANAN JJ. P. Balakrishnan for the appellant. P. K. R. Menon, and George K. George for the respondent. JUDGMENT The judgment of the court was delivered by RAMACHANDRAN NAIR, J. - This appeal is filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as a prima facie inadmissible deduction authorised under proviso (iii) to Section 143 (1)(a) of the Act. For easy reference, the Section as it stood at the relevant time is extracted hereunder: "143(1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142,- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section(2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee contended that appellant being a Scheduled Bank is bound to prepare it's accounts based on RBI guidelines. According to him, provision for bad debt is created from out of earning from non-performing asset based on RBI guidelines. Since RBI guideline is binding on the assessee, unlike the case of other business concerns, assessee's claim for bad debt should be allowed as the claim was made in accordance with the RBI guidelines is the case of the assessee. However, Standing Counsel for the department on the other hand contended that Section 36(1)(vii) does not authorise deduction of any provision for bad debt and the Section authorises to allow only deduction of bad debts actually written off in the accounts. He has spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in Section 28-- .... (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year: ... Explanation:- For the purposes of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee." 5. As already stated, the answer to the issue raised will depend on whether provision for bad debt claimed under Section 36(1)(vii) is a prima facie inadmissible deduction or not. Since assessee is a Scheduled Bank, the further question that requires to be considered is whether i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made under Section 143(3) later should not be looked into for the purpose of considering the validity of proceedings under Section 143(1) (a) of the Act, we called for the same only to find out the nature of claim made by the assessee in the return filed which led to the proceedings under Section 143(1)(a) of the Act. In other words, we have only examined whether the claim of deduction of provision for bad debt was made under Section 36(1)(vii) or under Section 36(1)(vii)(a). In fact even in the regular assessment, the very same amount of provision for bad debt was disallowed just because it is a provision and assessee does not have a case that it is really written off. In other words, the provision for bad debt claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
