Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (11) TMI 75 - AT - Income TaxFuture discount on bill purchase - Mercantile system of accounting - Matching Concept - held that:- The quantum of discounting charges has direct nexus with the due date of the bill, which, in turn, determines the period for which the bank is deprived of its funds in discounting the bill. If the due date of bill crosses the date of closure of the financial year, the bank discounting the bill will incur matching interest cost on its funds in the current year and also the later year. As the interest cost for the subsequent year shall not become deductible in the current year, naturally, the corresponding income in the form of discounting charges for the next year shall also not accrue as income in the current year. - CIT(A) has taken an unexceptionable view in holding that the future discount i.e. the amount of discount pertaining to the period after 31st March, 2000 cannot be charged to tax in this year. - This ground is not allowed. Claim of bad debts - section 36(1)(vii) - CIT(A) was justified in directing the AO to restrict the claim of bad debts by the amount of opening balance in the provision for bad and doubtful debts account as at the beginning of the year instead of the closing balance and then allowing deduction u/s 36(1)(viia). This ground of the Revenue's appeal fails. Foreign exchange loss - both the transactions of sale and purchase of dollars are totally independent of each other - there is no question of estimating any profit or loss on such transaction in the manner in which the assessee has done so, more specifically without divulging the impact of difference in the rate of dollar as at the end of the year vis-a-vis that agreed as per the forward contract. In view of the foregoing reasons we uphold the impugned order by not allowing this ground.
|