TMI Blog2009 (11) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken by the revenue in its appeals are stated as under:- For A.Y. 2003-04:- 1. In the facts and circumstances of the case, the ld CIT(A) erred in deleting the addition of ₹ 15604644/- and ₹ 20014897/- for a. Ys. 2003-04 and 2004-05 respectively, made by AO on account of disallowance of loss on sale of repossessed assets u/s 36(1)(vii) read with S. 36(2) ignoring the fact that the assessee has not shown the loss on sale of repossessed asset as income in earlier years which is one of the major conditions in the case of allowability of bad debts written off. 2. The ld CIT(A) erred on facts in ignoring the crucial point adjudicating by the Hon'ble Allahabad High Court in the case of M/s Motor General Sale Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the company and are never capitalized in the books of the company. No depreciation on such assets is claimed by the assessee. Such repossessed assets are sold subsequently as the core business and the loss on sale of such repossessed assets is a deductible business loss. 3.1 Further according the assessee the assessee company is engaged in the business of financing and giving loan to parties for purchase of vehicle under hire purchase. Thus the assessee is in the business of money lending and giving advances to parties. Whenever the customers to whom finance is made for purchase of vehicle under hire purchase, is not in a position to repay the debts, the assessee company catch hold of the assets on which company is having lien and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng giving finance for purchase of vehicle under hire purchase scheme. The owner of the vehicle is the purchaser and appellant is only lender of money. I have gone through the modes-operandi of transaction and the model of entries passed in connection with the transaction starting with the finance and its logical end. From perusal of the entries it is abundantly clear that it is clear cut case of write off of Bad Debts. Although the appellant company has used the nomenclature as Loss on Sale of Reprocessed Assets as provided under NBFC norms but the fact of the matter is that it is a write off of bad debts . When the customer makes default in payment of loan the vehicle is reprocessed and sold. The amount realized on sale is credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From perusal of the facts of the case and /the legal position for it transpire that the appellant case is fully covered by section 36(1)(vii) read with section 36(2) of the Act. It is not a case of trading loss u/s 28 of the Act as alleged by Assessing Officer following the case of Allahabad High Court supra. Coming on the legal side, I have perused the case of M/s Motor General Sales Pvt. Ltd. 226 ITR 137 relied upon by Assessing Officer and I am of the view that facts of the case are different in the sense that there the issue was of trading loss claimed u/s 28 of the Act whereas in appellant case it is a case of write off of debt (although the nomenclature given is Loss on Sale of repossesed Assets . It can be seen from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount advanced by the assessee during the course of business but could not recovered was held allowable as bad debt u/s 36(2) of the Act. Similarly judgment Delhi ITAT in case of Poysha Oxygen Ltd. (2008) 19 SOT 711 as well other judgment of jurisdictional court cited in submission holding the similar view. 6. On considering the submissions of both the parties, perusing the orders of the tax authorities below, we are of the opinion that the A.O. while disallowing the claim of the assessee has wrongly placed reliance on the decision of Hon'ble Allahabad High Court in the case of M/s Motor General Sales P.Ltd. (supra) and the same has been rightly analysed and distinguished by the CIT(A) in his order. We further find that the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation can be made in this regard. Had the legislature intended to extend depreciation @ 60% to computer accessories and peripherals, it would have used the term computer systems instead of the word computer in the I.T.Rules. Hence I.T.Rules specifically provided the depreciation @ 60% only on computers and computer softwares. In view of the above facts and interpretations, the assessee corporation's claim of depreciation @ 60% amounting to ₹ 31,836/- and ₹ 9,895/- in A.Y. 2003-04 and 2004-05 is disallowed on computer accessories and peripherals on ₹ 90,956/- and ₹ 37,300/- and the same are allowed @ 25%, treating the same as normal plant and machinery. 9. Aggrieved with the orders of A.O. the assessee filed ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
