Asst.C.I.T., Bangalore V. M/s Bosch Limited, Bangalore

ITA 1556/BANG/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6567 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PERCY PARDIWALA SR
• Keywords: Earning of tax free income; Question of law; Bad and doubtful debts; Rule 8D; Set aside
• Section: 43B; 14A; 72; 13; 37

Judgement Text

IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBERAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER IT(TP)A NO.1556/BANG/2014 ASSESSMENTYEAR:2010-11 ACIT (LTU) CIRCLE-I BANGALORE VS. M/S. BOSCH LIMITED HOSUR ROAD ADUGODI BANGALORE-560 030 PAN NO : AAACM9840P APPELLANT RESPONDENT IT(TP)A NO.1582/BANG/2014 ASSESSMENT YEAR: 2010-11 M/S. BOSCH LIMITED HOSUR ROAD ADUGODI BANGALORE-560 030 VS. DEPUTY COMMISSIONER OF INCOME-TAX (LTU) BANGALORE 560 085 APPELLANT RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR SINGH, D.R. RESPONDENT BY : SHRI PERCY PARDIWALA, SR. A.R. DATE OF HEARING : 09.09.2020 DATE OF PRONOUNCEMENT : 16.09.2020 O R D E R PER B.R. BASKARAN. ACCOUNTANT MEMBER: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 28.08.2014 PASSED BY LD. CIT(A) (LARGE TAX PAYERS U NIT, BENGALURU) AND THEY RELATE TO THE ASSESSMENT YEAR 2010-11. IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 2 OF 15 2. THE REVENUE HAS FILED THE APPEAL CHALLENGI NG THE DECISION RENDERED BY LD. CIT(A) IN RESPECTIVE ISSUE RELATING TO DISALLOWANCE OF EXPENDITURE ON PURCHASE OF APPLICATION SOFTWARE. AT THE TIME OF HEARING, BOTH THE PARTIES SUBMITTED THAT THE TAX EF FECT INVOLVED IN THE APPEAL FILED BY THE REVENUE IS LESS THAN RS.50 LAKHS AND HENCE, IN VIEW OF THE CIRCULAR NO.17/2019 DATED 08-08-20 19 ISSUED BY CBDT, THE REVENUE IS PRECLUDED FROM PURSUING THIS A PPEAL. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL OF THE REVENUE IN LIMINI. 3. GROUNDS OF APPEALS URGED BY THE ASSESSEE REL ATE TO THE FOLLOWING ISSUES: A) DISALLOWANCE OF PROVISION MADE TOWARDS INTEREST PAY ABLE TO CENTRAL EXCISE DEPARTMENT. B) DISALLOWANCE OF INTEREST EXPENDITURE PAYABLE TO MIC RO, SMALL AND MEDIUM ENTERPRISES. C) DISALLOWANCE OF PART OF WEIGHTED DEDUCTION CLAIMED U/S 35(2AB) OF THE ACT. D) DISALLOWANCE MADE U/S 14A OF THE ACT. E) DISALLOWANCE OF CLAIM OF PROVISIONS FOR BAD AND DOU BTFUL DEBTS. 4. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURE OF FUEL INJECTION EQUIPMENTS, AUTO ELECTRIC ITEMS, POR TABLE ELECTRIC POWER TOOLS, ETC. THE A.O. COMPLETED THE ASSESSMEN T DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.946.15 CRORE S BY MAKING VARIOUS ADDITIONS. THE APPEAL FILED BY THE ASSESSE E BEFORE LD. CIT(A) WAS PARTLY ALLOWED. AGGRIEVED BY THE DECISI ON RENDERED BY LD. CIT(A) ON THE ISSUES CITED IN THE PRECEDING PAR AGRAPHS, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. THE FIRST ISSUE RELATES TO DISALLOWANCE OF CLAIM OF INTEREST PAYABLE ON SALES TAX, EXCISE DUTY AND CUSTOMS DUTY. DURING THE IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 3 OF 15 YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED A SU M OF RS.51,49,959/- AS INTEREST PAYABLE TOWARDS CERTAIN DEMANDS PERTAINING TO SALES TAX OF RS.7,59,346/- AND CUSTOM S DUTY OF RS.43,90,613/-. THE ABOVE SAID AMOUNT WAS DEBITED TO PROFIT & LOSS ACCOUNT AND WAS NOT PAID. THE A.O. PROPOSED T O INVOKE PROVISIONS OF SECTION 43B OF THE ACTIN ORDER TO DIS ALLOW THE ABOVE SAID AMOUNT. HOWEVER, THE ASSESSEE CONTENDED THAT THE PROVISIONS OF SECTION 43B OF THE ACT ARE NOT APPLICABLE, SINCE INTEREST ON TAXES IS NOT COVERED U/S 43B OF THE ACT. THE A.O. DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY DIS ALLOWED THE ABOVE SAID AMOUNT OF RS.51,49,959/-, APPARENTLY U/S 43B OF THE ACT. THE LD. CIT(A) NOTICED THAT AN IDENTICAL ISSU E HAS BEEN CONSIDERED BY THE BENGALURU BENCH OF ITAT IN ASSESS EES OWN CASE AND IT WAS DECIDED AGAINST THE ASSESSEE. ACCORDING LY, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. 6. