TaxTMI 
TaxTMI 
2016 (9) TMI 150
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....counting and advancing loan etc., filed its return of income for the assessment year 2000-01, declaring total net loss of Rs. 9,64,12,318/-. The AO completed the assessment u/s 143(3) of the Income Tax Act, 1961 (for short 'The Act), after making various disallowances and additions. The assessee challenged the assessment order before the CIT(A), who after hearing the assessee upheld the findings of the AO. Aggrieve by the impugned order, the assessee is in appeal before the Tribunal. 2. The assessee has challenged the impugned order on the following effective grounds: "1. The learned Commissioner (Appeals) erred in confirming disallowance of interest u/s 14A amounting to Rs. 9,31,500/- attributable to investments when the appellant had not borrowed any funds and did not make any investments out of the same during the year. 2. The learned Commissioner (Appeals) erred in directing the Assessing Officer to apply Rule 8D for the purpose of disallowance u/s 14A when the Rule 8D is applicable only from the assessment year 2008-09 and there is no proximate cause for disallowance as the appellant has not incurred any expenditure in relation to dividend income earned. 3. The learned ....
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..... 44,00,000/- (Net) after considering profit /loss on sale of shares /government securities. 11. The learned Commissioner (Appeals) confirmed the disallowance of Rs. 66,24,000/- treating the same as 'capital gains' considering the brokers note as bogus and failed to appreciate the justification given by the appellant for the same." 3. Ground No 1 & 2 pertain to disallowance of interest expenditure under section 14 A read with Rule 8D of the Income Tax Rules. The Ld. Counsel for the assessee submitted that during the A.Y. under consideration, the assessee earned dividend of Rs. 9,94,000/-. AO made interest disallowance of Rs. 9,31,500/-. In appeal the Ld. CIT(A) directed the AO to apply Rule 8D, contrary to the decision of Hon'ble jurisdictional High Court passed in Godrej and Boyce Mfg. Co Ltd. vs. DICT. The Ld. Counsel further submitted that the investments in question were made in the earlier year and since no disallowance for interest was made in the earlier years, it will be presumed that the assessee has made investments out of its own funds. 4. On the other hand the Ld. Departmental representative relying upon the findings of the Assessing Officer and CIT(A)....
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.... has no jurisdiction to confirm the disallowance merely on the ground that the assessee has filed suit for recovery against some of the debtors which are pending adjudication in the court or the assessee has written off some of the debts within a period of one year. On the other hand the Ld. DR submitted that there must be a gap of at least 1 year and debts cannot become bad within the same year. 8. We have heard the rival submissions. The Ld CIT(A) has confirmed the disallowance holding that the assessee has failed to establish that the debts in question, in fact, have become irrecoverable. In some of the cases the assessee did not even wait till the next year to write off the debts. The Ld. CIT(A) relying on the decision of the Hon'ble Bombay High Court in the case of M/s Oman International Bank, has held that the assessee has failed to prove that its decision to write off the debts was bona fide. 9. The Hon'ble Supreme Court has held in TRF vs. CIT (supra) that after 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Th....
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....l. 13. As regards the ground No. 6-7 the Ld. Counsel submitted that the debtor from whom interest was not charged during the year fall into 2 categories , i.e., (a) Mafatlal Industries Ltd., though interest was charged during the year as the said company has become a sick company and referred to BIFR. It has also become a non-performing asset as no lease rentals were received by it for A.Y. 1999-2000. (b) The other category of debtors listed at page 7 of the assessment order where loans were advanced to the said companies on an interest free basis. 14. With respect to category (a) no interest was accrued from them. The Ld. Counsel placed reliance on the decision of Hon'ble jurisdictional High Court in CIT vs. of KEC Holdings Ltd.( ITA No 221 of 2012 dated 11.6.14) wherein the assessee was held justified in not accruing interest in respect of debtors which had become NPA. With respect to category (b), the Ld. Counsel submitted that as per the books of account placed on record, no interest was charged from them at any point of time. Relying upon the decisions in India Finance and Construction Co. Pvt. Ltd. vs. DCIT 200 ITR 710(Bom), CIT vs. A. Raman & Co. 67 ITR 11and Shivnandan ....
