9911796707
TMI Blog2021 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... No.302 of 2020 2. This tax appeal under Section 260A of the Income Tax Act, 1961 (for short "the Act, 1961") is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal dated 18th December, 2019 in the ITA No.675/Ahd/2016 for the A.Y. 2012-13. 3. The Revenue has proposed the following three questions of law for the consideration of this Court; "(A) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law and on facts in not upholding the entire addition of Rs. 97,57,920/- made by the Assessing Officer under Section 14A of the Income Tax Act, 1961 r.w. Rule 8D of the Income Tax Rules, 1962? (B) Whether on the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reported in 288 ITR 1. In view of the settled position of law, the disallowance under Section 14A would not be permissible. We do not find that the Tribunal has committed any error. 7. In view of the aforesaid conclusion, the second question would become academic in nature. 8. We now come to the third question as proposed by the Revenue. 9. Mr. Patel, the learned senior standing counsel appearing for the Revenue pressed hard to admit this appeal so far as the question No.3, i.e, the 2(C) is concerned. According to Mr. Patel, the ITAT could be said to have committed an error in law and also on facts in not upholding the disallowance of bad debt claim of Rs. 1,71,90,900/- made by the Assessing Officer and confirmed by the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of tax. But if in his account it is clearly stated that though a particular income is due to him, but it is not possible to recover the same, then it cannot be said to have been accrued and the said amount cannot be brought to tax. In this regard, Mr. Soparkar, seeks to place reliance on a decision of the Madras High Court in the case of Commissioner of Income Tax vs. Tiruchirapalli District Central Co-operative Bank Ltd., (2020) 275 taxmann.com 628 (Mad). 11. The CIT(A) has observed as under; "5.2 I have carefully considered the facts on records and submissions of the Ld. Authorized Representative. Undisputedly, Quick Flight Ltd. is a 100% subsidiary of the appellant company and during the year under consideration, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avoid the tax liability and hence the transaction does not fall in the four corners of legitimate tax planning. This view gets support from the ratio laid down in the case of CIT vs. Getxo Smithline Asia Pvt. Ltd. (2010) 236 CTR 113 (SC) because the transaction between the sister concern in the case of appellant was not revenue neutral. Accordingly, the disallowance of Rs. 170.91 lacs being the bad debts pertaining to Quick Flight Ltd. Is confirmed for the above reasons as also reasons recorded by the Assessing Officer. 5.2.1 On perusal of the details furnished, it is noticed that the Assessing Officer has considered entire bad debts of Rs. 171.90 lacs pertaining to Quick Flight Ltd., but in fact a sum of Rs. 0.69 lacs was not pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest outstanding in the books of accounts at Rs. 170.91 lakhs has been written off during the year under consideration as irrecoverable. The stand of the assessee was rejected by the ld. Revenue authorities on the ground that since it has advanced fresh loans during the year, therefore, it cannot be said that recovery of interest has become bad. The second reason given by the ld. CIT(A) is that though the liability of QFL were ceased qua the payment of interest expenditure, but actually that concern did not suffer tax on cessation of these liability, because that concern was showing huge loss. In other words, according to the ld. CIT(A) taxes in actuality were not paid by the QFL on cessation of this liability. 20. With the assistance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is altogether irrelevant, whether QFL actually paid tax or not. If a liability has ceased, then it will be added back in the taxable income of the QFL. Now, if that concern was suffering huge loss, then that cannot be the reason to disallow claim of the assessee. If this type of logic is being accepted, then every business organization was required to show profit only. This is a misplaced notion at the end of the ld. CIT(A) for rejecting the claim of the assessee. We allow this ground of appeal, and delete disallowance of bad debts. In the other words, claim of bad debt at Rs. 170.91 lakhs is allowed." 13. We are in agreement with the view taken by the Tribunal, referred to above. The findings recorded by the Tribunal, referred to abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