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. WE NOTICE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDER ED BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NOS. 713, 714, 750 & 751/BANG/2014 RELATING TO ASSESSMENT YEAR 200 7-08 & 2008-09, VIDE ITS ORDER DATED 6.11.2017 AND IT WAS DECIDED AGAINST THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTR ACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY THE COORDI NATE BENCH ON THE ABOVE SAID ISSUE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE CO-ORDINATE B ENCH IN AY 2008-09:- 3. GROUND NO.1 IS REGARDING DISALLOWANCE OF PROVIS ION MADE TOWARDS INTEREST PAYABLE TO CUSTOMS DEPARTMENT. THIS GROUND IS COMMO N IN BOTH THE ASSESSMENT YEARS. 4. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTAT IVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELE VANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS TRIBUNAL IN ASSESSEE' S OWN CASE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 IN ITA NOS.671, 672 & 66 5/BANG/2011 AND ITA IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 4 OF 15 NO.1211/BANG/2015 VIDE ORDER DT.8.9.2016 HAS CONSID ERED AND DECIDED THIS ISSUE IN AS UNDER : ' GROUND NO.6 RAISED BY THE ASSESSEE IS AS UNDER; '6. THE LD., CIT(A)LTU ERRED IN UPHOLDING THE ACTIO N OF THE AO IN NOT ALLOWING A DEDUCTION FOR THE PROVISION MADE TOWARDS INTEREST P AYABLE TO CENTRAL EXCISE DEPT. SALES TAX ETC., DEPT. AMOUNTING TO RS.2,96,24,753/- ALTHOUGH THE APPELLANT HAS FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING'. 8. IT WAS FAIRLY CONCEDED BY THE LD. AR OF THE ASSE SSEE THAT THIS ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2004-05 IN IT(TP)A NO.670(B)/2011 DATED 20-08- 2015. HE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND HAS DRAWN OUR ATTENTION TO PARA-4 ON PAGE-10 OF THE TRIBUNAL ORDER. FOR THE SAKE OF READY REFERENCE, WE REPRODUCE PARA-4 OF THIS TRIBUNAL ORDER AS UNDER; ' AS REGARDS OF APPEAL NO.8 IS CONCERNED, AGAINST T HE ORDER OF THE CIT(A) IN UPHOLDING THE ORDER OF THE AO IN NOT ALLOWING DE DUCTION FOR PROVISION MADE TOWARDS INTEREST PAYABLE TO CENTRAL EXCISE DEP ARTMENT AND SATES TAX DEPARTMENT AT RS.4,29,67,460/- THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED AGAINST THE AS SESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2000-01 AND 2001-02 WHICH IS PLACED AT PAGES 3 TO 58 OF THE CAS E LAWS PAPER BOOK FILED BEFORE US. THE TRIBUNAL, AT PARA-6 OF ITS ORDER, HA S OBSERVED THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 1994-05 AND 1999-00 W HEREIN THE ACTION OF THE CIT(A) ON DISALLOWING INTEREST PAYABLE TO CENTR AL EXCISE DEPARTMENT HAS BEEN UPHELD BY THE TRIBUNAL. RESPECTFULLY FOLLO WING THE SAME, HIS GROUND OF APPEAL (NO.8) OF THE ASSESSEE IS REJECTED '. FROM THE ABOVE PARA, WHAT IS SEEN THAT THIS ISSUE I S COVERED AGAINST THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEE'S OWN CASE FOR TH E ASSESSMENT YEARS 2000-01 & 2001-02 AND HENCE, THIS GROUND OF THE ASSESSEE IS R EJECTED BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER.' THUS IT IS CLEAR THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISIONS OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE. ACCORDINGLY F OLLOWING THE EARLIER ORDERS OF THIS TRIBUNAL CITED SUPRA, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF AUTHORITIES BELOW QUA THIS ISSUE. THIS GROUND OF AS SESSEE'S APPEAL IS DISMISSED. WE NOTICE THAT THE VIEW TAKEN BY LD CIT(A) IS CONSI STENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH AND HENCE WE UP HOLD THE SAME. 7. THE NEXT ISSUE RELATES TO DISALLOWANCE OF I NTEREST PAYABLE TO MICRO, SMALL AND MEDIUM ENTERPRISES BY INVOKING SEC TION 23 OF MSMED ACT. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 5 OF 15 HAS CLAIMED A SUM OF RS.33,83,134/- AS INTEREST PAY ABLE TO MICRO, SMALL AND MEDIUM ENTERPRISES. THE A.O. NOTICED THA T THE PROVISIONS OF SECTION 23 OF MICRO, SMALL AND MEDIUM ENTERPRISES ACT STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN T HE INCOME TAX ACT, 1961, THE AMOUNT OF INTEREST PAYABLE OR PAID B Y ANY BUYER, UNDER OR IN ACCORDANCE WITH THE PROVISIONS OF THE A CT, SHALL NOT, THE PURPOSE OF COMPUTATION OF INCOME UNDER THE INCOME T AX ACT, 1961 BE ALLOWED AS DEDUCTION. SINCE THE PROVISIONS OF S ECTION 23 OF MSMED ACT HAS AN OVERRIDING EFFECT ON THE INCOME TA X ACT, THE A.O. DISALLOWED THE CLAIM OF ABOVE SAID INTEREST EX PENDITURE. THE LD. CIT(A) ALSO CONFIRMED THE SAME FOLLOWING THE DE CISION RENDERED BY HIM IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2 008-09. 8. WE HEARD THE PARTIES AND PERUSED THE RECORD . BEFORE US, THE LD A.R SUBMITTED THAT THE INCOME TAX ACT DOES NOT P ROVIDE FOR ANY SUCH DISALLOWANCE. HOWEVER, WE NOTICE THAT AN IDEN TICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN THE ASSE SSEES OWN CASE AND IT WAS DECIDED AGAINST THE ASSESSEE IN ASSESSME NT YEAR 2008- 09 (REFERRED SUPRA). FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER ABOVE BY THE ITA T IN ASSESSMENT YEAR 2008-09. 7. WE HAVE HEARD THE LEARNED SENIOR COUNSEL FOR TH E ASSESSEE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CAREFULLY P ERUSED THE PROVISIONS OF MSMED ACT. SECTION 23 OF MSMED ACT HAS SPECIFICA LLY PROVIDED THAT THE INTEREST PAID TO THE MICRO, SMALL & MEDIUM ENTE RPRISES ON ACCOUNT OF DELAYED PAYMENT IS NOT ALLOWABLE AS DEDUCTION FROM INCOME. FOR READY REFERENCE WE QUOTE SECTION 23 AND SECTION 24 AS UNDER : ' SECTION 23 - INTEREST NOT TO BE ALLOWED AS DEDUCT ION FROM INCOME. NOTWITHSTANDING ANYTHING CONTAINED IN THE INCOME TA X ACT, 1961 (43 OF 1961), THE AMOUNT OF INTEREST PAYABLE OR PAID BY AN Y BUYER, UNDER OR IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, SHALL N OT, FOR THE PURPOSES OF COMPUTATION OF INCOME UNDER THE INCOME TAX ACT , 1961, BE ALLOWED AS DEDUCTION. SECTION 24 - OVERRIDING EFFECT. IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 6 OF 15 THE PROVISIONS OF SECTIONS 15 TO 23 SHALL HAVE EFFECT NOTWITHSTANDING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OT HER LAW FOR THE TIME BEING IN FORCE.' THUS IT IS CLEAR THAT SECTION 23 OF MSMED ACT HAS S PECIFICALLY PROHIBITED THE ASSESSEE FROM CLAIMING THE DEDUCTION FROM THE I NCOME ON ACCOUNT OF INTEREST PAID TO MSME. SECTION 24 IS HAVING OVERRIDING EFFECT TO THE EXTENT OF ANY INCONSISTENT PROVISIONS CONTAINED IN ANY OTH ER LAW FOR THE TIME BEING. WE FURTHER NOTE THAT AS PER THE SECTION 15 O F THE MSMED ACT, THE LIABILITY OF THE BUYER TO MAKE THE PAYMENT TO MSME WITHIN THE PERIOD AS AGREED BETWEEN THE PARTIES OR IN CASE THERE IS A DE LAY BEYOND 45 DAYS FROM THE DATE OF ACCEPTANCE OR DATE OF DEEMED ACCEPTANCE THE INTEREST PAYABLE AS PER SECTION 16 SHALL BE THREE TIMES OF THE BANK RATE NOTIFIED BY THE RBI. THUS AS PER SECTION 16 OF THE MSMED ACT, THE PAYMEN T OF INTEREST ON DELAYED PAYMENT IS IN THE NATURE OF PENALTY OR IT I S PENAL INTEREST. THEREFORE ONCE THE PAYMENT OF INTEREST ON DELAYED PAYMENT TO MSME IS REGARDED AS A PENAL IN NATURE THEN THE SAID EXPENDITURE IS OTHERW ISE NOT ALLOWABLE UNDER SECTION 37 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). HENCE, IN VIEW OF THE SPECIFIC PROVISIONS UNDER MSMED ACT, 20 06 FOR PAYMENT OF INTEREST TO THE MSME BEING PENAL IN NATURE AND HAVI NG THE OVERRIDING EFFECT OF SECTIONS 15 TO 23 , WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW IN DISALLOWING THIS CLAIM OF INTEREST PAID TO THE MSME. FOLLOWING THE DECISION RENDERED BY THE COORDINATE B ENCH, WE UPHOLD THE ORDER PASSED BY LD. CIT(A) ON THIS ISSUE. 9. THE NEXT ISSUE RELATES TO CLAIM OF WEIGHTE D DEDUCTION MADE BY THE ASSESSEE U/S 35(2AB) OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED A SUM OF RS.40. 96 CRORES AS WEIGHTED DEDUCTION U/S 35(2AB) OF THE ACT. THE ASS ESSEE HAD CLAIMED WEIGHTED DEDUCTION ON THE GROSS AMOUNT OF E XPENDITURE INCURRED BY IT ON R & D ACTIVITIES. HOWEVER, THE A .O. TOOK THE VIEW THAT THE DEDUCTION IS ALLOWABLE ON THE NET AMOUNT O F EXPENDITURE, I.E., EXPENDITURE AS REDUCED BY RELATED INCOME. AC CORDINGLY, THE A.O. RESTRICTED THE CLAIM OF THE ASSESSEE U/S 35(2A B) OF THE ACT ON THE NET AMOUNT OF EXPENDITURE, I.E., EXPENDITURE AF TER DEDUCTION OF RELATED INCOME. THE SAME RESULTED IN AN ADDITION O F RS.29.03 CRORES. THE LD. CIT(A) CONFIRMED THE SAID ADDITION . IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 7 OF 15 10. