The ACIT, 1(1), Ujjain V. M/s. Jila Sahakari Kendriya Bank Mydt., Ujjain

MA 8/IND/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3004 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESH
• Keywords: Depreciation; Bad and doubtful debts
• Section: 37(1); 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER M.A. NOS. 8/IND/2014 ARISING OUT OF ITA NO. 135/IND/2013 A.Y. 2009-10 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1(1) UJJAIN ::: APPLICANT VS M/S JILA SAHKARI KENDRIYA BANK UJJAIN ::: RESPONDENT APP LIC ANT BY SHRI R.A. VERMA RESPONDENT BY SHRI S.S. DESHPANDE DATE OF HEARING 15 .5. 2015 DATE OF PRONOUNCEMENT 15 . 5 .2015 O R D E R PER SHRI B.C. MEENA, AM THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 WH ICH READS AS UNDER :- 2 WHILE FINALIZING THE APPEAL OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE THE HON'BLE ITAT HAS NOT CONSIDERED THE FOLLOWING. THE ONLY GROUND RAISED BY THE DEPARTMENT BEFORE THE ITAT WAS AGAINST THE RELIEF OF RS. 28.10 LACS GRANTED BY CIT(A) BEING PROVISION FOR BAD AND DOUBTFUL DEBT DISALLOWED BY THE A.O. IN THE CROSS OBJECTION FILED THE ASSESSEE HAD CONTESTED THE ORDER OF CIT(A) ON THE GROUND OF NOT ALLOWING THE CLAIM OF DEDUCTION OF PROVISION FOR BAD AND DOUBTFUL DEBTS OFRS. 78.79 LACS U/S 36(12)(VIIA).THE I.T.A.T. WHILE DECIDING THE ABOVE CROSS OBJECTION NOTED AS UNDER :- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAS MADE PROVISION FOR BAD AND DOUBTFUL DEBTS AT RS. 5752009/- WHICH ALSO INCLUDES PROVISIONS OF FRAUD AND GAVAN AT RS. 28.10 LACS AND PROVISION OF STANDARD ASETS AT RS. 5 LACS. AS PER THE ASSESSEE IT IS ELIGIBLE FOR CLAIMING PROVISION ON BAD AND DOUBTFUL DEBTS AT RS.78.80 LACS U/S 36(1)(VIIA) AS AGAINST CLAIM OF RS. 57.52 LACS. THE ASSESSEES ELIGIBILITY FOR CLAIM OF DEPRECIATION U/S 36(1)(VIIA) HAS BEEN DECIDED BY COORDINATE BENCH WHEREIN IT WAS HELD THAT CLAIM OF DEDUCTION U/S 36(1)(VIIA) IS TO BE ALLOWED ONLY WITH RESPECT TO THE AMOUNT OF CLAIM MADE IN THE BOOKS OF ACCOUNT. 3 MERE CLAIM OF DEDUCTION IN THE COMPUTATION OF INCOME IS NOT SUFFICIENT, EVEN IF ELIGIBILITY IS WORKED OUT. FROM THERECORD, IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS ACTUALLY MADE PROVISION BY PASSING ENTRY IN ITS BOOKS OF ACCOUNT FOR RS. 78.79 LACS. IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE MATTER IS RESTORED BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO FIND OUT THE AMOUNT ACTUALLY WRITTEN OFF BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AND ASSESSING OFFICER IS TO FURTHER RECOMPUTED THE ASSESSEES ELIBILITY IN TERMS OF CLAUSE (A0 OF SUB SECTION (VIIIA) OF SECTION 36 WE DIRECT ACCORDINGLY. THUS, THE ISSUE OF CLAIM OF DEDUCTION OF RS.78.79 LACS HAS BEEN SET ASIDE FOR VERIFICATION WITH REFERENCE TO THE PASSING OF ENTRIES IN THE BOOKS OF ACCOUNTS AND ALLOWING/DISALLOWING THE SAME AFTER THE SADI VERIFICATION. HOWEVER, ITAT HAS FAILED TO CONSIDER THE FACT THAT THE AMOUNT OF RS. 28.10 LACS WHICH IS ALSO PART OF THE SAID PROVISION OF RS. 78.79 LACS HAS ALREADY BEEN ALLOWED AND IN RESPECT OF WHICH ENTRIES IN THE BOOKS AS ENVISAGED U/S 36(1)(VIIA) HAS ADMITTEDLY NOT BEEN PASSED BY THE ASSESSE, AS THE ASSESSEE HIMSELF HAS STATED IN HIS ARGUMENTS THAT THE FINAL ENTRY IN THE BOOKS HAVE NOT BEEN PASSED IN RESPECT OF THIS AMOUNT PENDING FINALIZATION OF THE CASES FILED BEFORE VARIOUS COURTS. 