Commissioner Of Income Tax, Trichy v. The Lakshmi Vilas Bank Ltd., Salem Road Kathaparai, Karur

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM: THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMAND THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.201, 202, 203, 208 and 209 of 2018andC.M.P.Nos.3362, 3363, 3364, 3369 and 3370 of 2018 Commissioner of Income Tax,Trichy. ..Appellant in all appealsVs The Lakshmi Vilas Bank Ltd.,Salem Road Kathaparai,Karur. ..Respondent in all appeals Tax Case Appeals filed u/s.260-A of the Income TaxAct, 1961, against the orders of Income Tax AppellateTribunal Madras 'A' Bench, dated 29.01.2016 in ITANo.246/Mds/2014, ITA No.247/Mds/2014, ITA No.248/Mds/2014,ITA No.1364/Mds/2014 and ITA No.1365/Mds/2014 for theAssessment Years 2006-07, 2007-08, 2008-09, 1997-98 and1998-99 against the order of commissioner of Income Tax(Appeals) Tiruchirapalli made in ITA Nos.284/11-12,193,194,195/13-14/CIT(A)/TRY,DT.25/10/2013,ITA.NO.384/07-08/CIT(A)/TRYDT.29/01/2014,ITA.NO.385/07-08/CIT(A)/TRY DT.29/01/2014 and against the order of theJOintCommissionerofincomeTax,rangeI,Tiruchirapalli,Deputy commissioner of Income Tax,(cirlceI)(1), Tiruchirapalli ,Deputy commissioner of Income TaxCircle I, Tiruchirapalli , commissioner of Income TaxCompany Circle I, Tiruchirapalli and ,Assistantcommissioner of Income Tax ,Company Circle I,Tiruchirapallidt.29.12.2011 ,25/04/2013,25.04.2013 and 31.12.2007 &31/12/2007 respectively made in PAN GIR.NO.AAA CT 4291P. For Appellant:Mr.T.RavikumarFor Respondent :Mr.Vijayaraghavanfor M/s.Subbaraya Aiyar Padmanabhan & Ramamani****** These appeals, by the Revenue, are directed against thecommon order of the Income Tax Appellate Tribunal, Madras'A' Bench dated 29.04.2016 in I.T.Nos.246/Mds/2014,247/Mds/2014, 248/Mds/2014, 1364/Mds/2014 and 1365/Mds/2014for the assessment years 2006-07, 2007-08, 2008-09, 1997-98and 1998-99. 2. The following substantial questions of law have beenraised in the appeals:- ‘Whether on the facts and in thecircumstances of the case the tribunal was rightin holding the assessee is entitled for deductionof bad debts written off u/s 36(1)(vii) in totowithout ascertaining and excluding the debtsrelating to rural and non urban advances asprovided under section 36(1)(viia) ?Whether on the facts and in thecircumstances of the case the tribunal was rightin allowing the claim of bad debts written offu/s 36(1)(viii) in excess of the provision madeu/s 36(1)(viia) by following the decisionreported in 343 ITR 270(SC) ?Whether on the facts and in thecircumstances of the case the tribunal was rightin holding that software expenditure is to betreated as a revenue expenditure and not acapital expenditure ?’ 3. So far as substantial question of law No.1, whichhas been raised in TCA Nos.208 and 209 is concerned, it isregarding the expenditure for software whether it is Capitalor Revenue in nature. In the assessee's own case inT.C.A.Nos.210 and 211 of 2018 arising for the AssessmentYears 2001-02 and 2000-01, we have held that the expenditureis Revenue in nature and dismissed the appeals filed by theRevenue. Accordingly, the said question is answered infavour of the assessee and against the Revenue by applyingthe decisions in T.C.A.Nos.210 and 211 of 2018. 4. The next question, which arises in all theAssessment Years viz., 2006-07, 2007-08, 2008-09, 1997-98and 1998-99, is with regard to 'bad debts'. The assesseehad claimed deduction of bad debts and the details of theclaim made in excess of the provision under Section 36(1)(viia) related to rural debts were not provided andtherefore, the Assessing Officer disallowed the assessee'sclaim for bad debts relating to rural debts as quantified by 4. The next question, which arises in all theAssessment Years viz., 2006-07, 2007-08, 2008-09, 1997-98and 1998-99, is with regard to 'bad debts'. The assesseehad claimed deduction of bad debts and the details of theclaim made in excess of the provision under Section 36(1)(viia) related to rural debts were not provided andtherefore, the Assessing Officer disallowed the assessee'sclaim for bad debts relating to rural debts as quantified by the Assessing Officer in the earlier proceedings. Aggrievedby the same, the assessee filed appeals before theCommissioner of Income Tax (Appeals), who allowed theappeals holding that the said expenditure is to be allowedas Revenue expenditure. The assessee further submitted thatbad debts relating to rural debts were not claimed andaccepting the same, the Commissioner of Income Tax (Appeals)allowed the appeals by following the decision of the Hon'bleSupreme Court in the case of Catholic Syrian Bank Ltd. v.CIT [(2012) 343 ITR 0270]. Aggrieved by the order of theCommissioner of Income Tax (Appeals), the Revenue filedappeals before the Tribunal, which were dismissed by theimpugned order. 5. We have perused the findings recorded by theAssessing Officer and that of the Commissioner of Income Tax(Appeals) and the Tribunal. The Tribunal, in our consideredview, rightly followed the decision of the Hon'ble SupremeCourt in Catholic Syrian Bank Ltd., (supra), which decidedthe issue in favour of the assessee. We find that there isno error in the order passed by the Tribunal. Hence, forsuch reason, we find that there is no ground made out by theRevenue to interfere with the order passed by the Tribunal. In the result, the Tax Case Appeals are dismissed andthe substantial questions of law are answered in favour ofthe assessee and against the Revenue. No costs. Connectedmiscellaneous petitions are closed. Tax Case Appeal Nos.201, 202, 203, 208 and 209 of 2018ASK(16/11/2018) https://hcservices.ecourts.gov.in/hcservices/