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. WE NOTICE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDER ED BY THE COORDINATE BENCH IN ASSESSMENT YEAR 2008-09 (SUPRA) AND IT WAS DECIDED IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PA SSED BY THE COORDINATE BENCH IN 2008-09. THUS IT IS CLEAR THAT THE TRIBUNAL WHILE DECIDING THIS ISSUE HAS FOLLOWED THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF DCIT VS. MICROLAB (SUPRA) AS WELL AS DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. WHEELS INDIA PVT. LTD. 336 ITR 513 WHEREIN IT WAS HELD THAT THE INCOME EARNED BY THE ASSESSEE FROM THE R & D CENTRE CANNOT BE REDUCED FOR THE FOR THE PURPOSE OF ALLOWING THE DED UCTION UNDER SECTION 35(2AB) BECAUSE THE SAID INCOME IS PART OF THE TOTAL & 751 /BANG/2014 INCOME OF THE ASSESSEE. ACCORDINGLY IN PRINCIPLE TH E ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE THAT THE INCOME EARNED BY TH E ASSESSEE FROM R&D CENTRE CANNOT BE REDUCED FROM THE EXPENDITURE FOR T HE PURPOSE OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. HOWEVER, SINCE THE RELEVANT DETAILS AND FACTS WERE NOT AVAILABLE BEFORE THE TRI BUNAL TO GIVE A FINDING ABOUT THE NATURE OF THE RECEIPT WHETHER INCOME /REV ENUE OR REIMBURSEMENT OF THE EXPENDITURE OR GRANTS THEREFORE, THE ISSUE W AS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR LIMITED PURPOSE OF VER IFICATION OF THE SAID FACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RAISED A VERY SERIOUS OBJECTION THAT NEITHER THE ASSESSING OFFICER NOR TH IS TRIBUNAL HAS JURISDICTION TO TINKER WITH THE AMOUNT OF EXPENDITU RE AS GIVEN IN THE APPROVAL CERTIFICATE BY THE DSIR. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON A SERIES OF DECISIONS HOWEVER, WE FIND THAT TH E DECISIONS RELIED UPON BY THE LD. DR ON THE ISSUES THAT ONCE THE DSIR APPR OVED THE R&D CENTRE THEN THE ASSESSING OFFICER CANNOT DENY THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR WEIGHT ED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. FURTHER IN THE CASE IN HAND THERE IS N O DISPUTE REGARDING THE GROSS TOTAL EXPENDITURE AND T HE RECEIPTS THEREFORE, THERE IS NO QUESTION OF TINKERING WITH THE DETAILS GIVEN BY THE DSIR IN THE APPROVAL ORDER. THE ONLY QUESTION IS THE COMPUTATIO N OF QUANTUM OF WEIGHTED DEDUCTION UNDER SECTION 35(2AB) AND ON THE SPECIFIC ASPECT OF RECEIPTS OF THE R&D CENTRE ARE REQUIRED TO BE REDUC ED OR NOT FROM THE EXPENDITURE FOR THIS PURPOSE. THERE IS NO DISPUTE A BOUT THE NATURE OF THE RECEIPTS AS IT IS MANIFEST FROM THE DETAILS GIVEN I N THE CERTIFICATE ISSUED BY THE DSIR AND ALSO NOT DISPUTED BY THE & 751/BANG/20 14 ASSESSING OFFICER THAT THESE RECEIPTS ARE IN THE NATURE OF FEES AND S ERVICE CHARGES AND PART OF THE TOTAL INCOME OF THE ASSESSEE. THEREFORE IN VIEW OF THE BINDING PRECEDENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS. MICROLABS LTD. (SUPRA) AS WELL AS THE DECISION OF THE CO- ORD INATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2005-06 & 2006- 07, WE HOLD THAT THE RECEIPTS OF THE R&D CENTRE WHI CH IS IN THE NATURE OF REVENUE/INCOME BEING PART OF THE TOTAL INCOME OF TH E ASSESSEE CANNOT BE IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 8 OF 15 REDUCED FROM THE GROSS EXPENDITURE OF IN-HOUSE R&D CENTRE FOR THE PURPOSE OF WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. HENCE, WE ALLOW THE CLAIM OF THE ASSESSEE AND SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. FOLLOWING THE ORDER PASSED BY THE COORDINATE BENCH IN 2008-09, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISS UE AND DIRECT THE A.O. TO ALLOW THE DEDUCTION U/S 35(2AB) OF THE ACT ON THE GROSS AMOUNT OF EXPENDITURE. 