Gujarat State Financial Services Ltd, Ahmedabad V. The Income tax Officer, Ward-4(1), Ahmedabad

ITA 2112/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0156 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 06-10-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S GEHLOT
• Keywords: Capital asset; Depreciation; Rule of consistency; Retrospective amendment; Bad and doubtful debts; Reason to believe
• Section: 234B; 143(1); 147; 148; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, B-BENCH,AHMEDABAD. BEFORE: SHRI T.K. SHARMA, JUDICIAL MEMBER A ND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (ASSESSMENT YEAR 1999-2000) GUJARAT STATE FINANCIAL SERVICES LTD. WING B,3 RD FLOOR, KHANIJ BHAVAN, 132 FT. RING ROAD, NR. UNIVERSITY GROUND, VASTRAPUR, AHD-380 009. VERSUS ACIT, CIRCLE 4, AHMEDABAD. ACIT, CIRCLE 4, AHMEDABAD. GUJARAT STATE FINANCIAL SERVICES LTD. WING B, 3 RD FLOOR, KHANIJ BHAVAN, 132 FT. RING ROAD, NR. UNIVERSITY GROUND, VASTRAPUR, AHD-380 009. (APPELLANT) (RESPONDENT) PAN: AAACG 5581 B FOR THE APPELLANT: SHRI YOGESH SHAH, AR FOR THE RESPONDENT SHRI B.S. GEHLOT, CIT DR [ ORDER PER SHRI D.C. AGRAWAL,: THESE ARE THE TWO APPEALS FOR THE ASSESSMENT YEAR 1990-2000, ONE FILED BY THE REVENUE AND OTHER FILED BY THE ASSESSEE. THE GROUNDS RAISED BY THE 2 PARTIES ARE ARGUMENTATI VE AND LENGTHY AND HENCE THE ISSUES RAISED THEREIN ARE SUMMARIZED AS U NDER: A. IN ASSESSEES APPEAL 1. REOPENING OF THE ASSESSMENT AS BAD. 2. CIT HAS WRONGLY CONFIRMED THE DISALLOWANCE MADE FOR PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT. 3. CIT HAS WRONGLY CONFIRMED THE DISALLOWANCE MADE IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. 2 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) 4. CIT(A) HAS WRONGLY CONFIRMED DISALLOWANCE OF PRI OR PERIOD EXPENSES. 5. CIT(A) HAS ERRONEOUSLY CONFIRMED CHARGING OF INT EREST UNDER SECTION 234B 6. CIT(A) HAS ERRONEOUSLY CONFIRMED THE CHARGING OF INTEREST UNDER SECTION 234D. B. IN REVENUES APPEAL FOLLOWING ISSUES ARE RAISED. I. LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRO NEOUSLY ALLOWED DEPRECIATION ON ASSETS OF SALE AND LEASE BA CK TRANSACTIONS. II. LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERR ONEOUSLY ALLOWED DEDUCTION OF PROVISION FOR BAD AND DOUBTFUL DEBTS WHILE COMPUTING BOOKED PROFIT UNDER SECTION 115JA O F THE ACT. III. LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ER RONEOUSLY ALLOWED DEDUCTION FOR PROVISION FOR DOMINATION IN T HE VALUE OF INVESTMENT WHILE COMPUTING BOOKED PROFIT UNDER S ECTION 115JA OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A GOV ERNMENT COMPANY ENGAGED IN THE BUSINESS OF FINANCING INDUSTRIAL UND ERTAKINGS IN THE STATE OF GUJARAT. WHILE EXAMINING THE ACCOUNTS OF THE AS SESSEE THE ASSESSING OFFICER NOTED THAT THE PROVISION FOR BAD AND DOUBTF UL DEBTS AND PROVISION FOR TAX WERE NOT INCLUDED WHILE COMPUTING BOOK PROF IT UNDER SECTION 115JA. EARLIER THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) ON 20-02-2001 ON A TOTAL INCOME OF RS. 1,40,67,881/- C OMPUTED BY THE ASSESSEE UNDER SECTION 115JA. LATER ASSESSING OFFI CER