TMI Blog2018 (12) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd. v. CIT [2014 (2) TMI 1080 - KERALA HIGH COURT]. Dis-allowance of provision for leave encashment under Section 43B - Held that:- Section 43B spoke of certain deductions only on actual payment. Sub-clause (f) is with respect to any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee. The deduction, hence, is allowable only on actual payment. It is submitted that the Calcutta High Court has struck down the said provision. Admittedly a Special Leave Petition was filed before the Hon'ble Supreme Court and there is also a stay order granted. In such circumstances, the provision applies and this Court has also in a similar case answered the question in favour of the Revenue and against the assessee in South Indian Bank Ltd. v. CIT [2009 (12) TMI 394 - KERALA HIGH COURT]. Dis-allowance of bad debts of non-rural Banks written off under Section 36(1)(vii) - Held that:- In considering the allowance of deduction of actual written off debts under sub-clause (vii) of Section 36(1) with respect to urban bad debts as distinguished from rural bad debts, for which provision is allowable under sub-clause (viia), the same cannot be with refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als for the assessment years 1996-97 to 2006-07 are, in certain of the years, common. There are also more than one appeal filed in two years, i.e., in 1996-97 and 2006-07 two appeals each. In 1996-97, the two appeals [I.T.A.Nos.456 643 of 2009] arise; one from the order of assessment under Section 143(3) of the Income Tax Act, 1961 [for brevity the Act ] and the other from an assessment carried out under Section 143 read with Section 263 of the Act. In the year 2006-07, there are two appeals [I.T.A.Nos.126 116 of 2012]; one from the order of the Tribunal rejecting the appeal of the Department and the other from the order of the Tribunal allowing the appeal of the assessee. 2. In the years 1997-98 [I.T.A.No.1108/2009], 1998-99 [I.T.A.No.651/2009], 1999-2000 [I.T.A.No.1691/2009] and 2000-01 [I.T.A.No.717/2009] one of the questions is with respect to the dis-allowance of bad debts written off under Section 36(1)(vii). The specific contention of the assessee was that having debited the sums in the separate assessment years, in the P L account and netted the same from the total advances outstanding in the balance sheet, there is a complete write off and there is no warrant to lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly a Special Leave Petition was filed before the Hon'ble Supreme Court and there is also a stay order granted. In such circumstances, the provision applies and this Court has also in a similar case answered the question in favour of the Revenue and against the assessee in South Indian Bank Ltd. v . CIT [ ( 2014) 363 ITR 111 (Ker) ]. The said question is also answered against the assessee and in favour of the Revenue, affirming the order of the Tribunal to that extent. 6. For the years 2005-06 and 2006-07 in I.T.A.Nos.148 of 2012 and 126 of 2012, there is a question of dis-allowance of bad debts of non-rural Banks written off under Section 36(1)(vii). The AO declined the same. The Tribunal relied on a Full Bench decision of this Court in Commissioner of Income Tax v . The South Indian Bank Ltd. [ (2010) 326 ITR 174 (Ker)] to uphold the dis-allowance. However, the Hon'ble Supreme Court reversed the Full Bench decision of this Court in Catholic Syrian Bank Ltd. v . Commissioner of Income Tax [ ( 2012) 343 ITR 270 (SC) ]. In considering the allowance of deduction of actual written off debts under sub-clause (vii) of Section 36(1) with respect to urban bad deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. It is argued that this Court had found that when there is a substitution, if it is not specifically expressed to be prospective, then the Courts could always interpret it to be retrospective, looking at the scheme of the enactment, the purpose and object of the amendment, especially when the amendment by substitution, was intended at removing an obvious anomaly or correcting a blatant error or obliterating an absurdity or bringing it in consonance with any other law or the Constitution ... . Hence, the intention definitely was to extend the benefit to all undertakings. 9. The learned Standing Counsel for Government of India (Taxes), however, takes us through the Notes on Clauses of Finance Bill, 2008 and the Memorandum Explaining the Provisions in the Finance Bill, 2008. Clause 6 in the Notes on Clauses seeking to amend Section 35D specifically says so: The proposed amendment seeks to substitute the words industrial undertaking with the word undertaking and the words industrial unit with the word unit , wherever they occur in the said section. This is intended to provide benefit of amortisation of specified post commencement preliminary expenses to all sectors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building forming part of industrial undertaking; when invested in setting up another industrial undertaking. The assessee had an ice factory; the land and buildings of which were acquired by the Government. The consideration was treated as long term capital gains as against which, the assessee claimed exemption under Section 54D on the ground that he had invested the capital gains in the construction of a lodging house. This Court found that the running of a lodge would be an industrial undertaking within the meaning of Section 54D. 12. In Shankar Construction Co ., the Karnataka High Court was considering the meaning of industrial undertaking under Section 32A. The Karnataka High Court reiterated the principle that when a taxing statute is construed and there are two views possible, the view that favours the assessee has to be adopted. It was also held that in construing words in the absence of a statutory definition, it would be open to look for the meaning by reference to definitions in sister legislation. The High Court, looking at the various definition clauses as also the definition under the Industrial Disputes Act, 1947, found the construction activities carried on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Nazeer Cashew Industries and Computerised Accounting and Management Service Pvt. Ltd ., have a binding effect on us while the decision of the High Court of Delhi in Ansal Housing and Construction Ltd . can only be persuasive. We, hence, respectfully follow the Division Bench decisions of this Court and in doing so, we reiterate the principle as stated by the Karnataka High Court insofar as the assessee being favoured when two views are possible in construing a taxing statute. We also notice that the Division Bench of the High Court of Delhi had also construed the words industrial undertaking on the common parlance test. The Division Bench of this Court in Alikunju, M.A.Nazeer Cashew Industries also considered the issue on the very same principle, as can be seen from the following extracts: What then is an industrial undertaking ? The Income-tax Act does not define what is an undertaking or what is an industrial undertaking . It has, therefore, become necessary to construe these words. Words used in a statute dealing with matters relating to the general public are presumed to have been used in their popular rather than their narrow, legal or technical sense. Loqui ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
