TaxTMI 
TaxTMI 
2025 (6) TMI 1133
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.... at Rs. 28,72,90,530/- by making the addition of Rs. 1,140/- u/s 36(1)(va) of the Act being the employees' contribution to LWF. The Assessing Officer also charged tax @ 30% as against 25% computed by the assessee resulting demand of Rs. 1,90,90,780/-. 3. Before the Ld. Addl / JCIT(A) it was argued that the tax rate of 30% is applicable for those companies whose turnover is above Rs. 250 crores in the previous year 2016-17. It was further argued that while computing the total tax payable for assessment year 2019-20 the assessee had taken the benefit of lower rate of tax of 25% as provided in the Finance Bill, 2018 since the turnover for the previous year 2016-17 was lower than Rs. 250 crores. However, in the intimation the tax rate of 30% has been applied on the premise that the turnover for the previous year 2016-17 is more than the required threshold of Rs. 250 crores. It was argued that in the audited financial statement of the company for the year ended 31st March, 2017 the total income was reported at Rs. 251.04 crore which comprised of revenue from the operations of Rs. 248.61 crore and other income of Rs. 2.43 crore. It was argued that in clause (40) of the tax audit report ....
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....ipts should include all amounts directly related to core business operations and not just operational revenue. 6. The Ld. CIT(A) erred in / failed to recognize that the 'Other Income' items, specifically Recovery of Bad Debts Written Off and Service Tax Input, are directly related to the business operations of the assessee and should be included in the total turnover/ gross receipts for determining the applicable tax rate. 7. The decision of the Ld. CIT(A) is inconsistent with the principles laid down in the Finance Act, 2018, and does not align with the guidelines established by the Hon'ble ITAT in similar case (Supra). 8. The Ld. CIT(A)'s acceptance of a reduced tax rate results in incorrect tax calculation. Therefore, the should be allowed to ensure compliance with the correct tax rate of 30%. 9. The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised at time of proceedings before the Hon'ble Tribunal which may please be granted. 6. The assessee has raised the following grounds in its Cross Objection: 1. Ground 1: Impugned adjustment of the applicable rate of tax is outside the scope of section 143(1) of th....
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....idered as part of the turnover / gross receipts and was asked to exclude. Though the assessee has relied upon the decision of the Chennai Bench of the Tribunal in the case of Shriram Properties Ltd. vs. ADIT (supra), however, application of the findings of the said decision do not come to the rescue of the assessee but in fact helps the case of the Revenue. He accordingly submitted that the grounds raised by the assessee should be allowed and the CO filed by the assessee be dismissed. 9. The Ld. Counsel for the assessee at the outset submitted that the adjustment made by the CPC by computing the tax rate at 30% as against 25% is outside the scope of 143(1) of the Act since it is not falling under the prima facie adjustment covered within section 143(1) of the Act. In his alternate ground the assessee has stated that no proper opportunity was granted to the assessee and therefore, the order is bad in law. 10. Referring to the decision of the Hon'ble Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT (2018) 404 ITR 564 (Bom), he submitted that the Hon'ble High Court in the said decision has held that the issue as to whether claim of a provision for bad debts is deduct....
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....stment Co. Ltd. vs. DCIT (1999) 236 ITR 671 (Cal) (i) M/s. New Bridge Centre Pvt. Ltd. vs. DCIT vide ITA No.1620/Bang/2017 order dated 26.06.2020 (j) DCIT vs. Microland Limited vide ITA No.1154/Bang/2024, order dated 15.01.2025 12. Referring to the decision of the Hon'ble Kerala High Court in the case of Ponkunnam Traders vs. Addl.ITO (1972) 83 ITR 508 (Ker), he submitted that the Hon'ble High Court in the said decision has considered whether failure to confirm to principles of natural justice of audi alteram partem would make a judicial or quasi-judicial order void. The Ld. Counsel for the assessee also drew the attention of the Bench to the Notification No.3/2012 [(F.No.142/27/2011-SO(TPL)] SO 17(E), dated 04.01.2012, according to which the Board has issued the guidelines while processing the returns of income by the CPC. He accordingly submitted that both legally and factually the adjustment made by the CPC is not in accordance with law, therefore, the appeal filed by the Revenue should be dismissed and the CO filed by the assessee be allowed. 13. We have heard the rival arguments made by both the sides, perused the intimation of the CPC, order of the Ld. Addl / JCIT(A) an....
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....e tax refund and recovery of bad debts recovered in earlier years which the assessee has shown as other income will form part of gross turnover is a highly debatable issue. Further, before making the adjustment, the CPC had not provided any opportunity of being heard to the assessee which in our opinion is in violation of first proviso to section 143(1) of the Act. 16. We find a somewhat identical issue had come up before the Hon'ble Bombay High Court in the case of Bajaj Auto Finance Ltd. vs. CIT (supra). The Hon'ble High Court while quashing the disallowance made by the CPC u/s 143(1)(a) without affording an opportunity of being heard to the assessee, has observed as under: 8. Before dealing with the rival contentions, it would be necessary to reproduce Section 143(1)(a) of the Act, at the relevant time which read as under :- "143(1)(a) Where a return has been made under Section 139, or in response to a notice under sub-section (1) of section 142, - (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the p....
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....l interpreting a provision is to be ignored by the Assessing Officer, if accepted will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchal system of jurisprudence in our country. 10. The issue that arises for our consideration is whether an adjustment by intimation under Section 143(1)(a) of the Act can be made where the issue which arises for consideration is a debatable issue. In the present facts, the computation of total income submitted along with return indicates that claim for bad debts has been made by relying upon the decision of Gujarat High Court in the case of Vithaldas H.Dhanjibhai Bardanwala (supra). 11. However, the Assessing Officer completely ignored the note made by the applicant in its computation of return, indicating that the basis of claim for bad debts is the decision in Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (surpa). In the above case, even a provision debited to the profit and loss account was allowed as bad debts, where corresponding credit entires are posted in the bad debts reserve account. It held that is was not necessary to post c....
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....of provision of bad debts by intimation under Section 143(1)(a) of the Act, it was disallowed on the ground that it is a debatable issue. This itself would indicate that whether the claim of a provision for bad debts is deductible under Section 36(1)(vii) of the Act or not is debatable. Further, the above claim for deductions as made by the applicant was by following the decision of the Gujarat High Court in Vithaldas H.Dhanjibhai Bardanwala (Supra). Thus, a debatable issue. Therefore, the same could not have been disallowed by way of an intimation under section 143(1)(a) of the Act. 14. We are conscious of the fact that Section 36(1)(vii) of the Act was amended by the Finance act, 2001 by insertion of Explanation to Section 36(1)(vii) of the Act w.e.f. 1st April, 1989. We are also conscious of the fact that while disposing of a Reference under Section 256(1) of the Act, the question proposed for our opinion shall be answered taking into account the subsequent amendment to the law with retrospective effect, as they are clarificatory in nature. 15. In the aforesaid background, we find that the insertion done by Explanation to Section 36(1)(vii) of the Act (w.e.f. 1989) would ari....