REALIZED THAT 3 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) CERTAIN CLAIMS ARE AGAINST THE EXPRESS PROVISION OF LAW AND THEREFORE HE RECORDED THE REASONS FOR RE-OPENING OF THE ASSESSME NT AS UNDER: THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 27.12.99 DECLARING NIL INCOME UNDER NORMAL PROVISIONS OF THE ACT AND INCOME OF RS. 1,40,67,881/- U/S 115JA OF THE ACT. THE RETURN WAS PROCESSED ON 20-02-2001 UNDER SECTION 143(1) OF THE I.T. ACT. AFTER PERUSAL OF THE RETURN OF THE INCOME, IT IS NO TICED THAT THE ASSESSEE COMPANY HAS DEBITED PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 6,04,18,812/- AND PROVISION FOR TA X AMOUNTING TO RS. 63,15,503/- TO THE P & L ACCOUNT. WHILE COMPUT ING THE BOOKED PROFIT UNDER SECTION 115JA OF THE I.T. ACT. PRO VISIONS FOR BAD AND DOUBTFUL DEBTS AND PROVISION FOR TAX HAVE NO T BEEN ADDED BACK TO THE NET PROFIT SHOWN IN THE P & L ACCOUNT A S PER THE REQUIREMENT OF EXPLANATION (C) OF SECTION 115JA OF THE I.T. ACT. IT HAS RESULTED IN THE UNDERSTATEMENT OF BOOKED PROFIT BY RS. 6,67,34,315/- LEADING TO UNDER ASSESSMENT OF INCOME AMOUNTING TO RS. 2,00,20,295/- (30% OF RS. 6,67,34,315/-). THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME TO THE TUNE OF RS. 2,00,20,295/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT. THE CASE NEEDS TO BE REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. HE ACCORDINGLY MADE THE IMPUGNED ADDITIONS IN THE R EASSESSMENT PROCEEDINGS. THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) CONFIRMED THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143(1). NOTICE UNDER SECTI ON 148 WAS ISSUED AFTER DUE RECORDING OF THE REASONS. THE REQUIREMEN T OF THE RECORDING OF 4 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) THE REASONS ON OBJECTIVE BASIS IS FULFILLED AND THE ACTION OF THE ASSESSING OFFICER INVOKING HIS JURISDICTION IS ACCORDING TO L AW. 3. BEFORE US, LEARNED AR FOR THE ASSESSEE DID NOT S ERIOUSLY PRESS THIS GROUND. THE CASE OF THE ASSESSEE IS COVERED IN THE MAIN PROVISION OF SECTION 147. THE PROVISO TO SECTION 147 WILL BE AP PLICABLE ONLY IN A CASE WHETHER ORIGINAL ASSESSMENT IS COMPLETED UNDER SECT ION 143(3). THE GROUND ON WHICH ASSESSMENT HAS BEEN SOUGHT TO BE RE OPENED ARE PURELY LEGAL. PRIMAFACIE THEY GIVE RISE TO BELIEF THAT IN COME HAS ESCAPED ASSESSMENT ON ACCOUNT OF NOT ADJUSTMENT OF PROVISIO N FOR A BAD AND DOUBTFUL DEBTS AND PROVISION FOR TAX. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS REJECTED. 4. ISSUE NO. 2 IS REGARDING DISALLOWANCE MADE FOR P ROVISION FOR DIMINUTION IN VALUE OF INVESTMENT. THE LEARNED ASS ESSING OFFICER HELD THAT THE CLAIM MADE BY THE ASSESSEE IS NOTIONAL AND AN UNASCERTAINED LIABILITY. THE LD. COMMISSIONER OF INCOME TAX (APP EALS) OBSERVED THAT ASSETS IN RESPECT OF WHICH PROVISION WAS MADE WERE ONLY INVESTMENTS AND NOT STOCK IN TRADE DURING THE RELEVANT TIME. THEY BEING CAPITAL ASSET, LOSS OR GAIN CAN BE COMPUTED ONLY ON THEIR TRANSACTION A ND NOT PRIOR TO THAT EVENT. THUS, EVEN THOUGH PROVISION WERE MADE IN TH E ACCOUNTS, AND CLAIM IS IN ACCORDANCE WITH NORMS OF RBI BUT IT IS PREMAT URE