TMI Blog2011 (6) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2005-06. 2. Briefly stated, the facts of the case are that the assessee-Board filed its return of income on 27.10.2005 returning total loss at Rs.21,61,88,11,000/-. The return was selected for scrutiny. Assessment u/s 143(3) was completed on 16.10.2007 assessing the total loss at Rs.6,66,60,16,230/- after addition/disallowance amounting to Rs.14,80,14,62,276/- being the amount of subsidy written off by the assessee as irrecoverable in the year under appeal. 3. Perusal of the assessment order shows that the assessee-Board was entitled to receive rural electrification subsidy as a result of the undertaking given by the Government of Punjab to the World Bank to compensate the assessee for expenditure in respect of rural electrifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy will be restricted to the amount of interest payable by the assessee-Board on the loans advanced to it by the State Government in a particular year and further that the amount of subsidy would not be paid to the assessee-Board in cash in any case. In its effort to draw maximum benefit of subsidy from the State Government, the assesseeBoard incorporated the aforesaid clause in its favour to mean that although the quantification of subsidy could be made at 15%, the amount exceeding the interest on loans could be tried to be adjusted against the loans payable to the Government. This endeavor of the assessee did not click and ultimately the subsidy was allowed as per clause (3) of the letter cited supra. On 26.05.2005, the assessee-Board sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO examined the claim of the assessee and noted, in particular, the sequence of dates. According to him, the MOU between the assesseeBoard and the State Government was signed on 26.05.2005 and the proposal to write off the amount as bad debt was approved by the assessee-Board on 08.08.2005 and therefore the claim was pre mature in the assessment year under appeal as both the aforesaid dates namely 26.05.2005 and 08.08.2005 fell in the previous year relevant to the next assessment year, i.e., assessment year 2006.07. The AO therefore declined the claim of the assessee in the year under appeal. 6. On appeal, the ld. CIT(A) has concurred with the view taken by the AO with the following observations : 3.4 I have gone through the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions) reads as under: In this connection it may be submitted that the claim of 15% subsidy was not admissible at all. It had to be confined to the amount of interest due on the loans of the State Government. The income shown by the Board in different years was, therefore, excessive. The decision to write back was though taken on 26.05.2005, since the books of account were under audit, the claim was duly made therein. In the case of Raza Buland Sugar Co.Ltd. v CIT reported in 122 ITR 817. It has been held by the Hon'ble Allahabad High Court that even where a liability was quantified during the assessment proceedings, the assessee was entitled to make a claim for the same. Further in the case of CIT v Central Province Manganese O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be written off as it was irrecoverable from the State Government. On the aforesaid facts, all the conditions stipulated by Section 36(1)(vii)/36(2) are fully satisfied. 10. It is however the objection of the Assessing Officer, which has also found favour with the CIT(A) that it was pre-mature on the part of the assessee-Board to write off the impugned sum as irrecoverable in the year under appeal. They have come to the aforesaid conclusion on the basis that the MOU was signed and a decision was taken by the assessee-Board after 31.03.2005, i.e., after expiry of the previous year relevant to the assessment year under appeal. We are however not convinced by the aforesaid reasoning for the reason that what was approved by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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