2005 (10) TMI 38

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....the court was delivered by P.D. Dinakaran J.- Against the order of the Appellate Tribunal in I.T.A. Nos. 1864 & 1865/Mds/2000, dated November 27, 2001, the assessee has preferred the appeals and raised the following common substantial question of law: "Whether the Tribunal is correct in upholding the order of the Commissioner of Income-tax (Appeals) in disallowing provisions for non-performi....

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.... account cannot be allowed as a deduction unless it is an ascertained liability as the provision made by the assessee is only contingent in nature. On appeal, the Commissioner of Income-tax (Appeals) held that the non-performing assets related to capital goods/assets whereas bad and doubtful debts were revenue in nature/trade related and the direction of the Reserve Bank of India could not overrid....

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....the provisions of sub-section (2), the amount of any debt, or part thereof, which is established to have become a bad debt in the previous year: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision....

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....tful debts made in the accounts of the assessee is not an allowable deduction. Further, the Commissioner (Appeals), on the facts of the case, found that merely because the Reserve Bank of India has directed the assessee to provide for non-performing assets, that direction cannot override the mandatory provisions of the Income-tax Act contained in section 36(1)(viia) which stipulate for deductio....