AND IS NOT IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT. 5. WE HAVE HEARD LEARNED AR AND LEARNED DR. THE IS SUE IS DECIDED AGAINST THE ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 229/A/2005 AND ITA NO. 403/A/05 DECIDED ON 10-07-2009 AND ALSO IN GUJARAT GAS FINANCIAL SERVICES LIMITED VS. ACIT 115 ITD 218. THE OPERATION PUT OF THIS JUDGMENT ON THIS ISSUE RE ADS AS UNDER: 5 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) 102. THE NEXT GROUND IS REGARDING PROVISION MADE F OR NON- PERFORMING ASSETS OF RS. 1,32,12,521 IN ASSESSMENT YEAR 2001-02 AND RS. 2,22,96,657 IN ASSESSMENT YEAR 2002-03 AS PER T HE DIRECTIVES OF THE RBI. THIS ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE CIT(A) WHO DID NOT FIND MERIT IN THE CLAIM OF THE ASSESSEE AND REJECTED THE GROUND VIDE DISCUSSION IN PARAGRAPH-7 AND 7.1 AS UNDER : 7. AS PER GROUND NO. 8, THE APPELLANT HAS OBJECTED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE FACTS STATED VIDE PO INT NO. 7 OF LETTER DATED 12-2-2005 FOR ALLOWING A SUM OF BEING PROVISI ON FOR NON- PERFORMING ASSETS, AS IT IS MADE AS PER THE REQUIRE MENT OF RESERVE BANK OF INDIA. IT WAS SUBMITTED THAT SINCE THE SAME IS LEGAL REQUIREMENT OF THE APEX BODY, THE SAME MAY BE GRANT ED ACCORDINGLY. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF TEDCO INVESTMENT & FINANCIAL SERVICES (P.) LTD. 82 TTJ 259 AND THE DECISION OF HONBLE CHENNAI TRIBUNAL IN THE CASE OF OVERSEAS SANMAR FINANCIAL LTD. 86 ITD 602 . 7.1 I FIND THAT THIS ISSUE HAS NOT BEEN DISCUSSED B Y THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER. THIS C LAIM HAS ALSO NOT BEEN REFLECTED IN THE RETURN OF INCOME OR COMPUTATI ON OF INCOME. THEREFORE, THIS GROUND IS ALSO NOT EMANATING EITHER FROM THE ASSESSMENT ORDER OR ON ACCOUNT OF STATEMENT OF INCO ME. ACCORDINGLY, THIS GROUND IS NOT ADMITTED. HOWEVER, IF THERE IS A NY ERROR ON FACTS ON RECORD, THE APPELLANT IS FREE TO FILE PETITION UNDE R SECTION 154 OF THE ACT. 103. THE DECISION OF MADRAS HIGH COURT IN THE CASE OF T.N. POWER FINANCE & INFRASTRUCTURE DEVELOPMENT CORPN. LTD. V. JT. CIT [2006] 280 ITR 491 1 IS ON THE ISSUE AND DECIDES IT AGAINST THE ASSESSE E BY HOLDING AS UNDER : MERELY BECAUSE THE RBI HAS DIRECTED THE ASSESSEE T O PROVIDE FOR NON- PERFORMING ASSETS, THAT DIRECTION CANNOT OVERRIDE T HE MANDATORY PROVISIONS OF THE INCOME-TAX ACT CONTAINED IN SECTI ON 36(1)(VIIA) WHICH STIPULATE FOR DEDUCTION NOT EXCEEDING 5 PER C ENT OF THE TOTAL INCOME ONLY IN RESPECT OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS WHICH ARE PREDOMINATELY REVENUE IN NATURE OR TRADE RELATED AND NOT FOR PROVISION FOR NON-PERFORMING ASSETS WHICH ARE O F PREDOMINATELY 6 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) CAPITAL NATURE. THE ASSESSEE WAS NOT ENTITLED TO DE DUCTION, IN VIEW OF THE EXPLANATION TO SECTION 36(1)(VII) WHICH SAYS TH AT THE PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE ACCOUNTS OF THE ASSESSEE IS NOT AN ALLOWABLE DEDUCTION. 