11. THE NEXT ISSUE RELATES TO DISALLOWANCE MAD E U/S 14A OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, THE ASSE SSEE HAD RECEIVED EXEMPT INCOME OF RS.38.81 CRORES. THE ASS ESSEE HAD DISALLOWED A SUM OF RS.10.08 LAKHS U/S 14A OF THE A CT. THE A.O. DID NOT ACCEPT THE WORKINGS FURNISHED BY THE ASSESS EE AND ACCORDINGLY, COMPUTED DISALLOWANCE AS PER RULE 8D O F THE I.T. RULES. THE SAME WORKED OUT TO RS.3.35 CRORES. AFTER GIVIN G SET OFF OF RS. 10 LAKHS MADE BY THE ASSESSEE VOLUNTARILY, THE A.O. ADDED A SUM OF RS.3.25 CRORES TO THE TOTAL INCOME OF THE ASSESSEE U/S 14A OF THE ACT. THE LD. CIT(A) ALSO CONFIRMED THE SAME. 12. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. THE LD. A.R. INVITED OUR ATTENTION TO THE COPY OF B ALANCE SHEET PLACED AT PAGE 278 OF THE PAPER BOOK AND SUBMITTED THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE AS ON 31.3.2010 I S MORE THAN THE VALUE OF INVESTMENT AND HENCE IT SHOULD BE PRESUMED THAT THE INVESTMENTS HAVE BEEN MADE OUT OF OWN FUNDS. IN TH AT CASE, NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IN TERMS O F RULE 8D(2)(II) OF THE I.T. RULES IS CALLED FOR. IN SUPPORT OF THIS P ROPOSITION, THE LD. A.R. PLACED HIS RELIANCE ON THE DECISION RENDERED B Y HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE INDUS TRIES LTD. (2019) 102 TAXMANN.COM 52. WITH REGARD TO THE DISA LLOWANCE MADE OUT OF ADMINISTRATIVE EXPENSES UNDER RULE 8D(2 )(III) OF THE I.T. RULES, THE LD. A.R. SUBMITTED THAT MOST OF THE INVE STMENTS MADE BY IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 9 OF 15 THE ASSESSEE DID NOT YIELD DIVIDEND INCOME AND HENC E, AS PER THE DECISION RENDERED BY SPECIAL BENCH OF ITAT IN THE C ASE OF VIREET INVESTMENTS P LTD (165 ITD 27), THE INVESTMENTS WHI CH DID NOT YIELD EXEMPT INCOME SHOULD NOT BE CONSIDERED FOR COMPUTIN G AVERAGE VALUE OF INVESTMENTS. THE LD. A.R. FURTHER SUBMITT ED THAT THE ASSESSEE GAVE SCIENTIFIC METHOD OF WORKING FOR ARRI VING AT THE EXPENDITURE RELATING TO EXEMPT INCOME AND THE SAME WAS NOT EXAMINED PROPERLY BY THE TAX AUTHORITIES. HE FURTH ER SUBMITTED THAT THIS ISSUE WAS RESTORED TO THE FILE OF THE A.O . BY THE COORDINATE BENCH IN ASSESSMENT YEAR 2008-09. HE SUBMITTED THA T THE COORDINATE BENCH HAS ALSO RESTORED THE ISSUE OF EXA MINING THE AVAILABILITY OF OWN FUNDS TO THE FILE OF THE A.O. I N ASSESSMENT YEAR 2008-09, SINCE THE RELEVANT DETAILS WERE NOT AVAILA BLE BEFORE THEM AT THE TIME OF HEARING. HOWEVER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FURNISHED ALL THE R ELEVANT DETAILS IN THE PAPER BOOK AND THE ATTENTION OF THE BENCH WAS I NVITED TO THE BALANCE SHEET OF THE ASSESSEE AND HE HAS ALSO DEMON STRATED THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE IS MORE T HAN THE VALUE OF INVESTMENTS. ACCORDINGLY, HE PRAYED THAT A FINDING MAY BE GIVEN ON THIS ISSUE BY THE TRIBUNAL ITSELF. 13. THE LD. D.R. SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE A.O., FOLLOWING THE DECISION RENDERED B Y COORDINATE BENCH IN THE ASSESSMENT YEAR 2008-09. 14. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. FROM THE BALANCE SHEET PLACED AT PAGE 278 OF THE PA PER BOOK, WE NOTICE THAT THE OWN FUNDS AVAILABLE WITH THE ASSESS EE AS ON 1.4.2009 AND 31.3.2010 ARE RS.3075.67 CRORES AND RS .3601.21 CRORES RESPECTIVELY. THE VALUE OF INVESTMENTS AS O N 1.4.2009 AND 31.3.2010 ARE RS.991.46 CRORES AND RS.1676.90 CRORE S RESPECTIVELY. ADMITTEDLY, THE OWN FUNDS AVAILABLE WITH THE ASSESS EE IS MORE THAN IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 10 OF 15 THE VALUE OF INVESTMENTS AS AT THE BEGINNING AND EN D OF THE FINANCIAL YEAR. ACCORDINGLY, THE PRESUMPTION IS TH AT THE ASSESSEE HAS USED HIS OWN FUNDS FOR MAKING THE INVESTMENTS, IN WHICH CASE NO DISALLOWANCE OUT OF INTEREST EXPENDITURE AS PER RULE 8D(2)(II) OF THE I.T. RULES IS CALLED FOR. IN THIS REGARD, WE D ERIVE SUPPORT FROM THE DECISION RENDERED BY HONBLE SUPREME COURT IN T HE CASE OF RELIANCE INDUSTRIES LTD. (SUPRA). ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE INTEREST DISALLOWANCE MADE UNDER RULE 8D (2)(II) OF THE I.T. RULES. 