TMI Blog2023 (8) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 46 - SUPREME COURT] - HELD THAT:- Since we found force in the submission of learned Standing counsel for the Income Tax Department that the Appellate Tribunal had not examined the factual aspect as to whether or not the respondent assessee in the instant case had actually reduced the amount representing bad debts from the value of its assets in the balance sheet and had merely adopted the ratio of Supreme Court judgment in Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT ], we requested assessee to make available a copy of the audited balance sheet and profit and loss account of the company for the assessment year in question so as to verify the factual aspects therein. Tribunal was clearly in error in allowing the appeal preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14A of the Income Tax Act, the said order was set aside by the Principal Commissioner of Income Tax, Thrissur, by an order dated 18.12.2018 finding the assessment order as erroneous and prejudicial to the interests of the revenue. In the order of the Principal Commissioner, it was noticed that the respondent assessee had debited an amount of Rs. 294,76,94,000/-being provision for non-performing assets (NPA) in the profit and loss account under the head of provisions and contingencies. While the assessee had initially not claimed the said amount while computing the loss that was returned, it had subsequently claimed the said amount towards bad debts written off in terms of Section 36(1)(vii) of the Income Tax Act. The Principal commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in the light of the facts and figures found by the Principal Commissioner on an examination of records demonstrate the order of the Assessing Officer as an order erroneous and prejudicial to the interest of the Revenue? (b) ls not the Revisional Order of the Principal Commissioner in accordance with law and the Tribunal is justified in interfering with the Revisional Order? 3. Whether on the facts and in the circumstances of the case and since the excess provision made in accounts for non performing assets (NPA) being not allowable as per Explanation-1 to Section 36(1)(vii) of the I.T Act and will not non consideration of such an aspect by the Assessing Officer result in the order being erroneous an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e balance-sheet is shown as net of the provisions for the impugned debt. However, what is being insisted upon by the Assessing Officer is that mere reduction of the amount of loans and advances or the debtors at the year-end would not suffice and, in the interest of transparency, it would be desirable for the assessee- bank to close each and every individual account of loans and advances or debtors as a precondition for claiming deduction under section 36(1)(vii) of the 1961 Act. This view has been taken by the Assessing Officer because the Assessing Officer apprehended that the assessee-bank might be taking the benefit of deduction under section 36(1)(vii) of the 1961 Act, twice over. [See order of the Commissioner of Income-Tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced the value of its assets in an amount equivalent to the amount claimed by way of bad debts that were allegedly written off as irrecoverable. It is pointed out that the Supreme Court in Vijaya Bank (Supra) had clearly found that the assessee bank had not only debited the profit and loss account to the extent of the impugned bad debt but was also simultaneously reducing the amount of loans and advances of the debtors at the year-end. In other words, the Court, in the judgment above, had clearly recognised that it was open to an assessee company to not only show a write-off of the bad debts in its profit and loss account but it could also simultaneously reduce the value of its assets in a like amount in the balance sheet of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r NPA (including bad debts written off and write back). It is also his submission that this document forms part of the audited balance sheet and profit and loss account, although it does not find a place in the printed annual report of the company that is produced before us. 8. Taking note of the said annual report as also the submissions of the learned Senior counsel in relation to the additional documents produced before us, we are of the view that the Tribunal was clearly in error in allowing the appeal preferred by the assessee through a mere application of a ratio in Vijaya Bank (Supra). In our view, the Tribunal ought to have ascertained whether the factual situation that was established in Vijaya Bank (Supra) existed in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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