Rs.14,13,48,6/6/-. The Assessing Authority, By An/Order Dated 21.12.2016, Held That Method Of Accountingand Bid Loss Claimed As An Expenditure In The Year Of.pr v. Supreme Court In."Taparia Tools Vs. Jcit’ (2015)37)Itr6G5(Sc)Jupheldtheorderofthecommissioner Of Income Tax (Appeals) And The Appealpreferred By The Revenue Was

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 0/[TH|]DAY OF DECEMBER 2020. PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD BETWEEN: ILT.A. NO.814 OF JZO1 1.PR. COMMISSIONER INCOME TAX-6, CIRCLE-6(1)(1),. BMITC COMPLEX, KORAMANGALA, BANGALORE. 2.THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6(1)(1), BANGALORE. (By SRI. E.I. SANMATHI., ADVOCATE) _.., APPELLANTS AND M/S. SHRIRAM CHITS|(KARNATAKA) PVT. LTD.,.NO,259/31,1 FLOOR,10 CROSS, WILSON GARDEN,BANGALORE - 560 O27.PAN: . .., RESPONDENT (By Sri. M.V. SHESHACHALA SENIOR COUNSEL &Sri. BALRAM R RAO., ADVOCATE FOR RESPONDENT) THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME|TAX ACT 1961, ARISING OUT OF ORDER DATED 08.06.2018PASSED IN ITA NO.403/BANG/2018, FOR THE ASSESSMENTYEAR:2014-15, (ANNEXURE-A), PRAYING THIS HON'BLECOURT TO: (a) DECIDE THE FOREGOING QUESTION OF LAWAND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BEFORMULATED BY THE HON BLE COURT AS DEEMED FIT.(bp) SET ASIDE THE APPELLATE ORDER DATED: 08.06.2018PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘'CBENCH: BANGALORE IN APPEAL PROCEEDINGS NO.ITA NO.403/BANG/2018.FOR|ASSESSMENTYEAR:272014-201(ANNEXURE-A), AS SOUGHT FOR IN THIS APPEAL. FORMULATED BY THE HON BLE COURT AS DEEMED FIT. THIS I.T.A. COMING ON FOR ORDERS, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short).Nas been filed Dy the revenue. The subject matter ofthe appeal pertains to the Assessment Year 2014-15. The appeal was admitted by a Bench of this Court videorder dated 25.02.2019 on the following substantial| question of law: "Whether on the facts and in the circumstancesof the case, the Tribunal Is Justified in directingthe Assessing Officer to delete the disallowance| of Bid loss claimed in the computation of totalincome [In addition to Bid Loss claimed in P&LAccount without appreciating that the amountof Bid Loss claimed is incorrect as per.provisions of section 145(1) of the Income Tax.Act and Is not In consonance with the Board'sNotification No.69(E) dated: 25.01.2016 and|Accounting Standard As 22 of ICAI?” 2. Facts leading to filing of this appeal brieflystated are that the assessee iS a company engaged inbusiness of organizing and conducting chit funds for.different groups. The assessee, for the Assessment Year.2014-15, debited a sum of Rs.14,13,48,6/6/- as loss on.own chits bidding and also claimed bid loss. ofRs.18,65,72,30/7/-. From the aforesaid amount, the)assessee reduced an amount of Rs.14,13,48,6/6/- being.bid loss and claimed reduction of Rs.4,52,23,631/- on|account of bid loss. The assessee filed return of income|on 30.09.2014 declaring a loss of Rs.4,77,49,534/-. |Thereafter,theaSSe@SSCEfiledrevisedreturnON|29.10.2014 in which the assessee claimed bid loss otf Rs.14,13,48,6/6/-. The Assessing Authority, by an/|order dated 21.12.2016, held that method of accountingand bid loss claimed as an expenditure in the year of.pricing, Wwasnot In consonance|with system of|accounting and therefore, disallowed the claim. 3. The assessee thereupon filed an appeal beforethe Commissioner of Income Tax (Appeals). The|Commissioner of Income Tax (Appeals), Dy an orderdated 14.07.2017, by placing reliance on the assessee's|case in the earlier Assessment Year with regard to Did|loss claimed as well as relying on the decision of Madras|Hign Court in|"BILAHARI INVESTMENT Vs. CIT 288|ITR 39 (MAD), allowed the claim of the assessee with.regard to the bid loss. Thereupon, the revenue assailed |the aforesaid order in an appeal before the Income Tax.Appellate Tribunal (hereinafter referred to as ‘theTribunal for short). Tne Tribunal, by an order dated08.06.2018, by placing reliance on the decision of the 3. The assessee thereupon filed an appeal beforethe Commissioner of Income Tax (Appeals). The|Commissioner of Income Tax (Appeals), Dy an orderdated 14.07.2017, by placing reliance on the assessee's|case in the earlier Assessment Year with regard to Did|loss claimed as well as relying on the decision of Madras|Hign Court in|"BILAHARI INVESTMENT Vs. CIT 288|ITR 39 (MAD), allowed the claim of the assessee with.regard to the bid loss. Thereupon, the revenue assailed |the aforesaid order in an appeal before the Income Tax.Appellate Tribunal (hereinafter referred to as ‘theTribunal for short). Tne Tribunal, by an order dated08.06.2018, by placing reliance on the decision of the Supreme Court In."TAPARIA TOOLS Vs. JCIT’ (2015)37)ITR6G5(SC)Jupheldtheorder|oftheCommissioner of Income Tax (Appeals) and the appealpreferred by the revenue was. dismissed. In the}aforesaid factual background, the revenue has filed this|appeal. 