15. WITH REGARD TO THE DISALLOWANCE MADE OUT OF ADMINISTRATIVE EXPENSES, UNDER RULE 8D(2)(III) OF THE I.T RULES, T HE LD. A.RS MAIN CONTENTION IS THAT MANY OF THE INVESTMENTS HAVE NOT YIELDED DIVIDEND INCOME AND HENCE, AS PER THE PRINCIPLE LAI D DOWN BY SPECIAL BENCH OF ITAT IN THE CASE OF VIREET INVESTM ENTS P LTD (SUPRA), THE INVESTMENTS, WHICH DID NOT YIELD EXEMP T INCOME SHOULD NOT BE CONSIDERED FOR COMPUTING THE AVERAGE VALUE O F INVESTMENTS WHILE WORKING OUT DISALLOWANCE UNDER RULE 8D OF THE I.T. RULES. THE LD A.R SUBMITTED THAT THE ASSESSEE AGREES TO THE CO MPUTATION OF DISALLOWANCE U/R 8D(2)(III) OF I T RULES BY FOLLOWI NG THE PRINCIPLE LAID DOWN IN THE CASE OF VIREET INVESTMENTS P LTD (SUPRA ). SINCE THE FACTUAL ASPECTS RELATING TO THIS ISSUE REQUIRE EXAM INATION, WE RESTORE THE ISSUE OF MAKING DISALLOWANCE UNDER RULE 8D(2)(III) OF THE I.T. RULES TO THE FILE OF THE A.O. BY FOLLOWING THE PRINCIPLE LAID DOWN IN THE CASE OF VIREET INVESTMENTS P LTD (SUPRA). HOWEVER, IF THE DISALLOWANCE WORKED OUT BY THE A.O. TURNS OUT TO BE LOWER THAN THE AMOUNT OF DISALLOWANCE MADE BY THE ASSESSEE IN THE RETURN OF INCOME, THEN THE DISALLOWANCE MADE BY THE ASSESSEE SHOULD BE RESTORED. 16. THE LAST ISSUE RELATES TO DISALLOWANCE OF PRO VISION FOR BAD AND DOUBTFUL DEBT U/S 36(1)(VII) OF THE ACT. THE A.O. NOTICED THAT THE IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 11 OF 15 ASSESSEE HAS DEBITED A SUM OF RS.12.04 CRORES IN TH E PROFIT & LOSS ACCOUNT TOWARDS PROVISION FOR DOUBTFUL DEBTS AND CLAIMED THE SAME AS DEDUCTION. THE AO NOTICED THAT THE MERE PR OVISION CREATED FOR DOUBTFUL DEBTS IS NOT ALLOWABLE UNDER THE INCOM E TAX ACT AND ONLY THE BAD DEBTS ACTUALLY WRITTEN OFF IN THE BOOK S OF ACCOUNT IS ALLOWABLE AS DEDUCTION U/S 36(1)(VII) OF THE ACT. WHEN QUESTIONED, THE ASSESSEE PLACED ITS RELIANCE ON THE DECISION RE NDERED BY HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK VS. CIT (3 23 ITR 166) AND SUBMITTED THAT THE PROVISION FOR BAD AND DOUBTF UL DEBTS HAS BEEN REDUCED FROM THE AMOUNT OF SUNDRY DEBTORS IN T HE BALANCE SHEET AND THE SAME IS SUFFICIENT COMPLIANCE MENTION ED U/S 36(1)(VII) OF THE ACT REGARDING WRITING OFF OF DEBT S AS BAD. IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SECTION 36 (1)(VII) OF THE ACT, THE AMOUNT OF BAD DEBT OR PART THEREOF WHICH IS WRI TTEN OFF AS IRRECOVERABLE IS ALLOWABLE AS DEDUCTION. THE A.O. TOOK THE VIEW THAT THE BAD DEBT SHOULD HAVE BEEN ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNTS AS IRRECOVERABLE AND MERE REDUCTION OF PRO VISIONS FOR DOUBTFUL DEBTS FROM THE AMOUNT OF SUNDRY DEBTORS BA LANCE IN THE BALANCE SHEET DOES NOT AMOUNT TO COMPLIANCE TO THE CONDITION PRESCRIBED U/S 36(1)(VII) OF THE ACT. THE A.O. FUR THER TOOK THE VIEW THAT THE DECISION RENDERED BY THE HONBLE SUPREME C OURT IN THE CASE OF VIJAYA BANK PERTAINS TO ASSESSMENT YEAR 199 3-94 AND 1995- 96 AND HENCE THE SAME CANNOT BE FOLLOWED. THE ASSE SSEE HAD ALSO PLACED ITS RELIANCE ON THE DECISION RENDERED BY HON BLE KARNATAKA HIGH COURT IN THE CASE OF SANDVIK ASIA LIMITED (ITA NO.563/2006). THE A.O. DID NOT FOLLOW THE SAME BY STATING THAT TH E HONBLE KARNATAKA HIGH COURT HAS FOLLOWED THE DECISION REND ERED BY HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK. ACCORDINGLY, HE DISALLOWED THE CLAIM OF PROVISION FOR DOUBTFUL DEBT S AND THE LD. CIT(A) ALSO CONFIRMED THE SAME. IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 12 OF 15 17. WE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. THE LD. A.R. STRONGLY PLACED HIS RELIANCE ON THE DE CISION RENDE4RED BY HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK (SUPRA) AND ALSO BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANDVIK ASIA LIMITED (SUPRA). HE INVITED OUR ATTENTION TO THE C OPY OF BALANCE SHEET, MORE PARTICULARLY SCHEDULE OF SUNDRY DEBTORS PLACED AT PAGE 286 OF THE PAPER BOOK AND SUBMITTED THAT PROVISION FOR DOUBTFUL DEBTS HAVE BEEN REDUCED FROM THE AMOUNT OF SUNDRY D EBTORS. ACCORDINGLY, HE SUBMITTED THAT, AS PER THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK (S UPRA), THIS DISCLOSURE AMOUNTS TO WRITE OFF AS MENTIONED U/S 36 (1)(VII) OF THE ACT. ACCORDINGLY, HE PRAYED FOR VACATION OF THIS D ISALLOWANCE. 