9911796707
TMI Blog1983 (1) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings for the assessment year under appeal, the assessee claimed that reserve for bad and doubtful debts and reserve for pension respectively amounting to Rs. 52,44,822 and Rs. 40,000 be considered as reserves for purposes of allowing statutory deduction under the Second Schedule to the Companies (Profits) Surtax Act, 1964. The ITO, however, held the view that these two amounts were provision and not a reserve. These were not taken into consideration in working out the allowable statutory deduction under the Second Schedule. The assessee had also claimed deduction of Rs. 29,885 being the dividend out of the total income for working out the chargeable profits. However, the ITO restricted the deduction to Rs. 11,951 as shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 572 of the report. The learned senior departmental representative contended that if appropriation is made as a provision, the amount concerned cannot be taken as a reserve. He also submitted that factually in the earlier years in which the judgment of the Tribunal has been given, there were no amounts written off. However, for the year under appeal, the amounts have been written off as recorded in the order of the ld. CIT (A) notwithstanding their quantum which may be small. 5. With regard to ground No.2 relating to the sum of Rs. 29,885, it was contended that though it is covered by the judgment of Punjab and Haryana High Court in the case of Patiala Flour Milla vs. CIT (1980) 14 CTR (P&H) 102 : 123 ITR 273 (P&H) yet the revenue would li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Ltd. 1977 CTR (Mad) 404 : (1979) 116 ITR 889 (Mad). The revenue, however, supported the order of the learned CIT (A). 8. We have given careful consideration to the rival submissions. Before we come to the position of law applicable to the issues that are before us, a glance at the factual background relating to the first ground of appeal of revenue regarding the sum of Rs. 52,44,822 is necessary. As already stated, the assessee is a banking company and is governed by the Banking Regulation Act, 1949. In the judgment dt. 23rd January 1980, to which one of us was a party as the Author, it was found that there was a statutory recognition to the factum of there being two balance-sheets in the case of banking companies, one being publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal suits have been filed to recover loans, the amounts standing in the account of such parties are transferred from the normal loan accounts to what is known as in the banking parlance 'protested bills account'. This is done by passing general entries crediting loans account and debiting the protested bills account. By and large, the amount standing to the debit of the protested bills account as on 31st December 1975 is deducted from the current account contingencies account to., from the balance-sheet and similarly by way of contra-entry this sum is also deducted from the amount standing to the debit of the advances account leaving the balance which is taken in the unpublished balance-sheet. The sum of Rs. 52,44,822 (52,44,821.83) came in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of the law already settled by the judgment of the Supreme Court in the case of Metal Box Company of India Ltd. (1969) 73 ITR 53 (SC). Though this judgment in the case of Wazir Sultan is dated 25th September 1981 and has been reported in (1981) 25 CTR (SC) 186 : (1981) 132 ITR 559 (SC) yet when the Tribunal made the order dt. 23rd January 1980 in the case of the assessee for the earlier years, it did not take into consideration the law laid down by the Supreme Court in the case Metal Box Company of India Ltd. Referred to supra. Therefore, the judgment of the Supreme Court which the revenue requires us to consider has in a way been considered by the Tribunal insofar as this judgment merely follows the judgment in Metal Box Company of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taking into consideration the surrounding circumstances and the intention of those who dealt with it. Therefore, for the reasons given by the Tribunal in the case of the assessee for the earlier years particularly recorded in para 20 of the order dt. 23rd January 1980 and the reasons recorded in this order, we hold that Rs. 52,44,822 was rightly held to be a reserve for the purpose of allowing statutory deduction under the Second Schedule to the Companies (Profits) Sur tax Act, 1964 by the ld. CIT(A). This is more so because we find on facts that in order to meet a statutory requirement, the Reserve Bank of India itself had directed the assessee to make reasonable ad hoc provision in respect of the outstanding advances in addition to maki ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
