TMI Blog2006 (6) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... nswer the questions of law against the Revenue and in favour of the assessee. - - - - - Dated:- 22-6-2006 - Judge(s) : R. GURURAJAN., JAWAD RAHIM. JUDGMENT The judgment of the court was delivered by R. Gururajan J. - The Income-tax Appellate Tribunal, Bangalore Bench (for short "the Tribunal"), has chosen to refer the following question of law for our consideration under section 256(1) of the Income-tax Act, 1961: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the disallowance made by the Assessing Officer in respect of 'corporate guarantee obligation' amounting to Rs. 18,67,21,730 does not come within the purview of 'prima facie adjustment' as laid down under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order. After hearing, we have carefully perused the material on record. The adjustment explanatory sheet is available and in terms of the said adjustment, it is seen that the Assessing Officer has chosen to disallow the corporate guarantee obligation in the following manner: "This payment is in the nature of discharge of a liability on behalf of another company of the group, viz., U.B. Elostomers Ltd., as a guarantor of the loans borrowed by M/s. U.B. Elostomers Ltd. Since this payment is a recoverable debt from M/s. U.B. Elostomers Ltd. the same cannot be claimed as a deduction in the statement of computation of income." Aggrieved by the disallowance of this item, an unsuccessful appeal was filed to the appellate authority. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration in terms of section 143(1)(a) of the Act. If the material at the first sight provides for a prima facie admissible or not admissible, then, the Assessing Officer is free to consider the case in terms of section 143 of the Income-tax Act. In the case on hand, the Assessing Officer has virtually decided the issue while disallowing the corporate guarantee obligation in the case on hand. The appellate authority also has taken into consideration, the various aspects of the matter as though the appellate authority was deciding the case finally. The Tribunal on noticing the approach of the Assessing Officer and the appellate officer, rightly, in our view, has chosen to say that a debatable issue cannot be decided under section 143(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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