Biocon Ltd., Bangalore V. DCIT, Bangalore

ITA 635/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0632 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 17-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Retrospective amendment; Bad and doubtful debts
• Section: 143(3); 147; 148; 11

Judgement Text

ITA NO.635/B/09 1 IN THE INCOME TAX APPELL ATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH BANGALORE BENCH BANGALORE BENCH BANGALORE BENCH A AA A BEFORE BEFORE BEFORE BEFORE GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER AND AND AND AND SHRI SHRI SHRI SHRI A AA AKBAR BASHA, KBAR BASHA, KBAR BASHA, KBAR BASHA, A A A ACCOUNTANT MEMBER CCOUNTANT MEMBER CCOUNTANT MEMBER CCOUNTANT MEMBER ITA NO.635/BAN G/2009 (ASSESSMEN T YEAR 2000-01) M/S BIOCON LTD., 20 TH KM, HOSUR ROAD, ELECTRONIC CITY (PO), BANGALORE. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, (LTU), BANGALORE . RESPONDENT APPELLANT BY : SHRI MANOJ KUMAR RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R O R D E R O R D E R O R D E R PER PER PER PER GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE K KK K, , , , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER : : : : THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS)-LTU, BANGALORE DATED 30.3.2009. THE ASSESSMENT YEAR CON CERNED IS 2000- 01. 2. THE SOLITARY ISSUE THAT WAS ARGUED BY THE AR DUR ING THE COURSE OF HEARING WAS, WHETHER CIT(A) IS JUSTIFIED IN ADDI NG BACK DOUBTFUL ADVANCES AMOUNTING TO RS.6,97,968/-, WHILE COMPUTIN G THE BOOK PROFIT U/S 115JA OF THE ACT. ITA NO.635/B/09 2 THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS : 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURE AND SALE OF BIO-CHEMICALS AND ENZYMES. THE ASSESSEE FILED RETURN OF INCOME FOR THE CONCERNED ASST. YEAR ON 30/03/2001 DECLARING A LOSS OF RS.29,465,399/- AS PER THE PRO VISIONS OF INCOME- TAX AND A TAX LIABILITY OF RS.2,882,780/- ON ITS BO OK PROFIT AS PER THE PROVISIONS OF SEC. 115JA OF THE ACT. ASSESSMENT OR DER WAS PASSED U/S 143(3) OF THE ACT ON 31.1.03 DISALLOWING DEPRECIAT ION OF RS.229,404/- AND ALLOWING AN ADDITIONAL DEDUCTION U/S 35(2AB) OF THE ACT OF RS.12,481,800/- AS PER THE NORMAL PROVISIONS OF THE ACT. HOWEVER, THE BOOK PROFITS OFFERED TO TAX BY THE ASSESSEE U/S 11 5JA OF THE ACT WAS ACCEPTED BY THE AO AND NO ADJUSTMENT WAS MADE IN TH IS REGARD IN THE ASSESSMENT ORDER PASSED ON 31.1.03. 3.1 THEREAFTER NOTICE U/S 148 ORIGINAL WAS ISSUED O N 2.3.07. PURSUANT TO THE SAME, ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SEC. 147 ON 24.10.07, WHEREIN FOLLOWING ADJUSTMENT WAS MADE: ADDED BACK THE AMOUNTS CLAIMED AS PROVISION FOR BAD AND DOUBTFUL DEBTS AND PROVISION FOR ADVANCES AMOUNTING TO RS.3,930,104/- AND RS.697,968/- RESPECTIVELY IN ARRIVING AT THE BOOK PROFITS U/S 11 5JA OF THE ACT. ITA NO.635/B/09 3 4. ON FURTHER APPEAL, THE CIT(A) FOLLOWED THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE CIT VS. HCL COMNE T SYSTEMS & SERVICES LTD., 305 ITR 409 AND HELD THAT AO WAS NOT JUSTIFIED IN ADDING BACK THE PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS .39,30,104/-. HOWEVER, HE UPHELD THE ADDITION OF RS.6,97,968/- MA DE ON ACCOUNT OF DOUBTFUL ADVANCES. THE RELEVANT PORTION OF THE CIT (A)S ORDER IS REPRODUCED. IN VIEW OF THE RATIO OF THE DECISION OF THE HONB LE SUPREME COURT SUPRA, THE ADDITION OF RS.6,97,968/- MADE ON ACCOUNT OF DOUBTFUL ADVANCE IS HEREBY UP-HELD. HOWEVER, THE AO WAS NOT JUSTIFIED IN ADDING BACK TH E PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS.39,30,10 4/- UNDER CLAUSE (C) OF THE EXPLANATION TO SEC. 115JA O F THE I.T ACT, 1961. THE AO IS, THEREFORE, DIRECTED TO RECALCULATE THE BOOK PROFIT ACCORDINGLY. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE C IT(A) IS IN APPEAL BEFORE US. 5. THE AR FAIRLY SUBMITTED THAT, THE ISSUE IN QUEST ION IS COVERED AGAINST THE ASSESSEE IN LIGHT OF THE LEGISLATURE AM ENDMENT OF SEC. 115JA BY FINANCE ACT 2009 WITH RETROSPECTIVE EFFECT FROM 1.4.98. THE AR STATED THAT CLAUSE (G) TO EXPLANATION WAS INSERT ED AND IN LIGHT OF THE INSERTION, PROVISION FOR DOUBTFUL ADVANCES HAD TO B E ADDED BACK, WHILE COMPUTING BOOK PROFIT U/S 115JA OF THE ACT. ITA NO.635/B/09 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE LIGHT OF THE LEGISLATURE AMENDMEN T VIDE INSERTION OF CLAUSE (G) TO EXPLANATION, WE ARE OF THE VIEW THAT, THE ISSUE HAS TO BE NECESSARILY DECIDED AGAINST THE ASSESSEE AND IN FAV OUR OF THE REVENUE. THEREFORE, WE ARE OF THE VIEW THAT THE AO HAS CORRE CTLY ADDED BACK DOUBTFUL ADVANCES, WHILE COMPUTING BOOK PROFIT U/S 115JA OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20TH NOV, 2009. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - ( (( (AKBAR BASHA AKBAR BASHA AKBAR BASHA AKBAR BASHA) ) ) ) ( ( ( (GEORGE GEORGE K) GEORGE GEORGE K) GEORGE GEORGE K) GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED : 20 /11/09 VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, ITAT, BANGAL ORE.