104. SIMILAR IS THE DECISION OF THE TRIBUNAL DECISI ON IN THE CASE OF NEW INDIA INDUSTRIES LTD. V. ASSTT. CIT [2007] 18 SOT 5 1 (DELHI) (SB) DISALLOWING A SIMILAR CLAIM OF THE ASSESSEE. NO CON TRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE PARTIES. WE THER EFORE RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE ISSUE IS DECIDED AGAINST THE ASSES SEE. THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) IS ACCORDINGLY CONFIRMED. 6. GROUND NO.3 REGARDING DISALLOWANCE FOR PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS. 6,04,18,812/-. THE FACTS ARE THAT ASSESSING OFFICER OBSERVED THAT ASSESSEE DID NOT PR ODUCE ANY OF EVIDENCE IN RESPECT OF THIS CLAIM. THE PROVISION FOR DEBTS WERE ONLY WRITTEN OFF IN THE BOOKS. THUS, THE ESSENTIAL CONDITION FOR ADMIS SIBILITY OF DEDUCTION UNDER SECTION 36(1)(VII) READ WITH SECTION 36(2) WA S NOT FULFILLED. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED T HE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AND LEARNED DR. THE ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE DECISI ON OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 229/A/2005 AND ITA N O. 403/A/2005 DECIDED ON 10-07-2009 AND ALSO IN GUJARAT GAS FINAN CIAL SERVICES LIMITED VS. ACIT 115 ITD 218. THE OBSERVATION IN T HEIR ORDER ON THIS ISSUE READS AS UNDER: 98. THE AMOUNT OF RS. 1,32,12,512 IN ASSESSMENT YE AR 2001-02 IS CARRIED TO THE PROVISION ACCOUNT SHALL NOT BE ALLOW ED IN VIEW OF THE 7 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) EXPLANATION BELOW SECTION 36(1)(VII) OF THE ACT PRO VIDING THAT ANY BAD DEBT OR PART THEREOF WRITTEN OFF AS IRRECOVERAB LE IN THE ACCOUNTS OF THE ASSESSEE SHALL NOT INCLUDE ANY PROV ISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE ACCOUNTS OF THE ASSE SSEE. ACCORDINGLY, THE ISSUE IS DECIDED AGAINST THE ASSES SEE. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) IS ACCORDIN GLY CONFIRMED. 8. GROUND NO. 4 RELATES TO CLAIM OF PRIOR PERIOD EX PENSES AMOUNTING TO RS. 2,81,561/-. THE ASSESSING OFFICER DISALLOWE D THE CLAIM ON THE GROUND THAT THE DETAILS WERE NOT MADE AVAILABLE BY THE ASSESSEE. BUT BEFORE LD. COMMISSIONER OF INCOME TAX(APPEALS) ASSE SSEE FILED A LIST SHOWING THE NAME OF THE PARTIES AND THE AMOUNT WHIC H WERE WRITTEN OFF. BUT, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) DI D NOT ALLOW THE CLAIM OF THE ASSESSEE ON THIS GROUND FOR THE REASON THAT IT WAS NOT MADE CLEAR AS TO WHY SUCH EXPENSES WERE NOT ACCOUNTED FO R IN THE RESPECTIVE ACCOUNTING YEARS. THEREFORE, IT CANNOT BE HELD THA T THE ADJUSTMENTS SO MADE CRYSTALISED DURING THE CURRENT PREVIOUS YEAR. 9. BEFORE US, LEARNED AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE LIST OF AMOUNT WRITTEN OF THIS YEAR BY MAKING ADJUSTMENT S. ACCORDING TO HIM ADJUSTMENTS WERE MADE THIS YEAR AND THEREFORE LIABI LITY CRYSTALLIZED THIS YEAR AND ACCORDING THEY ARE ALLOWABLE ONLY THIS YEA R. IN THE ALTERNATIVE, THE LEARNED AR SUBMITTED THAT ASSESSING OFFICER MAY VERIFY WHETHER THESE AMOUNTS ARE CRYSTALLIZED DURING THE CURRENT Y EAR. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE AUTHOR ITIES BELOW. 