TMI Blog2018 (4) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... of Deputy Commissioner of Income Tax vs. Beardsell Ltd. (2000 (3) TMI 37 - MADRAS High Court), pertains to a case not arising in respect of a banking company. Decisions of the Hon'ble Supreme Court in State Bank of Patiala (1996 (3) TMI 128 - SUPREME Court) and HCL Comnet Systems & Services Ltd., (2008 (9) TMI 18 - SUPREME COURT) are clear answers to both the substantial questions of law, which have been framed for consideration. - Decided in favour of the assessee. - T.C.(Appeal) No.916 of 2008 - - - Dated:- 9-4-2018 - T. S. Sivagnanam And N. Seshasayee, JJ. For the Appellant : Mr.Sriraman For the Respondent : Mr.T.R.Senthil Kumar JUDGMENT ( Judgment of the Court was delivered by T. S. Sivagnanam, J. ) Heard Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet of the relevant previous year qualified as reserves. The Hon'ble Supreme Court pointed out that, if the sums set apart in the balance sheet are only provisions , the assessee will not be entitled to the relief claimed by it. If, on the other hand, the sums set apart are reserves within the meaning of the Act, the assessee will be entitled to appropriate relief. The Hon'ble Supreme Court pointed out the finding rendered by the Tribunal to the said fact and while answering the correctness of the decision, held as follows: 14. The High Court has taken the view that the fund created or a sum of money set apart to meet any liability which the assessee can reasonably and legitimately anticipate on the date of prepara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anticipated on the date when the balance-sheet was prepared. The question is not whether the assessee can anticipate or reasonably anticipate on the date when the balance-sheet was prepared about the bad and doubtful debts . The High Court was in error in surmising that the assessee being a banking company is bound to have bad and doubtful debts. It need not necessarily be so. It is not bound to anticipate on the date of preparation of balance-sheet that all or any of its debts are bound to be bad and doubtful . It all depends upon facts and circumstances. We are of the view that the High Court misunderstood the scope of the observations in Saran Engineering Co.'s case (supra) and surmised that the observations quoted at page 748 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities, other than ascertained liabilities. The assessee's case would, therefore, fall within the ambit of Item (c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than ascertained liability, i.e., it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract Item (c) of the Explanation to Section 115JA. In our view, Item (c) is not attracted. There are two types of debt . A debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relied on by the ITAT in the case of Deputy Commissioner of Income Tax vs. Beardsell Ltd., reported in (2000) 244 ITR 0256, pertains to a case not arising in respect of a banking company. 8. Thus, the decisions of the Hon'ble Supreme Court in State Bank of Patiala (referred supra) and HCL Comnet Systems Services Ltd., (referred supra) are clear answers to both the substantial questions of law, which have been framed for consideration. Thus, we are required to allow the appeal filed by the assessee and answer both the questions in favour of the assessee. 9. Further, it is a case of the assessee that by applying a decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd., vs. Commissioner of Income Tax reported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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