AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1231
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.... The AO sought clarification from the assessee to which assessee replied vide reply dt. 10.1.2000. It was explained that depending upon the feedback and discussions with the staff, the possibility of the customer to repay the outstanding is assessed and suitable provision is made. Once a provision is made in a year , it is reversed in toto in the next year by a corresponding credit to cost of sales account irrespective of whether the amount has been received or not. A fresh estimate is done for the next year and provision is created by debit to cost of sales account. Thus, this debit is the net effect of the additions and deletions of provisions in the current year. 3.1. It was further explained that requirements Sec. 36(2)(1) has been fully complied with by posting debit entry in profit & loss account and corresponding credit entries in provision for Doubtful Debts account. It was further explained that it was not essential to post corresponding entry in the individual ledger accounts of parties. The AO has discussed the names and amounts of 19 parties for which provision for doubtful debts was created. These details find place at para-7.2 of assessment order. The AO further disc....
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....he assessee pointed out that the issue has been decided by the Special Bench of Bangalore Tribunal in Wipro Information Technology Ltd. VS DCIT (2004) 88 TTJ (Bang) 778, wherein similar of incremental provision made for bad and doubtful debts and advances considered at length and after considering the judicial precedents on the issue, it was held as under: ...... (vii) Bad debt in respect of sales turnover which has been recognized as income is allowable subject to furnishing of details required in this behalf. It is also held that 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. To this extent, the judgment in Vithaldas H. Dhanjibhai Bardanwals Vs CIT (1981) 21 CTR (Guj) 190 (1981) 130 ITR 95 (Guj) still holds good." The matter was set aside to the file of AO with a direction to allow the claim in the light of the findings in para 3.11 at page 802 of the judgement. The Ld. AR further stated that the explanation to Sec. 36(1)(vii) of the I.T. Act does not require that individual account of the debtors are to be credited. Rel....
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....dy placed on record. It was further explained that the provision has been added back to the company's income at the time of finalization of assessment u/s. 143(3) and therefore have been taxed earlier. In the current year, as the provision has been written back, the company has offered it for tax. Therefore, the same income has been taxed twice. The AO discussed the entire facts at para-6.3 of his order and at para 6.4 observed that while deciding the appeals of the assessee for A.Yrs 1995-96 and 1996-97, the Ld. CIT(A) has categorically examined this issue considering the findings of the Ld. CIT(A) in earlier assessment years, the AO allowed the actual amount utilized during the year at Rs. 19,02,580/- and added back to the entire provision of Rs. 2,08,32,829/-. 12. The assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) has considered the grievance of the assessee vide ground No. 4 of his order at page-5 and at para 6.5 the Ld. CIT(A) has confirmed the findings of the AO relying upon the decision of his predecessor for A.Yrs 1995-96 and 1996-97. 13. Before us, the Ld. Counsel for the assessee submitted that the issue has been restored back to the files of the AO b....
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....19. The Ld. CIT(A) has considered the grievance of the assessee at para-9 on page-7 of his order and at para-9.4 observed that in the preceding assessment year similar disallowance have been confirmed by the Ld. CIT(A). Following the said decisions, the Ld. CIT(A) upheld the action of the AO to include the rent paid for guest house accommodation as part of the disallowance u/s. 37(4) of the Act. 20. Before us, the Ld. Counsel for the assessee could not bring any distinguishing facts on record. 21. After considering the facts and the submissions made before the lower authorities, in our humble opinion, the findings of the Ld. CIT(A) require no interference. Ground No. 4 is accordingly dismissed. 22. Ground No. 5 relates to the claim of deduction u/s. 80-O of the Act on the net income from service. 23. The assessee claims that the deduction u/s. 80-O of the Act be allowed on gross service charges received and not on net income from service charges received after deducting expenses incurred. 24. The AO has considered this issue at para-17 on page-50 of his order and at para-17.2 the AO computed the eligible deduction of the assessee at Rs. 17,75,105/-. 25. The assessee carried t....
