TMI Blog2007 (7) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... The judgment of the court was delivered by Madan B. Lokur J.— The Revenue is aggrieved by an order dated July 21, 2006, passed by the Income-tax Appellate Tribunal, Delhi Bench "D", New Delhi, in I. T. A. No. 811 (Del) of 2002 relevant to the assessment year 1998-99. 2. The Revenue has raised three substantial questions of law. The first substantial question of law reads as follows : "Whether the Income-tax Appellate Tribunal was correct in law in allowing depreciation of Rs. 1,21,26,481 to the assessee at the rate of 100 per cent. on tankers." 3. It is submitted by learned counsel for the Revenue that a similar question of law had arisen in the case of this assessee in I. T. A. No. 1052/2006 and the decision of this court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that the Board for Industrial and Financial Reconstruction had restrained Kedia from disposing of its fixed or current assets without the consent of the Board for Industrial and Financial Reconstruction. Learned counsel for the Revenue is unable to tell us what were the assets of Kedia and there is nothing on record to show its assets and whether the assessee was at all in a position to recover its debts from those assets. Both the Commissioner of Income-tax (Appeals) (the CIT(A)) and the Tribunal were of the view that the Assessing Officer had erred in not treating the amount as a bad debt, given the circumstances of the case as also the fact that the assessee had written off the amount as irrecoverable in its accounts for the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) as well as the Tribunal were in error in taking note of the subsequent events and should have strictly gone by the principles of the mercantile system of accounting and on that basis it should have been held that the Assessing Officer was correct in taking the interest on those advances as income having accrued to the assessee. 9. The Tribunal relied upon the decision of the Supreme Court in Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746. We have gone through this decision. The Supreme Court quoted a passage from an earlier decision rendered in CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144, 148, where it had been stated as follows : "Income-tax is a levy on income. No doubt, the Income-tax Act takes into acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment orders in respect of the assessment years under consideration." 11. Applying the law laid down by the Supreme Court, what has to be seen in the present case is whether there was any real accrual of interest to the assessee. Both the Commissioner of Income-tax (Appeals) as well as the Tribunal came to the conclusion that there was no real accrual of interest. It has been noted that the interest had not even been recorded by the assessee in its books of account. The assessee had also issued a notice to the parties under section 138 of the Negotiable Instruments Act for dishonour of cheques issued by all (except one of the debtors) followed by initiation of appropriate proceedings. The debts were written off as bad debts ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