18. WE HEARD LD. D.R. ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE HONBLE KARNATAKA HIGH COURT HAS CO NSIDERED AN IDENTICAL ISSUE IN THE CASE OF SANDVIK ASIA LIMITED AND IT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK . FOR THE SAKE OF CONVENIENCE, WE EXTRACT THE ORDER PASSED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANDVIK ASIA LI MITED. 2. THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF DO UBTFUL DEBTS FOR THE ASSESSMENT YEARS 1996-97 AND 1998-99. THE ASSESSEE HAD ADOPTED IN THE P & L ACCOUNT PROVISION FOR DOUBTFUL DEBTS OF RS. 16. 94.455/- FOR THE ASSESSMENT YEAR 1996-97 AND RS. 8,32,905/- FOR THE ASSESSMENT YEAR 1998- 99. SINCE THE METHODOLOGY FOLLOWED BY THE ASSESSEE TO WRITE OFF WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 36(1)(VII) OF THE INCOME TAX ACT, 1961, IT'S CLAIM WAS NOT ALLOWED. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFERRED APPEAL TO THE COMMISSIONER OF IN COME TAX (APPEALS). THE APPELLATE COMMISSIONER HELD THE WRITING OFF DOE S NOT NECESSARILY REQUIRE CREDIT TO BE GIVEN TO EACH DEBTOR'S ACCOUNT . IF BAD DEBTS ARE DEBITED IN PROFIT AND LOSS ACCOUNT AND CREDITED TO ANOTHER ACCOUNT NAMED AS BAD DEBT RESERVE ACCOUNT, BAD DEBT SUSPENSE ACCOUNT ETC , THE REQUIREMENT OF WRITING OFF IS MET EVEN THOUGH INDIVIDUAL DEBTOR'S ACCOUNTS ARE NOT CREDITED. THEREFORE, HE HELD, THE ASSESSING OFFICER WAS NOT J USTIFIED IN DISALLOWING THE PROVISION FOR DOUBTFUL DEBTS IN EACH ASSESSMENT YEAR. IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 13 OF 15 3. AGGRIEVED BY THE SAID ORDER, THE REVENUE PREFERR ED APPEAL TO THE TRIBUNAL, WHICH HAS CONFIRMED THE SAID ORDER. HOWEV ER, THE TRIBUNAL HELD THAT IT IS NOT MADE MANDATORY THAT THE WRITE OFF CA N BE ONLY BY SQUARING-UP THE ACCOUNT OF DEBTORS, THE LAW IS THAT THE WRITE O FF SHOULD BE MADE IN THE ACCOUNTS. IN THIS CASE THE ASSESSEE HAS DEBITED THE PROFIT AND LOSS ACCOUNT AND ORDER ENTRY IS BY WAY OF REDUCTION OF SUCH SUM FROM THE TOTAL DEBTORS ACCOUNT. THUS, THE PROVISION OF SECTION 36(1)(VII) OF THE ACT IS DULY COMPLIED WITH AND THEREFORE THE APPELLATE COMMISSIO NER WAS JUSTIFIED IN ALLOWING THE CLAIM OF BAD DEBT. AGGRIEVED BY THE SA ID ORDER THE REVENUE HAS PREFERRED THESE APPEALS. 4. THE APEX COURT IN THE CASE OF VIJAYA BANK V. COMMISSIONER OF INCOME TAX REPORTED IN ( 2010) 323 ITR 166 (SC) VOLUME 323 HAS HELD AS UNDER:- 6. THE FIRST QUESTION IS NO MORE RES INTEGRA. RECE NTLY, A DIVISION BENCH OF THIS COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LIMITED V. JOINT COMMISSIONER OF INCOME TAX, COIMBATORE REPORTED IN (2010) 320 ITR 577, (IN WHICH ONE OF US S.H KAPADIA J. WAS A PARTY) HAD AN OCCASION TO DEAL WITH THE FIRST QUESTION AND IT HAS BEEN ANSWERED, A CCORDINGLY, IN FAVOUR OF THE ASSESSEE, VIDE PARAGRAPH 25, WHICH READS AS UND ER (PAGE 604 PRIOR TO APRIL 1, 2989, THE LAW, AS IT THEN STOOD, TOOK THE VIEW THAT EVEN IN CASES IN WHICH THE ASSSSSEE(S) MAKES ONLY A PROVISION IN ITS ACCOUNTS FOR BAD DEBTS AND INTEREST THEREON AND EVE N THOUGH THE AMOUNT IS NOT ACTUALLY WRITTEN OFF BY DEBITING THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND CREDITING THE AMOUNT TO THE ACCOUNT OF THE DEBTOR, THE ASSESSEE WAS STILL ENTITLED TO DEDUCTION UNDER SECTION 36(1) (VII), (SEE CIT V. JWALA PRASAD TIWARL (1953) 24 ITR 537 (BOM ) AND VITHALADAS H. DHANJIBHAIBARDANWAIA V. CIT ( 1981) 130 ITR 95 (GUJ ), SUCH STATE OF LAW PREVAILED UP TO AND INCLUDING THE ASSESSMENT YEAR 1 988-1989, HOWEVER, BY INSERTION (WITH EFFECT FROM APRIL 1, 1989) OF A NEW EXPLANATION IN SECTION 36(2)(VII), IT HAS BEEN CLARIFIED THAT ANY BAD DEBT WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE WILL N OT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBT MADE IN THE ACCOUNTS OF T HE ASSESSEE. THE SAID AMENDMENT INDICATES THAT BEFORE APRIL 1, 1989, EVEN A PROVISION COULD BE TREATED AS A WRITE OFF. HOWEVER, AFTER APRIL 