TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 258
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....ex Court s 3. The CIT(A) ought to have noticed that the electricity duty payable to Govt. of Kerala were receipts by the assessee which were kept outside the P&L account to take a stand that these are not expenses to be disallowed u/s. 43B and ought to have upheld the additions made by the Assessing Officer. 4. The electricity charges are in the nature of payments receivable by the Govt. of Kerala and M/s. KSEB is a person who is managing the business of collection of these charges (as this activity is vested with this board and governed by the Electricity Duty Act, 1963 and read with Electricity Supply Act, 1948 and hence clearly it is an income from business u/s. 28(ii)(d). Hence the duty collected by the assessee constitutes trading receipts received during the ordinary course of its business and consequently when the payment is made to the Govt., the deduction under the Income Tax Act is allowed as business expenditure. Thus, if any sum is not paid within the due date fixed by the statute under Electricity Duty Act, it is to be disallowed u/s. 43B of the Income Tax Act. 5. The CIT(A) ought to have brought his attention to the decision of the High Court of Gujarat on id....
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....statute. We are of the opinion that, when section 43B(a) speaks of the sum payable by way of tax etc., the said provision is dealing with the amounts payable to the sovereign qua principal. We are therefore of the opinion that section 43B cannot be invoked in making assessment of the liability of the appellant under the Income Tax Act with regard to the amounts collected by the appellant pursuant to the obligation cast on the appellant under section 5 of the Electricity Duty Act, 1963". 4.1 Thus, by following the above judgment, the CIT(A) deleted the addition of electricity duty and surcharge payable to the Government of Kerala which in turn was brought to tax by invoking the provisions of section 43B of the Act. 5. Against this, the revenue is in appeal before us. 6. After hearing both the parties, we are of the opinion that this issue is squarely covered by the judgment of the Jurisdictional High Court in assessee's own case cited supra. Hence, we do not find any infirmity in the order of the CIT(A) in allowing the claim of the assessee and confirm the same. This ground of appeal of the Revenue is dismissed. Thus, the appeal of the Revenue in ITA No.29/Coch/2018 is dismissed....
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....ve that the bad debt shall not include any provision for bad and doubtful debt and deduction can be allowed only when such debt is taken into account in computing the income in previous years and actually written off. It is not the case of the assessee that Explanation to section 36(l)(vii) is not applicable to them and they have debited the bad debt written off to the provision created for bad and doubtful debts. The deduction u/s 36(l)(vii) is subject to clause(v) of section 36(2) which specifically states that any bad debt written off should be claimed as deduction only after debiting it to the provision created for bad and doubtful debts. 9.1 The CIT(A) relied on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. South Indian Bank Ltd (326 1TR 174) wherein it was observed that in order to qualify for deduction of the bad debt written off, the requirement of section 36(2)(v) is that such amount should be debited to the provision created under clause (viia) of section 36(1). It is also not the case of the assessee that the debt has been taken into account in computing the income of previous years as required u/s 36(2). From the above, the CIT(A) obs....
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....T vs. Vijaya Bank Ltd. reported in (2010) 323 ITR 166. It was submitted that from a reading of para -7 of the order of the Supreme Court in the case of Vijaya Bank Ltd., that if the provision for doubtful debts is debited to Profit & Loss a/c and reduced from the balance of sundry debtors in the balance sheet and the net amount is disclosed on the asset side of the balance sheet, this amounts to a write off as provided in Sec.36(2)(v) of the Income-tax Act, 1961 and therefore, qualifies fully for deduction of bad debts written off in the assessment for the year. It was also held by the Supreme Court that it was not necessary for the tax payer to close the debtors account in such cases by eliminating it from the books of accounts in order to qualify for allowance of the bad debts u/s.36(2)(v) of the Act. 10.1 The Ld. AR relied on the judgment of the Division Bench of Gujarat High Court in the case of Indian Petrochemical Ltd. in ITA No. 1773/2008 order dated 19.07.2016 wherein the above principle was applied by following the judgment of the Karnataka High Court in the case of CIT vs Yokogawa India Ltd. reported in (2012) 17 Taxmann.com (Kar) and also CIT vs Kriloskar System Ltd rep....
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.... debts of Rs. 5,29,80,02,551/- for the A.Y. 2008-09 as satisfying the provisions of Sec.36(2) of the Act and it was also submitted that the Department had accepted the order of the CIT(A) for the A.Y. 2008-09 and no second appeal was filed against the order of CIT(A). 10.3 The Ld. AR submitted that the break up details of major accounts, i.e., balances in excess of Rs. 50,000 under sundry debtors outstanding more than six months considered for making provision for doubtful debts was filed and all these debts have been taken credit for income in prior years as per accounting system / procedure in force. Thus, It was prayed that the Tribunal may allow deduction of the claim for provision of bad and doubtful debts written off amounting to Rs. 153,91,29,948/- due to genuine practical difficulties involved in this particular case as stated above. 11. The Ld. DR relied on the order of the lower authorities. 12. We have heard the rival submissions and perused the record. The provisions of section 36(1)(vii) reads as under: "36. Other deductions - (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the in....