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....ee entered into purchase of 'Bonus make Wind Electric Generator from M/s. REPL Synergy Ltd amounting to Rs. 1,30,00,000/-. The invoice and the delivery challan are placed in the paper book. Subsequent to this, the assessee entered into the lease agreement with REPL Engineering on quarterly lease rental of Rs. 6,53,250/-. The assessee has claimed depreciation at the rate of 100% of Rs. 1,30,00,000/-. During the course of the scrutiny assessment proceedings, the AO verified the claim of depreciation for which the AO wrote letters to REPL Synergy Power Systems Ltd which is at page-21 & 22 of the assessment order and at page-22, the AO remarked that the said letter could not be served upon the address provided by the assessee as it was found that the company is closed for a long time. A letter was also issued to Dr. Yeshwant R. Ullal, Chartered Engineer who issued certificate relating to the technical details and utility value of 100% depreciable asset. The said letter is at page-22 & 23 of the assessment order. Reply to the same is at page-24 of the assessment order. The AO further wrote a letter dt. 12.11.1999 to Gujarat Energy Development Agency at Porbunder which is at page-25 of t....
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....duction of depreciation amounting to Rs. 1,30,00,000/- being as per law, is therefore sustained". 34. The Ld. CIT(A) also confirmed the disallowance of lease management fees amounting to Rs. 1,30,000/- holding that the assessment order show that the above claim was rejected on the ground that the payment was claimed in respect of services by way of lease arrangement which on enquiry was found to be non- existent. 35. Aggrieved by this, the assessee is before us. The Ld. Counsel for the assessee reiterated the claim of depreciation relying upon the very same documents which have been considered by the AO during the course of the assessment proceedings. It is the say of the Ld. Counsel that the assessee has been showing lease rental income which clearly establishes the fact that the assessee has leased out assets to M/s. REPL Engineering. The Ld. Counsel also drew our attention to the criminal proceedings initiated by the assessee against the lessee for cheque bouncing case as the lease rental cheques were dishonored by the bank. The Ld. Counsel also drew our attention to the settlement between the assessee and the lessee for an amount of Rs. 20,00,000/-. It is the say of the Ld. C....
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....proceedings, the AO observed that the auditors have reported adjustment to the cost of procurement after adjusting net write-back of earlier years' provision. After considering the accounting entries and the submissions of the assessee, the AO observed that out of the provision amount of Rs. 6,85,38,717/-, the actual utilization that has taken place in the year under consideration is only Rs. 6,58,88,032/-. With respect to balance amount of Rs. 26,50,685/-, neither the bills have been received in the accounting year under consideration nor in the immediate succeeding financial year. The AO concluded that the purchases to the provision amount to the extent of Rs. 26,50,685/- as excess provision towards cost of sale. 40. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) has considered this grievance vide ground No. 14 before him. It was contended before the Ld. CIT(A) that the method of accounting followed by the assessee is a scientific one inasmuch as it is based on the matching principle of providing for in the very same year the expenditure incurred or services availed of during an accounting year. After considering the facts and the submis....
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....d for statistical purposes. ITA No. 614/Mum/2003 -A.Y. 1997-98 - Revenue's appeal 47. The Revenue has raised two substantive grounds of appeal. Ground No. 1 relates to the deletion of the disallowance of Rs. 56,70,115/- on account of fees paid for technical services. 48. At the very outset, the Ld. Counsel for the assessee submitted that this issue has been settled in favour of the assessee by the decision of the Tribunal in assessee's own case from A.Yrs 1984-85 to 1995-96. We find force in the submissions of the Ld. Counsel as the Ld. CIT(A) himself at page-4 on para 4.4 has observed that this fact has also been accepted in the preceding year both by the ITAT and by the Ld. CIT(A). In the light of the above and following the decisions of the Tribunal, findings of the Ld. CIT(A) are confirmed. Ground No. 1 is accordingly dismissed. 49. Ground No. 2 relates to the deletion of the disallowance of Rs. 35.70 lakhs being the notional interest. 50. This issue has been considered by the Ld. CIT(A) vide ground No. 3 before him and at para-5.4, the Ld. CIT(A) deleted the addition following the decision of his predecessor for A.Yrs. 1995-96 and 1996-97. 51. The Ld. Counsel for the ass....