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE RES TORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER BEFORE WHOM ASSES SEE WILL FURNISH DETAILS OF THE ADJUSTMENTS MADE AND PROVE AS TO HOW THE LIA BILITY IS CRYSTALLIZED 8 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) DURING THIS YEAR. IF HE IS ABLE TO PROVE THIS, THE CLAIM OF THE ASSESSEE WILL BE ALLOWED. THIS GROUND OF THE ASSESSEE IS ALLOWED , BUT FOR STATISTICAL PURPOSES. 11. GROUND NO. 5 IS AGAINST CHARGING OF INTEREST UN DER SECTION 234B. IN OUR CONSIDERED VIEW, THE CHARGING OF INTEREST IS CONSEQUENTIAL AND DEPENDS UPON FINALLY ASSESSED INCOME. THUS, IT DOE S NOT REQUIRE ANY SPECIFIC ADJUDICATION. THIS GROUND IS THEREFORE RE JECTED. 12. LAST GROUND IS REGARDING CHARGING OF INTEREST U NDER SECTION 234D. THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF SPECIAL BENCH OF ITAT IN ITO VS. EKTA PROMOTERS PRIVATE LIM ITED VS. MARUTI UDHYOG LIMITED (2008) 305 ITR (A.D.) 001 ITAT, DELH I SPECIAL BENCH WHEREIN IT IS HELD THAT THE PROVISION OF SECTION 23 4D ARE APPLICABLE WITH EFFECT FROM ASSESSMENT YEAR 2004-2005 AND THEREFORE INTEREST UNDER THAT SECTION IS NOT CHARGEABLE FOR EARLIER ASSESSMENT YE ARS EVEN THOUGH THOSE ASSESSMENTS MIGHT HAVE BEEN FRAMED AFTER 01-06-2003 . ACCORDINGLY, THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 13. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY AND ALLOWED AND PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. REVENUES APPEAL: 14. THE FIRST GROUND IS REGARDING ALLOWING DEPRECIA TION ON ASSETS OF SALE AND LEASE BACK TRANSACTIONS. THE ISSUE IS DEC IDED BY THE TRIBUNAL IN ASSESSMENT YEAR 2001-2002 IN ITA NO. 229/A/2005 AND ITA NO. 9 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) 403/A/2005 PRONOUNCED ON 10-07-2009. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE PARA 5 AND 6 FROM THAT ORDER AS UNDER: 5. SECOND GROUND RELATING TO SALE AND LEASES TRANS ACTIONS. FACTS OF THE CASE RELATING TO THIS ISSUE ARE THAT T HE ASSESSEE HAS BEEN PURCHASING BUSES FROM GSRTC AT BOOK VALUE IN E ARLIER YEARS AND LEASE THEM BACK BUT CLAIM DEPRECIATION THEREON. THIS SITUATION CONTINUED FOR SEVERAL YEARS IN THE PAST, BUT THIS Y EAR, THE AO SOUGHT TO DISALLOW DEPRECIATION ON THE GROUND THAT THE TRA NSACTION IS NOT GENUINE. LEARNED CIT(A) ALLOWED THE CLAIM ON THE G ROUND THAT THE SALE AND LEASE BACK TRANSACTION WERE ENTERED INTO E ARLIER YEARS, NO NEW TRANSACTION HAS BEEN ENTERED THIS YEAR. DEPART MENT HAS ALLOWED DEPRECIATION IN EARLIER YEARS AND THEREFORE FOLLOWING THE PRINCIPLE OF CONSISTENCY, DEPRECIATION FOR THIS YEA R SHOULD BE ALLOWED. 6. WE HAVE HEARD LEARNED DR AND LEARNED AR. WE NOT ICED THAT THE ASSESSEE ENTERED INTO FIVE LEASE TRANSACTIONS W ITH GSRTC. THEY ARE FIRST TRANSACTION WAS IN FINANCIAL YEAR 1993-9 4 WHEN, DEPRECIATION WAS CLAIMED AT RS.59,97,155/-. THE SEC OND LEASE TRANSACTION WAS ALSO ENTERED INTO IN A.Y.1994-95 WH EREIN DEPRECIATION OF RS.40,18,720/- WAS CLAIMED AND ALLO WED. THE THIRD LEASE TRANSACTION WAS ENTERED INTO IN F.Y.199 6-97 ON WHICH THE DEPRECIATION APPROX. OF RS.2,00,06,325/- WAS CL AIMED. FORTH TRANSACTION TOOK PLACE IN A.Y.1998-99 IN WHICH DEPR ECIATION OF RS.4,01,38,576/- WAS CLAIMED AND ALLOWED. FIFTH ALS O TOOK