TaxTMI 
TaxTMI 
2022 (11) TMI 244
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....is that at the time of receipt of the order, there was a lull and the administration of the assessee company came to a standstill and lot of confusions were prevailing due to the division of the State of A/P and dispute in the division of employees of the company and agitations all around. After considering the contents of the condonation application filed along with the affidavit and after hearing both the sides, the delay in filing of this appeal by the assessee is condoned and the appeal is admitted for adjudication. 3. Facts of the case, in brief, are that the assessee is a State PSU engaged in power generation, filed its return of income on 28.09.2010 declaring total income at Nil under the normal provisions and Rs.484,74,65,032/- u/s 115JB of the I.T. Act. The Assessing Officer passed the order u/s 143(3) on 28.3.2013 determining the taxable income at Nil and book profit u/s 115JB at Rs. 484,74,65,032/-. 3.1 Subsequently, the learned CIT examined the records and noted that the Assessing Officer completed the assessment without properly examining the following issues: (i) The assessee has debited an amount of Rs.24.55 Crores in P& L A/c towards misc. losses and provisions.....
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....th are business income and expenses respectively". 3.3 It was accordingly requested that the revisional proceedings u/s 263 of the I.T. Act should be dropped. 3.4 However, the learned CIT was not satisfied with the arguments advanced by the assessee. He noted that although the Assessing Officer has called for the details, however, he has not verified the correctness of the following claims: 1. Provisions of Rs. 87,30,955/- are not allowable expenditure under Income tax Act. 2. Book profit for the purpose of computation u/s 115JB is required to be considered at Rs.5108.45 lakhs as per P& LA/c (being above the line) as against Rs.28866.02 lakhs (down the line). Apart from the above, Provisions debited in the P & L a/c of Rs. 87,30,955/- are also to be considered required to be added to the net profit for determination of book profit. 3. As the assessee is having the scarp account separately, the obsolescence of store account needs to be transferred to scarp account and scarp receipts thereof, if any needs to be offered to tax. 3.5 He observed from the record that though the details of above expenditures were called for during the assessment proceedings, however, no findings ....
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....to the queries raised by the Assessing Officer vide notice dated 21/8/2012 wherein he had raised various queries. The learned Counsel for the assessee referring to the said notice drew the attention of the Bench to queries 8 to 13 which are as under: "8. Please furnish the details for the Miscellaneous losses and provisions. 9. Please furnish the details for prior period items of Rs.892.77 lakhs. 10. Please furnish the details for Extraordinary items of Rs.3,426.57 lakhs. 11. Please furnish the details of related to prior periods. 12. Please furnish the details for provision for expenses Rs.4,497.38 lakhs. 13. Please furnish the details for provision for other Rs.14,348.30 lakhs." 6. Referring to page 10 of the paper book, he drew the attention of the Bench to the miscellaneous losses and provisions written off wherein the provisions for bad and doubtful debts was shown at Rs.87,30,955/-. Referring to page 11 of the Paper Book, he drew the attention of the Bench to the details showing the particulars of income or expenditure of prior period credited or debited to P&L A/c. Referring to page 12 of the paper book, he drew the attention of the Bench to the details of extra....
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.... submitted that when the assessee is having scarp a/c separately, the obsolescence of stores account should have been transferred to the scarp a/c and scarp receipts thereof, if any, should have been offered to tax. Since the Assessing Officer has failed to conduct necessary inquiries, therefore, the order has become erroneous and prejudicial to the interest of the Revenue and therefore, the learned CIT was fully justified in invoking the jurisdiction u/s 263 of the I.T. Act and thereby setting aside the order for de novo assessment. 9. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case completed the assessment u/s 143(3) determining the taxable income at Nil under the normal provisions (after setting off of brought forward losses) and u/s 115JB at Rs.484,74,65,032/-. We find the learned CIT after examining the records noted that the Assessing Officer has failed to verify the correctness of the claims made by the assessee the details of which are given at Para No.3....
