TaxTMI 
TaxTMI 
2022 (7) TMI 374
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....,421/- which was revised on 29/3/2012 declaring the income at Rs. 119,48,18,728/-. Assessment under section 143(3) of the Income Tax Act, 1961 (for short "the Act") was complete by order dated 29/3/2013 at Rs.176,96,42,820/-by making certain additions and such additions, insofar as this appeal is concerned, include the addition of Rs.47,40,16,508/-on account of disallowance of bad debts and written off, Rs. 1,46,15,417/-on account of disallowance under section 14A of the Act read with Rule 8D of the Income Tax Rules 1962 ("the Rules") and Rs. 1,95,10,255/-on account of disallowance of business promotion expenses. 3. When the assessee preferred appeal challenging the additions made in the assessment order, Ld. CIT(A) by way of impugned order deleted the additions made by the learned Assessing Officer. Revenue is therefore before us in this appeal, challenging the deletion of these three additions, which we discuss hereunder. 4. Insofar as the disallowance of bad debts written off is concerned, it could be seen from the record that during the year the assessee had written off certain loans given in the ordinary course of its business to various parties to the tune of Rs.47,40,1....
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....al position on this aspect and reached a conclusion that the writing off of the loans of Rs. 47,40,16,508/-is an actual write-off and not a provision and the same is bona fide and based on its commercial expediency of the assessee company and therefore following the decision of the Hon'ble Apex Court in the case of TRF Ltd vs. CIT 323 ITR 397, Bombay High Court in the case of DIT vs. Oman International Bank SAOG 313 ITR 128 (Bom) and Board circular No. 551 dated 23/1/1990, deleted the disallowance of Rs. 47,40,16,508/-. 7. It is the argument of the Ld. AR that the Prudential Norms are directions issued by the RBI to NBFCs, inter alia, in relation to classification of loans as good, non-performing asset (NPA), for which provision is to be created in the books of accounts, and loss asset, which is required to be written-off in the books of accounts; that the Prudential Norms define "non-performing asset" as any type of loan asset in respect of which recovery of the principal amount has remained overdue for a period of six months or more, or in respect of which the interest recovery has remained overdue for six months or more; and that the Prudential Norms also define the "loss ass....
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....assessee created provision for the doubtful debts, and per se is not entitled to claim the deduction. 10. We have gone through the record in the light of the submissions made on either side. During the year under consideration, the assessee had debited a sum of Rs.47,40,16,508/-in P&L Account in the nomenclature of "loans written off". Assessee submitted that they are entitled to claim a deduction of the written off of loans amounting to Rs. 47,40,16,508/-under the provisions of section 36(1)(vii) of the Act read with section 36 (2) (i) of the Act. Assessee also relied upon the decision of the Hon'ble Apex Court in the case of Vijaya Bank (supra). Insofar as the objection taken by the learned Assessing Officer, that the decision in the case of Vijaya Bank (supra) inasmuch as assessee is not a bank but NBFC does not hold much water because in paragraph No. 8 of such judgement, the Hon'ble Apex Court said that it is not in dispute that section 36(1)(vii) of the Act applies both to banking and nonbanking business. A reading of this order clearly establishes that the provisions under section 36(1)(vii) of the Act are not only confined to the banking business but also to nonbanking b....
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....the concept of write off as follows: "To understand the above dichotomy, one must understand 'how to write off'. If an assessee debits an amount of doubtful debt to the P&L Account and credits the asset account like sundry debtor's Account, it would constitute a write off of an actual debt. However, if an assessee debits 'provision for doubtful debt' to the P&L Account and makes a corresponding credit to the 'current liabilities and provisions' on the Liabilities side of the balance sheet, then it would constitute a provision for doubtful debt. In the latter case, assessee would not be entitled to deduction after April 1, 1989." Hon'ble Apex Court observed that if the assessee had not only debited the P&L account but also correspondingly reduced the amount from Debtors A/c on the assets side of the Balance Sheet and, consequently, at the end of the year, the figure shown on the assets side was net of the alleged provision, amounted to actual write off for the purpose of availing benefit of deduction under the section. 13. Having considered the material placed on record, Ld. CIT(A) reached a conclusion on facts that the assessee had already disallowed in the computati....
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....7/-. Learned CIT(A) deleted the same and restricted the disallowance to Rs.33,12,333/- on the ground that only such investment which yielded exempt income aloneshould be considered and such investments were made in the year 2007-08. 16. Submission of the ld. Counsel before us is that in the year under consideration, only the investment in Karnataka Bank Ltd. alone yielded dividend and such investment in Karnataka Bank Ltd. was invested during the assessment year 2007-08; and that during such year, the perusal of balance sheet as on 31.03.2007 shows the cash reserves of Rs.81.70 crores and it was far exceeding the initial investment of Rs.35.35 crores in Karnataka Bank Ltd. He submits that this aspect was considered by the coordinate Bench of this Tribunal in assessee's own case for the assessment year 2007-08 in ITA No. 1947/Del/2018 and batch and by order dated 24.08.2020, the Tribunal upheld the contention of the assessee. 17. Learned DR places reliance on the CBDT Circular No. 05/2014 dated 11.02.2014 and also the decision of Supreme Court in the case of Max Opp. Investment Ltd. Vs. CIT (2018) 91 taxmann.com 154 and submits that the ld. Assessing Officer is right in making....
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....ture; and that they relate to F.Y. 2010-11 corresponding to assessment year 2011-12. 20. Learned CIT(A), however, on a careful consideration of the entire material before him found that the expenses incurred by the REL was for advertisement, sponsorship expenses and other expenses and that these expenses have been incurred in F.Y. 2009-10 and since the specific portion of the expenses were allocable to the assessee in this case, the assessee reimbursed the same to REL. He, therefore, found that the expenses are Revenue in nature but not capital. 21. Learned DR places heavy reliance on the assessment order. Ld. AR submits that the expenditure incurred by REL on behalf of the group/subsidiaries is allocated to the subsidiaries on the basis defined in policy manual for support service fee and recovery of expense from its subsidiary/joint ventures; that according to such manual, the advertisement and business promotion expenses would be allocated to the subsidiaries in the ratio of their turnover as per the audited financial statements of the last financial year without charging any mark-up; and that REL allocated expenses of Rs.1,95,10,255/- to the assessee as its share of busin....