2012 (11) TMI 542

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....er Revenue, Assessing Officer was not given opportunity as required under Rule 46A of the Income Tax Rules with regard to bifurcation of activities done by the assessee, before deciding that bad debts was claimed on an activity other than infrastructure development. 3. Short facts apropos are that assessee had filed its return for impugned Assessment Years wherein it had claimed write off of bad debts under section 36(1)(vii), as also claimed provision for bad & doubtful debts under section 36(1)(viia)(c) of the Income Tax Act, 1961 (in short 'the Act'). Such claim of bad debts were Rs. 34,81,920, Rs. 3,97,123 & Rs.Rs. 21,40,211 respectively. Claim for provision under section 36(1)(viia)(c) of the Act were Rs. 3,13,510/- , Rs. 7,03,716/- &....

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....ince the provision made were not for those accounts on which write off were affected, it pleaded that its claim under section.36(1)(viia)(c) had to be allowed. 4. However, Assessing Officer was not impressed. According to him, section 36(1)(viia)(c) did apply to the assessee, being a state financial institution engaged in providing long term finance for industrial development. According to him, assessee had substantial balance in provision for bad and doubtful debts account in its balance sheet. Nevertheless, according to him, assessee's claim for bad debts write off could not be allowed, since it was eligible only for the provision made under section 36(1)(viia)(c) of the Act. In other words, in the original assessment when the Assessing ....

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....ts books. Therefore, effectively he reversed the order of Assessing Officer and held that claim of bad debt under section 36(1)(vii) was allowable whereas provision for bad and doubtful debts claimed under section 36(1)(viia)(c) was held as not allowable. 6. Now before us, Ld. D.R. assailing the order of the CIT(A) submitted that no evidence was produced by the assessee before the Assessing Officer to prove that provision for bad and doubtful debts were against the activity relating to infrastructure facility. As per ld. Departmental Representative, once assessee had claimed provision for bad and doubtful debts under section 36(1)(viia)(c) of the Act, it could not claim write off bad debts under section 36(1)(vii) of the Act. 7. Per contr....