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.... interest of the revenue. Therefore, the learned CIT, in our opinion, has rightly invoked the jurisdiction u/s 263 of the I.T. Act. The various decisions relied upon by the learned Counsel for the assessee, in the instant case, are distinguishable and not applicable to the facts of the present case since the Assessing Officer in the instant case has not at all examined the issue for which he has raised the queries. Accordingly, the order passed by the learned CIT is upheld and the grounds raised by the assessee are dismissed. ITA No.75/Hyd/2018 11. The grounds raised by the assessee are as under: "1. The Appellate Order of the Learned Commissioner of Income Tax (Appeals) bad and is erroneous both on facts and in law. 2. On the facts and in the circumstances of the case and in Commissioner law, the Learned of Income Tax (Appeals) has erred in dismissing the claim of the Appellant in relation to the addition of 87,30,955/, on account of disallowance towards Provision for Bad and doubtful debts, both under normal well provisions as well as in the computation of book profits U/s 115 JB of the Act. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact ....
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....es. Since the same are not received, it was debited to P&L A/C towards provision for bad and doubtful debts. 16. However, the Assessing officer was not satisfied with the arguments advanced by the assessee. He noted that the expenses have not been incurred during the year and only provision has been made for future liability and therefore, cannot be allowed. Accordingly, the Assessing Officer disallowed Rs.87,30,955/- towards Provision of Bad and Doubtful Debts and added to the total income. 17. Before the learned CIT (A), the assessee submitted that particulars of Rs.87,30,955/- written off as bad debts are as follows: PARTICULARS AMOUNT Water charges receivable from Kothagudem Municipality since 1999 Rs.40,98,138/- Amount receivable towards reimbursement of salaries of the staff counted from the Govt. of A.P for the period from 1.2.1999 to 31.3.2004. Rs.37,27,682/- Bill of cost receivable from various companies to the end of 31.3.2010 Rs.9,05,135/- Total Rs.87,30,955/- 18. It was submitted that as the above items are long pending receivables, the amounts have been written off as irrecoverable in the accounts of the assessee for that previous year by reducing the amou....
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....be a bad debt. He submitted that although the assessee has given the nomenclature as provision for bad and doubtful debt, however, for all practical purposes, the same is bad debts written off. So far as the amount receivable from the Govt. Departments are concerned, he submitted that as and when the assessee will receive the amount, the same shall be offered to tax. He accordingly submitted that the order of the learned CIT (A) being not in accordance with law should be set aside and the ground raised by the assessee on this issue should be allowed. 22. The learned DR, on the other hand, strongly supported the order of the learned CIT (A) on this issue. 23. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case has debited an amount of Rs.24.55 crores in the P&L A/c towards miscellaneous loss and provisions which includes an amount of Rs.87,30,955/- towards provision for bad and doubtful debt. We find the Assessing Officer made the addition on the ground th....
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....educing it from profit from sale of scrap in view of the disclosure requirements. The assessee submitted that during the relevant previous year, the loss on sale of scrap is Rs.3,43,45,409/- and this figure was separately disclosed in Schedule 18 'Administration & General Expenses' under the heading 'Misc. Losses and provisions' in the amount of Rs.2455.00 lakhs. The assessee submitted that the profit from sale of scrap is Rs.56.55 lakhs and loss on sale of scrap is Rs.343.45 lakhs, hence the loss on scrap is allowable deduction. 26. However, the learned CIT (A) was not satisfied with the arguments advanced by the assessee sustained the addition made by the Assessing Officer by observing as under: "5.3 The submissions of the appellant have been carefully considered. The profit from the sale of scrap is Rs. 56.55 lakhs and loss on sale of scrap is Rs.343.,45 lakhs. The appellant submitted that the profit from the sale of stores and spares amounting to Rs.56.55 lakhs which was declared in the Annual Accounts under the head "Other income". The profit on sale of fixed assets was shown at the net figure and it was never declared that profit from sale of stores is the net amount. It....
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....ns of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the learned CIT (A) on this issue. In our opinion, since the scrap is valued at saleable value, there cannot be any loss on account of sale of scrap. Further, the sale of scrap is not the basic business of the assessee. In this view of the matter and in view of the detailed reasoning given by the learned CIT (A), we do not find any infirmity in the order of the learned CIT (A) on this issue. So far as the argument of the learned Counsel for the assessee that in subsequent years, the learned CIT (A) has allowed such type of claim by deleting the addition made by the Assessing Officer on this issue and the Revenue has not filed any appeal against the relief granted by the learned CIT (A) is concerned, we do not find any merit in the same argument. Merely, because some wrong has been followed, the same cannot be perpetuated. Further, it is the settled proposition of law that the principle of res judicata does not apply to Income Tax Proceedings and every A.Y is separate and distinct. In this view of the matter, the order of the learned CIT (A) is upheld and the ground rais....