Tamilnadu Urban Finance & Infrastructure Development Corporation, CHENNAI V. ACIT, CHENNAI

ITA 1317/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8742 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: G BASKAR
• Keywords: Bad and doubtful debts
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1317/MDS/2015 / ASSESSMENT YEAR :20 08 - 09 TAMILNADU URBAN FINANCE & INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., 490/1 - 2, ANNA SALAI, NANDANAM, CHENNAI 600 0 3 5 . [PAN: A AACT1259R ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE 3, CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : S HRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 0 2 . 0 6 .201 6 / DATE OF P RONOUNCEMENT : 11 . 0 8 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) 1 1 , CHENNAI , DATED 26 . 02 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO THE DISALLOWANCE MADE UNDER PROVISION FOR DOUBTFUL DEBTS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING UNDER THE GOVERNMENT OF TAMIL NADU ENGAGED IN THE BUSINESS I.T.A. NO . 1317 /M/ 15 2 OF FINANCING TO LOCAL BODIES UNDER THE GOVERNMENT FOR THE DEVELOPMENT OF INFRASTRUCTURE IN URBAN AREAS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.09.2008 FOR THE ASSESSMENT YEAR 2008 - 09 DECLARING TOTAL INCOME OF .12,45,82,700/ - . AFTER VERIFICATION OF RECORDS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 36(1)(VIII) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 25.11.2009. IN RESPONSE THERETO, THE ASSESSEE FILED DETAILS AND AFTER CONSIDERING THE SAME, THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT WAS COMPLETED ON 07.10.2010 AFTER MAKING VARIOUS ADDITIONS. 3. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 5. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER HAS DISALLOWED THE PROVISIONS OF BAD AND DOUBTFUL DEBTS OF .22,51,898/ - SINCE THE ASSESSEE VID E ITS LETTER DATED 02.08.2010 HAS STATED THAT AN AMOUNT TO THE EXTENT OF .22,51,898/ - HAS BEEN ALLOWED IN THE APPEAL AS EXPENDITURE IN THE EARLIER YEARS SUBSEQUENT TO FILING THE RETURN. THE APPEAL ORDERS FOR EARLIER I.T.A. NO . 1317 /M/ 15 3 YEARS CAME AFTER THE ASSESSEE FILED ITS RETURNS AND THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SAME. BEFORE US, BY FILING COPY OF THE PROFIT AND LOSS ACCOUNT, BALANCE SHEET AS ON 31.03.2008, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS CREA TED BY THE ASSESSEE WA S .1,15,52,154/ - , WHICH IS WELL WITHIN THE ELIGIBLE LIMITS PRESCRIBED UNDER SECTION 36(1)(VIIA)(C) OF THE ACT AND THE DEPARTMENT SHOULD HAVE ACCEPTED THE CLAIM OF THE ASSESSEE AND MOREOVER, IN THE APPELLATE ORDER AT PARA 8, THE LD. CIT(A) HAS MENTIONED THE FIGURE WRONGLY AT .22,51,898/ - . HE FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2007 - 08, THE ASSESSING OFFICER HAS ALLOWED THE PROVISIONS OF DOUBTFUL DEBTS CREATED BY THE ASSESSEE UPTO 5% OF THE INCOME AS PER EXPLANATION (V) TO SECTION 36((1)(VIIA) OF T HE ACT. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE ASSESSEE SHOULD BE ALLOWED THE PROVISIONS OF BAD AND DOUBTFUL DEBTS CREATED TO THE EXTENT OF 5% OF THE INCOME. WE FIND FROM THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET THAT THE PROVISION FOR BAD AND DOUBTFUL DEBTS CREATED WAS .1,15,52,154/ - . HOWEVER, NOTHING WAS BROUGHT ON RECORD IN THE ASSESSMENT ORDER. THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 07.10.2010 IS VERY CRYPTIC AND DOES NOT CONTAIN COMPLETE DE TAILS. THOUGH NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 25.11.2009 FOR REOPENING THE ASSESSMENT, IT IS ALSO NOT CLEAR AS TO WHETHER REASSESSMENT UNDER SECTION 147 OF THE ACT WAS DONE OR NOT. THE ASSESSEE IS A NON - BANKING FINANCIAL CORPORATION I.T.A. NO . 1317 /M/ 15 4 REGISTERED WITH RBI AND A GOVERNMENT COMPANY WITHIN THE MEANING OF SECTION 617 OF THE COMPANIES ACT, 1956 [1 OF 1956]. IT IS ENGAGED IN THE BUSINESS OF PROVIDING LONG TERM FINANCE FOR INFRASTRUCTURE PROJECTS AND IS ELIGIBLE FOR DEDUCTION UNDER CLAUSE (VIII) OF SECTION 36(1) OF THE ACT. THEREFORE, THE ASSESSEE IS ELIGIBLE TO MAKE PROVISION FOR BAD AND DOUBTFUL DEBTS TO AN EXTENT NOT EXCEEDING FIVE PERCENT OF THE TOTAL INCOME [COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VI - A ]. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW DEDUCTION IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6 . IN THE RESULT, THE APPEAL FILED BY THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 11 TH AUGUST, 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 11 . 0 8 .201 6 VM/ - / COPY TO : 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.