4 THERE IS THUS AN APPARENT MISTAKE IN CONFIRMING THE RELIEF ALLOWED BY THE LD.CIT(A) ON THE AMOUNT OF RS. 28.10 LACS AND DISMISSING THE APPEAL OF THE REVENUE. THE ABOVE AMOUNT BEING PART OF THE PROVISION OF 78.79 LACS SHOULD ALSO BE SET ASIDE FOR VERIFICATION AND ALLOWANCE ACCORDING TO THE RESULT OF SUCH VERIFICATION. HOWEVER, DUE TO THE DECISION RENDERED IN THE DEPARTMENTAL APPEAL THE A.O. WILL BE PRECLUDED TO TAKE UP DUE VERIFICATION OF THE SAID AMOUNT WHILE VERIFYING THE PROVISION OF RS. 78.79 LACS. IN VIEWS OF THE ABOVE, A MISCELLANEOUS APPLICATION MAY KINDLY BE ALLOWED TO BE FILED BEFORE YOUR HONOUR U/S 254(2) OF THE ACT AND IT IS PRAYED THAT THE ABOVE APPARENT INCONSISTENCY IN THE SAID ORDER BE REMOVED. 2. THE LEARNED AR DREW OUR ATTENTION TOWARDS PARAS 6 AND 7 OF THE ITAT ORDER WHEREIN THE ISSUE OF ALLOWABI LITY OF RS. 28,10,000/- HAS BEEN CONSIDERED AND DECIDED. HE PLEADED THAT THERE IS NO ERROR IN THE ORDER OF THE IT AT. 2. WE HAVE HEARD BOTH THE SIDES. THE LD. AR RELIED UPON THE FOLLOWING CASE LAWS :- 5 (1) ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 (SC) (2) CIT VS. CHHABRA GINNING UDHYOG; 303 ITR 182 (MP) (3) AGARWAL WAREHOUSING & LEASING LTD. VS. CIT; 257 ITR 235 (MP) WE HAVE ALSO GONE THROUGH RECORD AVAILABLE AND CONSIDERED CASE LAWS RELIED UPON. THE ITAT HAD CONCLU DED THE ISSUE IN PARAS 6 & 7 WHICH ARE REPRODUCED HEREUNDE R :- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAS CLAIMED THE AMOUNT OF FRAUD AND GAVAN UNDER THE HEAD PROVISION FOR BAD AND DOUBTFUL DEBTS. THE EXPENSES WHICH WERE OCCURRED DURING THE NORMAL COURSE OF THE BUSINESS OF BANKING CARRIED OUTBY THE ASSESSEE IS ALLOWABLE U/S 37(1) ALSO. THOUGH THERE IS NO PROVISION FOR ALLOWING DEDUCTION OF A TRADING LOSS ON ACCOUNT OF EMBEZZLEMENT, SECTION 37 6 PROVIDES FOR ANY EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS AND THERE HAS TO BE NEXUS BETWEEN BUSINESS OPERATION AND THE LOSS. HENCE DEDUCTION IS ALLOWABLE AS PER THE PROVISION OF SECTION 37(1) IF THERE IS DIRECT AND PROXIMATE CONNECTION BETWEEN THE LOSS AND THE BUSINESS OPERATION OF THE ASSESSE. 7. IN VIEW OF THE FINDING RECORDED BY THE LD. CIT(A) AT PARA 3.2.5 WE CONFIRM THE ACTION OF THE CIT(A) FOR ALLOWING LOSS ON ACCOUNT OF FRAUD AND GAVAN OCCURRED IN THE COURSE OF ITS BANKING BUSINESS AND WHICH WAS CRYSTALISED DURING THE YEAR UNDER CONSIDERATION. AFTER GOING THROUGH THE ORDER OF ITAT AND CASE LAWS, WE HOLD THAT THERE IS NO APPARENT MISTAKE. THE ITAT HAS POWER TO RECTIFY MISTAKE WHICH IS PATENT, MANIFEST AND SELF- EVIDENT AND WHICH DOES NOT REQUIRE AN ELABORATE 7 DISCUSSION, EVIDENCE OR ARGUMENTS TO ESTABLISH THE SAM E. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERROR AP PARENT MEANS AN ERROR WHICH STRIKES ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. THUS, ITAT HAS POWER TO RECTIFY ONLY THE MISTAKES WHICH ARE PARENT , MANIFEST AND PATENT. AFTER GOING THROUGH THE MISCELLANEOUS APPLICATION, WE FIND THAT THE REVENUE HAS TRIED TO ESTABLISH THE MISTAKE WHICH IS NOT PATENT, M ANIFEST AND SELF-EVIDENT. A PERUSAL OF THE MISCELLANEOUS APPLICATION SHOWS THAT ACCEPTING THE REVENUES APPLICATIO N SHALL DEFINITELY LEAD TO REVIEW OF THE ORDER OF THE T RIBUNAL. ITAT HAS NO POWER TO REVIEW ITS ORDER U/S 254(2) OF THE ACT. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT 8 VS. CHHABRA GINNING UDHYOG; 303 ITR 182 HAS HELD AS UNDER :- HELD, ALLOWING THE APPEAL, THAT A POWER TO RECTIFY THE MISTAKE IN THE ORDER IS CONFINED TO ONLY THOSE ERRORS WHICH ARE APPARENT FROM THE RECORD OF THE CASE. THE POWERS UNDER SECTION 254(2) CANNOT BE EXERCISED AS A REVIEW COURT OR AS AN APPELLATE COURT SO AS TO VIRTUALLY CHANGE THE EARLIER DECISION UNLESS A GRAVE ERROR ON THE FACTS OR AT LAW FROM THE RECORDS IS APPARENT. A WELL REASONED DECISION WHICH HAD GONE IN FAVOUR OF THE REVENUE IN A REGULARLY CONSTITUTED APPEAL COULD NOT BE UPTURNED BY RECOURSE TO THE PROVISIONS OF SECTION 254(2) OF THE INCOME TAX ACT, 1961. THE TRIBUNAL WHILE HEARING AN APPLICATION UNDER SECTION 254(2) COULD NOT ACT AS AN APPELLATE COURT. THE APPLICATION MADE BY THE ASSESSEE UNDER SECTION 254(2) DID NOT CONFORM TO THE REQUIREMENT OF SECTION 254(2) READ WITH RULE 34A OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, AND IT SHOULD HAVE BEEN DISMISSED. HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. SAURASHT RA KUTCH STOCK EXCHANGE LIMITED (SUPRA) HELD AS UNDER :- RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTAL PRINCIPLE THAT JUSTICE IS ABOVE ALL. IT IS EXERCISED TO REMOVE THE ERROR AND TO DISTURB THE FINALITY. 9 A PATENT, MANIFEST AND SELF-EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENTS TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED WHILE EXERCISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEE WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERROR APPARENT ON THE RECORD MEANS AN ERROR WHICH STRIKES ONE ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS ONE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. WHERE AFTER THE APPELLATE TRIBUNAL RENDERED ITS DECISION ON APPEAL, A MISCELLANEOUS APPLICATION WAS FILED BY THE ASSESSEE UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961, STATING THAT A DECISION OF THE JURISDICTIONAL HIGH COURT WAS NOT BROUGHT TO THE NOTICE OF 10 THE TRIBUNAL : HELD THAT THERE WAS A MISTAKE APPARENT FROM THE RECORD WHICH REQUIRED RECTIFICATION. KEEPING IN VIEW THE DECISIONS OF THE HONBLE SUPREM E COURT IN THE CASE OF ACIT VS. SAURASHTRA KUTCH STOCK EXCHANG E LTD. (SUPRA) AND THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHHABRA GINNING UDHYOG (SUPRA), THE MISCELLANEOUS APPLICATION OF THE REVENUE IS DISMISSED. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS DISMISSED. PRONOUNCED IN OPEN COURT ON 15 TH MAY, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MAY 15 TH , 2015 DN/-