Ii) Whether On The Facts And Circumstances Of The Case, The Tribunal Was Right In Holding That Disallowance Of Bad Debts Amounting To Rs.30,20,000/Was Not Prope v. Https://Hcservices.ecourts.gov.in/Hcservices

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR. JUSTICE R.MAHADEVANand THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ TCA.Nos.1239 to 1241 of 2009 Commissioner of Income Tax, Company Circle - I (3) Coimbatore. ...Appellant in all Tax Case Appeals M/s.Elgi Equipments Ltd., Elgi Industrial complex Singanallu, Coimbatore - 641 005. ...Respondent in Tax Case Appeals Appeals preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras “D” Bench, dated 14.03.2008 in I.TA.No.1503/Mds/2006,I.TA.No.1504/Mds/2006 & I.TA.No.1505/Mds/2006 and against theorder of the Commissioner of Income Tax (Appeals)-I, Coimbatore,dated 31.03.2006 in ITA.Nos.395 to 397/05-06, Assessment Years2001-02, 2002-03 & 2003–04 and against the order of theAssistant Commissioner of Income Tax Company Circle-I(3),Coimbatore-18 dated 31.01.2006 in PAN.No. AssessmentYears 2001-02, 200-03, 2003-04. COMMON JUDGMENT These tax case appeals have been filed by the appellant /Revenue, challenging the order dated 14.03.2008 passed by theIncome Tax Appellate Tribunal, Chennai 'D' Bench, inI.TA.No.1503/Mds/2006,I.TA.No.1504/Mds/2006& https://hcservices.ecourts.gov.in/hcservices/ I.TA.No.1505/Mds/2006, relating to the respective assessmentyears 2001-02, 2002-03 & 2003-04. 2. By order dated 08.12.2009, this court admitted theaforesaid tax case appeals on the following substantialquestions of law: “(i). Whether on the facts and circumstances ofthe case, the Tribunal was right in deleting theinterest levied under Section 234-D of the Income TaxAct ? and (ii) Whether on the facts and circumstances ofthe case, the Tribunal was right in holding thatdisallowance of bad debts amounting to Rs.30,20,000/-was not proper?” 3.1 Today, when the matters were taken up forconsideration, the learned counsel for the appellant / Revenueas well as the respondent / assessee jointly submitted that thefirst substantial question of law involved in these appeals hasalready been considered and decided in favour of the Revenue byjudgment dated 19.03.2019, passed in TCA.Nos.1457 and 1458 of2008, the relevant passage of which, is usefully extractedhereunder: "5.On the Second Question of Levy of Interestunder section 234D of the Act on the excess refundmade to the Assessee along with the Assessmentintimation sent to him under section 143(1) of theAct, the learned senior standing counsel for theRevenue drew our attention to a judgment of thiscourt in the case of Commissioner of Income Tax v.Fisher Sanmar Ltd, (2014) 361 ITR 296 (Mad), wherein,a Division Bench of this Court held that if theregular assessment of the Assessee is made after theamendment of provisions of Section 234D of the Actw.e.f. 01.06.2003, then, the provisions of Section234D for levy of interest on the excess refund amountwould become applicable, even though the assessmentperiod may be prior to the said date of amendment.” “9. As for the Question of Levy of Interestunder Section 234D of the Act, though computation ofinterest will depend upon the appeal effect order tobe passed, the quantum of net payment is to bedetermined accordingly, after allowing weighteddeduction under Section 35 (2AB) of the Act, asindicated above. The provisions of Section 234D ofthe Act have been held applicable for Assessment Year 2003-2004 in question in terms of the decision of theCo-ordinate Bench of this Court in the case of FisherSanmar Ltd., cited supra. Accordingly, Questions ofLaw Nos.3 and 4 are answered in favour of the Revenueand against the Assessee." 3.2 Following the aforesaid judgment, which applies to thefacts of the present case, the first question of law is answeredin favour of the Revenue and against the Assessee. 2003-2004 in question in terms of the decision of theCo-ordinate Bench of this Court in the case of FisherSanmar Ltd., cited supra. Accordingly, Questions ofLaw Nos.3 and 4 are answered in favour of the Revenueand against the Assessee." 3.2 Following the aforesaid judgment, which applies to thefacts of the present case, the first question of law is answeredin favour of the Revenue and against the Assessee. 4.1 As far as the second substantial question of law isconcerned, it is submitted by the learned counsel for both sidesthat the same has been considered and decided in favour of theassessee and against the revenue, by a judgment dated09.01.2019, passed in TCA.Nos.1270 and 1271 of 2009, therelevant passage of which, is usefully extracted hereunder: “5. As regards the second substantialquestion of law, the provisions of section 36(1)(vii) of the Income Tax Act, 1961 provide forallowance of an amount representing bad debt orpart thereof, which is written off asirrecoverable in the accounts of the assessee forthe previous year. 6. In the present case, the admitted fact isthat the assessee had taken over certain debtsfrom M/s.Elgi Finance Ltd. and has offered a sumof Rs.1,74,90,872/- and Rs.87,45,435/- as interestreceived in respect of the debts in the sameassessment years. The same have been assessed totax. Out of the total debts, a sum of Rs.81.00lakhs and Rs.53.00 lakhs have been collected backin the present assessment years and a sum ofRs.31,91,237/- and Rs.90,15,652/- have beenclaimed as bad debts. 7. The claim was disallowed on the groundthat the debts have been taken over from thesister concerns voluntarily only as a measure ofsupport to it and knowing fully well that the samewas irrecoverable. Thus, the claim for write-off,according to the Assessing Officer, was liable tobe denied. In appeal, the Commissioner of IncomeTax (Appeals) allowed the claim of the assessee. 8. We find, as a matter of fact, that theTribunal has taken note of the position that theMemorandum and Articles of Association permittedthe assessee to carry on the business of money lending and the transactions in question have beenheld to be in the realm of business activity.9. There is no dispute raised before us onthis factual position. In the light of the same,the second substantial question of law is alsoanswered in favour of the assessee and against theRevenue.” 4.2In the light of the aforesaid judgment, which holdsgood to the case of the assessee, the second substantialquestion of law involved in these appeals is answered in favourof the assessee and against the Revenue. 5.In the result, the Appeals of the Revenue are allowedin part as indicated above. No costs. Sd/- Assistant Registrar(CS VII) //True Copy// Sub Assistant Registrar av/rsh To 1. The Income Tax Appellate Tribunal, Madras “D” Bench.2. The Commissioner of Income Tax, Company Circle - I (3) Coimbatore. 3. The Commissioner of Income Tax (Appeals)-I, Coimbatore.4. The Assistant Commissioner of Income Tax, Company Circle-I(3), Coimbatore-18. +3ccs to Mr.N.V.Balaji, Advocate, S.R.No.65086,65088,65089 TCA.Nos.1239 to 1241 of 2009 NR[co]NSK 11/02/2022