PLACE IN A.Y.1998-99 IN WHICH THE DEPRECATION OF RS.7,99,42, 946/- WAS CLAIMED. IT IS STATED BY THE LEARNED AR OF THE A SSESSEE THAT NO FRESH LEASE TRANSACTION HAS TAKEN PLACE THIS YEAR A ND DEPRECIATION IN RESPECT OF OLD LEASE TRANSACTIONS HAS ONLY BEEN CLAIMED THIS YEAR. THEREFORE, FOLLOWING THE PRINCIPLE OF CONSIS TENCY, AS PROPOUNDED IN CIT VS. H.P.COTTON TEXTILE MILLS LTD. , 311 ITR 436, CIT VS. MALBOROUGH POLYCHEM PVT. LTD., 309 ITR 43; CIT VS. MOONLIGHT BUILDERS AND DEVELOPERS, 307 ITR 197 AND ACIT VS. GENDALAL HAZARILAL & CO., 263 ITR 679 WHEREIN IT IS HELD THAT EVEN THOUGH IN INCOME-TAX PROCEEDINGS PRINCIPLE OF RES-J UDICATA IS NOT APPLICABLE, BUT CONSISTENCY HAS TO BE MAINTAINED UN LESS THERE IS MANIFEST DISTINGUISHABLE FACTS. IN EARLIER YEARS, CLAIM OF DEPRECIATION WAS ACCEPTED BY THE REVENUE WHICH HAS NOW BECOME 10 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) FINAL, THE REVENUE CANNOT DISALLOW THE PRESENT CLAI M, UNLESS FACTS AND CIRCUMSTANCES ARE DISTINGUISHABLE. THEREFORE, THE REVENUE IS REQUIRED TO MAINTAIN A JUDICIAL CONSISTENCY BETWEEN ITSELF AND TAXPAYERS. AS A RESULT, WE DO NOT FIND ANY MERIT I N THE CLAIM OF THE REVENUE AND THIS GROUND OF THE REVENUE IS DISMISSED . 15. FOLLOWING OUR DECISION, WE DISMISS THIS GROUND OF THE REVENUE. 16. THE GROUND NO. 2 AND 3 ARE ABOUT ALLOWING CLAIM OF DEDUCTION FROM THE COMPUTATION OF BOOKED PROFIT UNDER SECTION 115JA, IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AND DIMINUTION IN THE VALUE OF INVESTMENT AMOUNTING TO RS. 45,68,625/-. THE LD. C OMMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE CLAIM OF THE ASSESS EE ON THE GROUND THAT SAID PROVISIONS WERE MADE IN THE BOOKS IN ACCO RDANCE WITH THE NORMS OF THE RBI AND THE FINAL ACCOUNTS HAVE BEEN APPROVE D AS PER COMPANIES ACT ACCORDING TO WHICH, ADJUSTMENTS ARE PERMISSIBLE . THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ALSO RELIED ON THE DECISION OF ITAT-C BENCH, AHMEDABAD IN THE CASE OF DCIT VS. BAS H REXROTH(I) LIMITED. 17. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AN D LEARNED DR. THE TWO ISSUES ARE NOW COVERED AGAINST THE ASSESSEE BY THE AMENDMENT IN SECTION 115JA BY INSERTING CLAUSE-9 IN SUB CLAUSE-2 BY THE FINANCE ACT NO. 2 OF 2009 WHEREBY IT IS PROVIDED THAT ANY PROVI SION FOR DIMINUTION OF VALUE OF ANY ASSET WILL ALSO BE INCLUDED IN THE COM PUTATION OF BOOK PROFIT. EARLIER THE ISSUE WAS CONSIDERED IN FAVOUR OF THE A SSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN SCL COMNET SYSTEMS AND SERVICES LIMITED |(2008) 305 ITR 409 (SC), BUT AFTER AMENDME NT WITH RETROSPECTIVE EFFECT FROM 01-04-1998 THE EFFECT OF THE DECISION OF THE 11 ITA NO. 2112/AHD/2006 ITA NO. 2156/AHD/2006 (A. Y. 1999-2000) HON'BLE SUPREME COURT IS NULLIFIED. AS A RESULT TH IS ISSUE IS DECIDED AGAINST ASSESSEE AND ACCORDINGLY THE TWO GROUNDS OF THE REVENUE ARE ALLOWED IN ITS FAVOUR. 18. AS A RESULT, APPEAL OF THE REVENUE IS PARTLY AL LOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 30 TH OCTOBER, 2009. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 30/10/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.