4 Learned counsel for the revenue submitted that.the Commissioner of Income Tax (Appeals) aS well as.the Tribunal ought to have appreciated that the|Assessing Authority had rightly disallowed the claim of the assessee with regard to the bid loss. It is further|Submitted that the assessee had claimed bid loss in two|ways namely, one debited in profit and loss accountunder the head ‘other expenses which relates to theperiod ending 31.03.2009 and the other one is reduced|in the computation of income representing Did loss|relating to the chit groups that extend to the subsequent.years. It is therefore urged that the Assessing Authority had rightly held that the claim of the assessee that thereis no scope to apportion any portion of bid loss to theremaining period of chit, cannot be accepted in view of the notification issued by the Central Board of DirectTaxes. It is also submitted that the claim of the'assessee also is in violation of Section 145(1) of the Actand the same also violates the notification dated|25.01.1996 issued by the Board. It is also urged that|the extraordinary item mentioned in the said circulardoes not cover the activities of the assessee and the'accounting standard AS 22 of ICAI does not permit to claim the amount of bid loss pertaining to a different|period other than the period for which computation of.income is made. It is also pointed out that as per theSaid accounting standard, the statements of differententities are uniform and with a view to apply theprinciple of ‘matching concept to arrive at a true picture|of revenue of an enterprise for a given accounting period, the assessee has failed to satisfy the above saidrequirements. — 5. On the other hand, learned Senior counsel forthe assessee has submitted that the substantial question of law is no longerres integraand the same has been|answered by the decision of the Supreme Court inTAPARIA TOOLS, SUDFadIn this connection, learned|Senior counsel nas invited the attention of tnis Court to.paragraph 19 of the aforesaid decision. 6. We have considered the submissions made on|poth sides and Nave perused the record. Paragrapn 19°of tne decision rendered by the Supreme Court inTAPARIA TOOLS, SUDIa, IS reproduced below for the|facility of reference: "19. In the instant case, as noticedabove, the Assessee did not want spread over.of this expenditure over a period of five yearsas in the return filed by it, it had claimed tne.entire interest paid upfront as deductible 5. On the other hand, learned Senior counsel forthe assessee has submitted that the substantial question of law is no longerres integraand the same has been|answered by the decision of the Supreme Court inTAPARIA TOOLS, SUDFadIn this connection, learned|Senior counsel nas invited the attention of tnis Court to.paragraph 19 of the aforesaid decision. 6. We have considered the submissions made on|poth sides and Nave perused the record. Paragrapn 19°of tne decision rendered by the Supreme Court inTAPARIA TOOLS, SUDIa, IS reproduced below for the|facility of reference: "19. In the instant case, as noticedabove, the Assessee did not want spread over.of this expenditure over a period of five yearsas in the return filed by it, it had claimed tne.entire interest paid upfront as deductible expenditure in the same year. In such a.situation, when this course of action waspermissible in law to the Assessee as it was in.consonance with the provisions of the Act.which permit the Assessee to claim theexpenditure in the year in which it) wasincurred, merely because a different treatment|was given in the books of accounts cannot be a.factor which would deprive the Assessee from.claiming the entire expenditure as a deduction.It has been held repeatedly by this Court that.entries in the books of accounts are not.determinative or conclusive and the metter IstO|be|examinedOf)thetouchstoneofprovisions contained in the Act [See-KedarnathJute Manufacturing Co. Ltd. v. Commissioner ofIncome Tax (Central), Calcutta (1972) 3 SCC.252; Tuticorin Alkali Chemicals and FertilizersLtd., Madras v. Commissioner of Income Tax,Madras (1997) 6 SCC 117; Sutlej Cotton MillsLtd. v. Commissioner of Income Tax, Calcutta(1978) 4 SCC 358; and United CommercialBank, Calcutta v. Commissioner of IncomeTax, WB-III, Calcutta (1999) 8 SCC 338." 7. Thus, from the close scrutiny of paragraph 19 ofthe aforesaid decision, it is evident that the substantialquestion of law involved in this appeal is no longerFes|integraand the same is already answered against therevenue. 8. In view of the aforesaid enunciation of law, thesubstantial question of law involved in this appeal is.answered against the revenue and in favour of tneaSSe@SSAEC In the result, the appeal fails and is dismissed. Sd/-JUDGE Sd/-JUDGE RV