TMI Blog2019 (7) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 263 of the Act had been the subject-matter of any appeal, and if yes, the revisional powers shall be available only if such subject-matter had not been considered and decided in such appeal. The order passed by ld. PCIT under section 263 was not a valid order in the eyes of law, which we quashed. - Decided in favour of assessee - I.T.A. No. 3488/Mum/2012, I.T.A. No. 3290/Mum/2014, I.T.A. No. 3380/Mum/2016, I.T.A. No. 4111/Mum/2013 - - - Dated:- 17-7-2019 - SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For the Appellant : Shri Rakesh Joshi (AR) For the Respondent : Shri R. Manjunatha Swamy (CIT-DR) ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER 1. This group of four appeals by assessee out of which two appeals challenging the order passed under section 263 by ld Commissioner of Income Tax (CIT) for assessment year (AY) 2007-08 and 2008-09 and remaining two appeals against the order giving effect by assessing officer. In all appeals, the assessee has raised certain common grounds of appeal, therefore, with the consent of parties all appeals were clubbed, heard and are decided by a conso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to section 3691)(vii). The assessee further stated that they fulfil all the prescribed condition under section 36(1)(vii) r.w.s. 36(2) for claiming such deduction of bad-debts written off which were rightly allowed. The assessee further stated that assessee is public financial institution and the advances written off in the accounts represent out of advances. Thus, Clause-c of section 36(1)(vii)(a) is applicable to the assessee. Therefore, the claim of bad-debts in the assessee s case is not affected, controlled or limited in any way by the proviso of clause (vii). The assessee also relied upon the decision of Hon ble Supreme Court in Catholic Syrian bank Ltd. Vs. CIT in (Civil Appeal No. 1143 of 2011). It was further stated that the provision of bad-debts and doubtful debts allowed under clause (vii)(a)(c) to section 36(1) has been reduced and considered to arrive at net credit or debit balance in the account. There is no credit balance in the provision for bad-debts and doubtful debts, therefore, the entire bad-debts written off is allowable as deduction under section 36(1)(vii). In support, the assessee relied upon the decision of Tribunal in State Bank of Travancore vs. Addl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Bombay High Court in CIT vs. Paul Brothers [216 ITR 548(Bom.)]. 6. The reply of assessee was not accepted by ld. PCIT holding that on verification of assessment proceeding, it was noticed by him, the only issue to consider by Assessing Officer was relating to allowability of bad debts pertaining to prior to 01.04.2001. The Assessing Officer after examining the issue and submission of the assessee concluded that bad debts of ₹ 15,87,92,163/- are not allowable, which pertains to prior to 01.04.2001, when the income of assessee was not chargeable to tax. Accordingly, bad debts amounting to ₹ 15,87,92,163/- was disallowed out of total claim of ₹ 188.01 crore. The Assessing Officer has not enquired into, verified or made any enquiry with regard to allowability of bad debts under clause (c) of section 36(1)(vii)(a) as claimed by assessee before the ld. PCIT. The assessment order is silent on that issue and that the Assessing Officer merely considered the issue regarding allowability of bad debts prior to 01.04.2001. The ld. PCIT took his view that Assessing Officer has not applied his mind and has incorrectly restricted the disallowance towards bad-debts to an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.08.2009 raised various enquiries including claim of bad and doubtful debts written off along with the reasons to show as to why it should be allowed along with the necessary evidence and so that debtors have actually been written off in the accounts. The details of bad-debts recovered and the order in which the claims have been offered for taxation and no claim as deduction under section 36(1)(vii). The copy of notice dated 28.04.2009 is placed on record. The Assessing Officer further vide notice dated 25.06.2009 again required necessary details regarding deduction under section 36(1)(vii)(a) and 36(1)(viii) the assessee vide its reply dated 02.06.2009 in response to the notice under section 142(1) dated 28.04.2009 furnished the details to the Assessing Officer along with note on the claim of bad debts written off and provision for bad and doubtful debts along with the list of bad-debts written off and vouchers dated 31.03.2007 evidencing the actual write off such debts in the accounts of assessee. The Assessing Officer after considering the details furnished by assessee passed the assessment order. The Assessing Officer while passing the assessment order made disallowance of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that their appeal on the similar issue is pending before ld CIT(A). This fact was not disputed by ld. CIT-DR for the revenue. The ld. AR for the assessee has filed on record the copy of the ld. CIT(A) dt. 10.03.2011 (page No. 56 to 61 of PB). 11. For appreciation of the contention of ld AR for the assessee, the relevant part of Section 263 of the Act and Explanation (c) there under which are material for consideration on the issue in this appeal and read as under 263. Revision of orders prejudicial to revenue.-(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.[1]-For the removal of doubts, it is hereby declared that, for the purposes of this sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng thereby, the contents of the remand report, giving effect to the order of the first appellate authority, as submitted by the Assessing Officer, came to be reconsidered and revisited. In addition thereto, one more aspect of sale of theatrical rights of Darna Zaroori Hai to M/s. RGV Enterprises was considered. Naturally, therefore, the doctrine of merger was invoked by the Assessee and it was applied by the Tribunal to uphold the objection raised by the Assessee. 11. In the above factual circumstances, we do not find that the Tribunal erred in holding that clause (c) of the Explanation to sub section (1) of section 263 of the Income Tax Act, 1961 cannot be applied. In the present case, that has no application because the matters which have been considered and decided in the Appeal by the first appellate authority are being made subject matter of the revisional authority's order. In other words, the power to revise, as conferred by section 263, is sought to be exercised so as to deal with the same matters which have been considered and decided in the Appeal. We do not find any merit in Mr. Mohanty's submission because detailed references have been made in the foregoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80HHC. Therefore, the assessment order had merged with the order of the Commissioner (Appeals). Thus, under Explanation (c) to section 263(1), such action of the Commissioner was not permissible. The word matter is certainly a word of wide import and represents a subject or situation that one needs to think about, discuss or deal with. The Hon ble High Court also after considering the similar objection of the department held that it was difficult to accept the submission of the department that the issue of depreciation being optional or the issue whether the assessee was at all entitled to deduction under section 80HHC or not, was not a subject-matter of appeal filed by the assessee before the Commissioner (Appeals). A matter might have many aspects and the above-mentioned two factors might be the aspects of the matter but not the entire matter itself. The matter , in the instant case, was deduction under section 80HHC. Therefore, the assessment order, so far as it related to deduction under section 80HHC, had merged with the order of the Commissioner (Appeals) and, therefore, exercise of power by the Commissioner under section 263 was even not available under Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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