TMI Blog2017 (1) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... r bad debts in the corporate accounts thus does not, in any way, impact the claim of bad debt u/s 36(1)(vii) of the Act in the regular computation of income. This submission of the department stands rejected. The claim of bad debts relates to debts actually written off and not a provision made in this regard. The Supreme Court in the case of Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT ) explaining the methodology for proper write-off set out in accordance with the Judgment of the Supreme Court in Southern Technologies (2010 (1) TMI 5 - SUPREME COURT OF INDIA) states as if an assessee debits an amount of doubtful debt to the P&L Account and credits the asset account like sundry debtors Account, it would constitute a write off of an actual debt. However, if an assesse debits provision for doubtful debt to the P&L Account and makes a corresponding credit to the Current liabilities and provisionson the Liabilities side of the balance sheet, then it would constitute a provision for doubtful debt. In the latter case, assesse would not be entitled to deduction after 1-4-1989. In view of the above, the Assessee has, in accordance with the provisions of Section 36 (1)(vii), written o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f bad debts in the regular computation of income and disallowed the same. The reasoning adduced was that a provision had been created for bad debts in the accounts prepared for the purpose of the Companies Act that, according to the assessing officer, militated against the claim u/s 36(1)(vii) of the Act. The disallowance was challenged at the instance of the Assessee, in some years, and Department, in others, upto the level of the Income tax Appellate Tribunal (in short Tribunal) till A Y 1997-98 when the issue was decided in favour of the assessee vide order dated 21.4.2006. The aforesaid order has been allowed to rest at the instance of the department. Thereafter, the CIT (Appeals), in respect of A Ys 1999-2000 to 2002-03 followed the rationale of the aforesaid order of the Tribunal and the disallowance was challenged at the instance of the Department before the Tribunal which again, vide order dated 19.12.2007 held in favour of the Assessee. The order of the Tribunal has been accepted by the Department and has attained finality. In respect of A Y years 2003-04 to 2005-06, the Commissioner of Income Tax (Appeals) applied the aforesaid orders of the Tribunal in allowing the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court (supra). 7. We have heard the learned Counsel and applied our mind to the facts and legal position involved. We are of the view that the maintenance of two separate sets of books, one for purposes of the Companies Act and the other for Income Tax, is perfectly in order and there is no embargo against the same. The books maintained for the purposes of the Companies Act duly approved by the Board of Directors and placed before the shareholders at the Annual General Body Meeting of the Company being contain inter alia the profit and loss account for the relevant previous year prepared in accordance with the provisions of Part II-III of Schedule VI to the Companies Act 1956 will form the basis of an assessment in terms of Chapter XII-B, Special Provisions relating to certain companies, that provide for an assessment of Minimum Alternate Tax (MAT). The Income Tax Act requires for the assessee to follow a parellelly consistent method of accounting in accordance with section 145 thereof. The books maintained for the purposes of the Income Tax Act shall comply with the provisions of section 145 and shall form the basis for an assessment thereunder. The error in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d debt and the claim is allowable. Substantial Question No.1 is answered in favour of the assessee and against the Department. 10. Before parting there is yet another aspect of the matter. We posed a query to the Department as to what the trigger was for pursuing this issue before the High Court, having accepted the same for eleven prior assessment years. The learned Standing counsel would produce instructions via e-mail from the CIT stating as follows: In the combined order of ITAT for A.Y.1995-96 to 2002-03 dated 21.04.2006, Tribunal in para, 33 stated that after going through the copies of balance sheet and P L a/c for these A. Ys., they find that the debts have been really written off. Considering the amendment to sec. 36(1)(vii) w.e.f. 01.04.1989 wherein the only condition to claim deduction is actual writing off of debts, Tribunal allowed the claim of asseessee. Since such interpretation was in tune with the intention of amendment which was brought out in the Explanatory Memorandum to the Direct Tax Laws (Amendment) Act, 1987, the decision of Tribunal was accepted by Department for the above mentioned A.Ys. However the crucial fact of assesse not writing off (show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal dated 16.12.2010 and 21.4.2006 the Assessee has been consistent in the methodology followed both in respect of maintenance of books as well as the treatment of bad debts. The Supreme Court, in the case of Commissioner of Income Tax Vs Excel Industries (358 ITR 295) reiterates the proposition that an issue consistently decided in the assesses favour for several years should not be disturbed unless there are very convincing reasons for doing so. 13. It is also relevant to refer to the findings of the privy counsel in the case of Hoystead v. Commissioner of Taxation, (1926 AC 155 (PC)) as extracted below; parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of sett ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