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.... The coordinate Bench decided this issue in favour of the assessee holding as under:- "23. We have heard the arguments at length and have also considered the case laws cited before us. The factum of repossession of equipments have not been disputed by the revenue authorities. This clearly means that lessor is the owner and it is he who can make the legal claim for ownership and depreciation. 24. We, therefore are of the considered view that despite the fact that the complete facts were before the CIT(A), the CIT(A) either did not consider them or that he did not go into the facts, which were brought out by the AO in the remand report. We further hold that there was no question of sham transaction, because, the assessee was dealing with corporates as well as State Government agencies. In these circumstances, the claim of the assessee cannot be held to be same and have to be taken to be genuine, and therefore allowable. Respectfully following the view taken by the coordinate bench of the Tribunal, we allow this ground of appeal of the assessee. 18. As regards the ground no. 10-11 the Ld. Counsel submitted that Assessing Officer as well as CIT(A) holding the long term capital lo....
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....5,01,67,957/- being the 'bad debts' written off on the ground that capital portion of the finance lease which does not form part of the assessee's trading receipts could not be written of as 'bad debts'. 6. The learned Commissioner (Appeals) erred in confirming that bad debts written off is to be allowed in the year of write off and failed to appreciate the elaborate justification given for 'bad debts' written off. 7. The learned Commissioner (Appeals) erred in not allowing the deduction u/s 36(1)(vii) r.w.s 36(2) and/or u/s 28/29 and u/s 37(1) for the total amount of Rs. 13,01,04,000/-. 8. The learned Commissioner (Appeals) erred in confirming the addition made by the Assessing Officer towards 'notional interest' amounting to Rs. 41,62,500/- when the principal amount was provided as non performing assets (NPA) for the assessment year 2002-03 and disallowed in the computation itself. 9. The learned Commissioner (Appeals) failed to understand the justification given by the appellant as to no 'notional interest' could be added to the total income of the appellant during the year. 10. The learned Commissioner (Appeals) erred in acc....
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.... after taking into consideration the additional evidence. 2.5 Ground No 10-11 regarding disallowance of bad debts in respect of notional income assessed in A.Y. 2000-01. Ld. Counsel for the assessee submitted that these grounds are consequential to ground nos. 6 & 7 of the appeal pertaining to A.Y. 2000-01. Since we have already remitted the grounds number six and 7 to the file of the assessing officer for reconsideration in the light of additional evidence filed consequentially these grounds would also be remitted to the file of the AO. 2.6 In the result the assesses appeal for the A.Y. 2001-02 is partly allowed. ITA 7176/Mum/2010 for A.Y. 2003-04 1. The assessee has preferred this appeal raising the following grounds are as under:- 1. The learned Commissioner (Appeals) erred in confirming the disallowance of 'bad debts' amounting to Rs. 5,48,95,406/- towards ICD / loans and advances when the appellant had made elaborate submissions / justifications to the Assessing Officer / Commissioner (Appeals) for the 'bad debts' written off. 2. The learned Commissioner (Appeals) erred in not allowing the deduction u/s 36(1)(vii) r.w.s 36(2) and/or u/s 28 / 29 and u/s ....
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....42,18,008/- based upon the disallowance made by the Commissioner (Appeals) vide its consolidated order dt. 18th June, 2009 for the earlier assessment years i.e. assessment years 1993-94 to 1998-99, treating lease transactions as 'finance transactions'. 2. The learned Commissioner (Appeals) ought to have allowed the depreciation on the WDV of the leased assets subject to the rectification and/ or determination of WDV as on 1st April, 2005. 3. The learned Commissioner (Appeals) erred in not directing the Assessing Officer for brought forward losses and allowances as per previous assessment records to be set off against future profits. 4. The appellant reserves the right to amend, alter or add to the grounds of the appeal. 2.1 Ground nos 1-2 regarding disallowance of depreciation of WDV of leased assets are identical to ground nos 8-9 of the appeal for the A.Y. 2000-01. Since we have held this issue in favour of the assessee for A.Y. 2000-01, we allow the assessee's appeal on this issue for this year also. 2.2 As regards the ground no. 3, the Ld. Counsel submitted that the assessee is only seeking consequential reliefs that Assessing Officer after determining the brought forwa....