TaxTMI 
TaxTMI 
2005 (7) TMI 70
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.... the case, the Tribunal was right in allowing the assessee's claim for a bad debt, when the bad debt had not actually been written off in the books of account? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in allowing the claim for bad debt on the ground that the provision had been shown under the head 'Expenditure' in the annual report of the assessee-company? 3. Whether, on the facts and circumstances of the case, and in view of the provisions of section 36(1)(vii), an assessee other than a banking company can be allowed a claim for a bad debt on the basis of a mere provision?" We have heard learned counsel for the parties and perused the record. The relevant assessment year is 1997-98. For this year th....
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.... in favour of the assessee. Aggrieved against that order the Department preferred an appeal before the Tribunal which has been dismissed by the impugned order. The Tribunal has observed in paragraph 4 of its order as follows: "From the facts, it is seen that the assessee had taken lot of efforts to collect the debt. While debiting a sum of Rs. 3 lakhs the assessee had claimed entire bad debt during this year and the next year. Though the nomenclature used is 'provision', it is seen that the claim of bad debt had to be allowed. At the time of hearing, learned counsel for the assessee filed sixth annual report (1997-98) wherein at page No. 9, the provision for bad debts had been clearly stated under the head 'Expenditure'. Therefore, 1 do n....
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....mediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply". Learned counsel for the Department submitted that a mere provision of bad debt is not sufficient to get the benefit of the above provision and it is only when the debt is actually written off as irrecoverable in the books of account that a claim for bad debt can be allowed as a deduction. On the other hand, the submission of learned counsel for the assessee is that it was only by an inadvertent mistake committed by the assessee that a narration was made in the profit and loss account as "provision for bad debt". On the facts of the case, we are of the opinion that this appeal has to be allowed. ....
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.... April 1, 1989, even if the debt has not been written off as irrecoverable in the accounts of the assessee, it could still be allowed as a bad debt if the assessee could establish that in fact it had become a debt in the previous year. After the amendment by Act 4 of 88 with effect from April 1, 1989, the essential requirement for a claim of "bad debt" to be allowed is that it should have been written off as irrecoverable in the accounts of the assessee for the previous year. Thus for and from the assessment year 1989-90, the requirement as to the writing off of the debt as irrecoverable has become essential for a claim of "bad debt" to be allowed. Thus, it is now a mandatory condition that deductions can be allowed as bad debts only when ....
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....he House of Lords held that a provision in the Income Tax Act, 1952 for a statutory penalty (for making an incorrect return of income) of 20 pounds and trebling "the tax which he ought to be charged under this Act" referred not to the tax on the amount which the taxpayer had failed to declare, but to the whole tax which he ought to be charged for the relevant year, notwithstanding the extravagant consequences which flowed from giving the words their natural meaning. The Supreme Court of India has held that equity is out of place in tax laws (vide CIT v. V. Mr. P. Firm, Muar [1965] 56 ITR 67; AIR 1965 SC 1216). In CIT v. Madho Pd. Jatia [1976] 105 ITR 179; [1976] 4 SCC 92, it held that there could be no consideration of equity if the langua....
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.... of India held that the language of section 17(3) was plain and unambiguous, and hence the said amount was not salary but income from other sources and taxable under section 56. In Polestar Electronic P. Ltd. v. Addl. CST [1978] 41 STC 409; AIR 1978 SC 897, the question was whether sales outside Delhi would also be included in taxable income. The Supreme Court held that the section used the word "resale" simpliciter, and hence it referred to all resales and could not be limited to resales within Delhi alone. Thus the Supreme Court went by the plain language of the statute, and did not speculate on the intention of the Legislature. In Hansraj Gordhandas v. H.H. Dave, Asst. Collector [1978] 2 ELT 350, the Supreme Court of India considered t....