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TMI Blog2012 (7) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved in all these appeals and facts are identical, we shall take up ITA No. 4882/M//2010 for A.Y. 2003-043 for our consideration. 3. Ground No. 1 is general in nature and do not require any specific adjudication. 4. Ground No. 2 relates to disallowance of bad debts amounting to Rs. 2,07,15,380/-. 5. During the course of assessment proceedings, the Assessing Officer found that in the Profit and Loss Account, the assessee has debited a sum of Rs. 2,07,15,380/- on account of bad debt. The AO was of the opinion that the assessee company being a non finance company, bad debt could not be allowed following the decisions in earlier assessment years and the AO disallowed the claim of Rs. 2,07,15,380/-. 6. Before the Ld. CIT(A) the assessee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has allowed the claim of bad debt. Respectfully following the decision of the Tribunal, the claim is allowed for this year also. 9. Ground No. 3 relates to deletion of service charges of Rs. 57,10,754/-. During the course of assessment proceedings the AO found that the assessee company has been following mercantile system of accounting in respect of service charges. However from assessment year 1999-2000 onwards the company changed its policy of accounting the service charges from mercantile system to cash system. The AO did not accept the change of method of accounting for the service charges and added to the total income. The AO further pointed out that as per the Audit report u/s. 44AB of the Act for the year under consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) allowed the appeal by deleting the addition. 11. The Ld. Departmental Representative relied upon the order of AO. The Ld. Counsel for the assessee reiterated the submissions made before Ltd. CIT(A). 12. We find that as per RBI guidelines vide Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, no interest income is to be booked on accrual basis on NPA and the same should be recognized only on cash basis and as the assessee is a non banking finance company it is bound to follow the guidelines issued by Reserve Bank of India. We therefore do not find any error or infirmity in the order of Ld. CIT(A) accordingly we confirm the same. 13. The fourth ground relates to deletion of the disallowance of Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions made by AO. The Ld. Counsel for the assessee relied upon the decision of CIT Vs Standard Polygraph Machines Pvt. Ltd (supra) and the decision of S. Takenaka Vs CIT 237 ITR 212 (Karnataka) 18. We have heard the rival submissions and perused the orders of lower authorities and also the orders relied upon by the Ld. Counsel. We find that on identical facts, Hon'ble Madras High Court in the case of CIT Vs Standard Polygraph Machines Pvt. Ltd (supra) has allowed the claim holding that amount paid was only to the discharge of the liability which liability the assessee had taken to pay as part of the agreement entered into. The amount so paid as tax has been held to be the amount payable between the collaborator and the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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