TaxTMI 
TaxTMI 
2008 (5) TMI 633
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....l was right in law in allowing the assessee's claim regarding interest due on sticky loans? (ii)Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the discount of Rs. 10,050 pertaining to bonds issued up to 31-3-1976 and thus relating to assessment year 1976-77 was allowable in the assessment year 1977-78, the previous year in respect of which ended on 31-3-1977? (iii)Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the order of the Commissioner of Income-tax on the ground that it was without jurisdiction?" 2. The assessee, Financial Corporation, set up under the State Financial Corporations Act, fi....
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....ioner was held to be without jurisdiction hence the reference in question was made to this Court. 5. Learned counsel appearing for the parties, during the course of hearing, have candidly admitted that while passing the assessment order the Income tax Officer did not take into consideration Circular No. 41(V-6)D of 1952 dated 6-10-1952. The learned counsel for the parties are also in agreement that at the relevant point of time, it was this Circular, which had to be considered for carrying out the assessment. Learned counsel for the parties are also in agreement that the decision rendered by this Court in ITR No. 23 of 1995 [H.P. Financial Corpn. v. CIT [2008] 306 ITR 252 (HP)], to the effect that the Assessing Officer was duty bound to ca....
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....s covered by the letter issued by the Central Board of Direct Taxes which was specifically directed by the Appellate Assistant Commissioner to be considered by the Income-tax Officer along with the facts on record of the assessee. The Income-tax Officer complied with the directions but took the precaution while allowing the deduction of interest of Rs. 1,03,286 to note that when this interest is received by the Corporation, it will be brought to tax under section 41(1) of the Income-tax Act, 1961. The order of the Income-tax Officer was, therefore, made after exercising due care and caution and after judicial discretion that vested in him. This order on the date of it was correct on facts and in law applicable thereto. Such judicial discret....
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....come in spite of the auditors note that interest on sticky accounts for the year amounting to Rs. 93,383 has not been provided for and after allowing a sum of Rs. 10,050 being liability discount on issue of bonds incurred in earlier years. The Balance Sheet showed that the opening balance of Rs. 1,54,074 in the interest in Suspense Account had only been reduced by a sum of Rs. 39,306. The balance carried forward thus worked out to Rs. 1,14,768. The assessee did not claim an amount as a bad debt nor did it claim that in view of there being no scope of recovery, interest had not been charged in certain accounts. Actually, the assessee did not furnish any details of these loans nor did the ITO go into the claim of the assessee that the amount ....
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....hat the Income-tax Officer passed the order without any material on record. Admittedly, the Circular dated 6-10-1952 has also not been considered by the Assessing Officer. In our view, the Assessing Officer failed to apply its mind in its correct perspective and the order passed by him is erroneous. There is no material on record to support the decision arrived at by the Tribunal. In this background, the Tribunal, therefore, was wrong in arriving at its conclusion that the Commissioner of the Income-tax had exceeded its jurisdiction while setting aside the same. The Commissioner rightly exercised his power under section 263(1) of the Act. 11. Questions of law Nos. 1 and 3 are answering accordingly. 12. Question No. 2, as has been submitte....