1, 198 9, A DISTINCT DICHOTOMY IS BROUGHT IN BY WAY OF THE SAID EXPLANATION TO SECTIO N 36(1)(VII). CONSEQUENTLY, AFTER APRIL 1, 1989, A MERE PROVISION FOR BANGALORE BAD DEBT WOULD NOT BE ENTITLED TO DICHOTOMY, ONE MUST UNDERS TAND HOW TO WRITE OFF. IF AN ASSESSEE DEBITS AN AMOUNT OF DOUBTFUL D EBT TO THE PROFIT AND LOSS ACCOUNT AND CREDITS THE ASSET ACCOUNT LIKE SUNDRY D EBTOR'S ACCOUNT, IT WOULD CONSTITUTE A WRITE OFF OF AN ACTUAL DEBT. HOWEVER, IF AN ASSESSEE DEBITS PROVISION FOR DOUBTFUL DEBT TO THE PROFIT AND LOS S ACCOUNT AND MAKES A CORRESPONDING CREDIT TO THE CURRENT LIABILITIES AN D PROVISIONS ON THE LIABILITIES SIDE OF THE BALANCE SHEET, THEN IT WOUL D CONSTITUTE A PROVISION FOR DOUBTFUL DEBT. IN THE LATTER CASE, THE ASSESSEE WOU LD NOT BE ENTITLED TO DEDUCTION AFTER APRIL 1, 1989. 8. COMING TO THE SECOND QUESTION, WE MAY REITERATE THAT IT IS NOT IN DISPUTE THAT SECTION 36(1)(VII) OF THE 1961 ACT APPLIES BOTH TO BANKING AND IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 14 OF 15 NON-BANKING BUSINESSES. THE MANNER IN WHICH THE WRI TE OFF IS TO BE CARRIED OUT HAS BEEN EXPLAINED HEREINABOVE. IT IS IMPORTANT TO NOTE THAT THE ASSESSEE BANK HAS NOT ONLY BEEN DEBITING THE PROFIT AND LOSS ACCOUNT TO THE EXTENT OF THE IMPUGNED BAD DEBT, IT IS SIMULTANEOUS LY REDUCING THE AMOUNT OF LOONS AND ADVANCES OR THE DEBTORS AT THE YEAR-EN D, AS STATED HEREINABOVE. IN OTHER WORDS, THE AMOUNT OF LOANS AN D ADVANCES OR THE DEBTORS AT THE YEAR END IN THE BALANCE SHEET IS SHO WN 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 S UFFICE AND IN THE INTEREST OF TRANSPARENCY, IT WOULD BE DESIRABLE FOR THE ASSE SSEE BANK TO CLOSE EACH AND EVERY INDIVIDUAL ACCOUNT OF LOANS AND ADVANCES OR DEBTORS AS A PRE CONDITION FOR CLAMING DEDUCTION UNDER SECTION 36(1)(VII) OF THE 1961 ACT . THIS VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER B ECAUSE 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) AT PAGES 66, 67 AND 72 OF THE PAPER BOOK, WHICH REFERS TO THE APPREHENSIONS OF TH E ASSESSING OFFICER). IN THIS CONTEXT, IT MAY BE NOTED THAT THERE IS NO FIND ING OF THE ASSESSING OFFICER THAT THE ASSESSES HAD UNAUTHORISEDLY CLAIMED THE BE NEFIT OF DEDUCTION UNDER SECTION 36(1)(VII) TWICE OVER. THE ORDER OF THE ASS ESSING OFFICER IS BASED ON AN APPREHENSION THAT, IF THE ASSESSEE FAILS TO CLOS E EACH AND EVERY INDIVIDUAL ACCOUNT OF ITS DEBTOR, IT MAY RESULT IN THE ASSESSEE CLAIMING DEDUCTION TWICE OVER. IN THIS CASE, WE ARE CONCERNE D WITH THE INTERPRETATION OF SECTION 36(1)(VII) OF THE 1961 ACT . WE CANNOT DECIDE THE MATTER ON THE BASIS OF APPREHENSION/DESIRABILITY. IT IS ALWAYS OP EN TO THE ASSESSING OFFICER TO CALL FOR DETAILS OF INDIVIDUAL DEBTOR'S ACCOUNT IF THE ASSESSING OFFICER HAS REASONABLE GROUNDS TO BELIEVE THAT THE ASSESSEE HAS CLAIMED DEDUCTION, TWICE OVER. IN FACT, THAT EXERCISE HAS B EEN UNDERTAKEN IN SUBSEQUENT YEARS. THERE IS ALSO A FLIP SIDE TO THE ARGUMENT OF THE DEPARTMENT. THE ASSESSEE HAS INSTITUTED RECOVERY SU ITS IN COURTS AGAINST ITS DEBTORS. IF INDIVIDUAL ACCOUNTS ARE TO BE CLOSED, T HEN THE DEBTOR/DEFENDANT IN EACH OF THOSE SUITS WOULD RELY UPON THE BANK STA TEMENT AND CONTEND THAT ON AMOUNT IS DUE AND PAYABLE IN WHICH EVENT THE SUI T WOULD BE DISMISSED. IN THE LIGHT OF THE JUDGMENT OF APEX COURT, THERE I S NO MERIT IN THIS APPEAL. 5. THE APPEALS ARE DISMISSED ANSWERING THE SUBSTANT IAL QUESTION OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE HAVE NOTICED EARLIER THAT THE ASSESSEE HAS REDUC ED THE AMOUNT OF PROVISION FOR DOUBTFUL DEBTS FROM THE AMOUNT OF SUNDRY DEBTORS IN THE BALANCE SHEET. ACCORDINGLY, RESPECTFULLY FO LLOWING THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT, WE DIRECT THE A.O. TO DELETE THE IMPUGNED DISALLOWANCE. IT(TP)A NO.1556 & ITA NO.1582/BANG/2014 M/S. BOSCH LTD., BANGALORE PAGE 15 OF 15 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16-09-2020 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 16 TH SEPT, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.