The First Substantial Question Of Law Is Covered By Theearlier Orders Of This Court In The Assessees' Own Case(Commissioner Of Income-Tax, Coimbatore v. Elgi Ultra Industriesltd.) ((2012) 25 Taxmann.com561(Mad.)) And In T.c.(A)

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09.01.2019 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE DR.JUSTICE ANITA SUMANTH Tax Case (Appeal) Nos.1270 & 1271 of 2009 The Commissioner of Income Tax Coimbatore. ...Appellant in the above T.CAs/ AppellantVs. M/s.Elgi Ultra Industries Ltd., India House, Trichy Road,Coimbatore – 18. ...Respondent in the above T.CAs/ Respondent Tax Case Appeals filed under Section 260A of the IncomeTax Act, 1961 against the orders of the Income Tax AppellateTribunal, Madras 'D' Bench, Chennai, dated 14.09.2007 made inITA No.2207 & 2208/Mds/2005 for the assessment years 2002-03 and2003-04 against the order passed by the Commissioner of IncomeTax (Appeals)-I, Coimbatore dated 25.07.2004 made in AppealNos.399 & 400/04-05 and against the order passed by theAssistant Commissioner of Income Tax, Coimbatore dated29.12.2004 made in P.A.No/GIR No.AAACE4566G/CO.CIR.I(1)/CBE forthe Assessment year 2003-04 and against the order passed by theAssistant Commissioner of INcome Tax, Company Circle I(1),Coimbatoredated29.12.2004madeinP.A.NO/GIRNo.AAACE4566G/CO.CIR.1(1)/CBE,for the Assessment year 2002-03. For Appellant : Mrs.K.G.Usha Rani for Mr.T.R.Senthil Kumar Sr.Standing Counsel For Respondent : Mr.N.V.BalajiC O M M O N J U D G M E N T (Delivered by DR.ANITA SUMANTH,J) These Tax Case (Appeals) have been filed by the Revenuechallenging an order of the the Income Tax Appellate Tribunal https://hcservices.ecourts.gov.in/hcservices/ dated 14.09.2007 relating to Assessment Years 2002-03 and 2003-04. 2. Two issues arise in these appeals and by order dated30.11.2009, the following substantial questions of law have beenadmitted by this Court for resolution:'1. Whether on the facts and circumstances of thecase, the Tribunal was right in holding that theassessee is entitled to relief under section 80IA ofthe I.T.Act, 1961? 2. Whether on the facts and circumstances of thecase, the Tribunal was right in holding that theassessee is entitled to claim deduction of Bad debtswithout adjudicated the claim whether it is a tradedebt?” 3. The first substantial question of law is covered by theearlier orders of this Court in the assessees' own case(Commissioner of Income-tax, Coimbatore V. Elgi Ultra IndustriesLtd.) ((2012) 25 taxmann.com561(Mad.)) and in T.C.(A)No.1140 of2009 dated 11.12.2018. 4. Following the same, the first substantial question oflaw is answered in favour of the assessee and against theRevenue. 5. As regards the second substantial question of law, theprovisions of section 36(1)(vii) of the Income Tax Act, 1961provide for allowance of an amount representing bad debt or partthereof, which is written off as irrecoverable in the accountsof the assessee for the previous year. 6. In the present case, the admitted fact is that theassessee had taken over certain debts from M/s.Elgi Finance Ltd.and has offered a sum of Rs.1,74,90,872/- and Rs.87,45,435/- asinterest received in respect of the debts in the same assessmentyears. The same have been assessed to tax. Out of the totaldebts, a sum of Rs.81.00 lakhs and Rs.53.00 lakhs have beencollected back in the present assessment years and a sum ofRs.31,91,237/- and Rs.90,15,652/- have been claimed as baddebts. 7. The claim was disallowed on the ground that the debtshave been taken over from the sister concerns voluntarily onlyas a measure of support to it and knowing fully well that thesame was irrecoverable. Thus, the claim for write-off,according to the Assessing Officer, was liable to be denied. Inappeal, the Commissioner of Income Tax (Appeals) allowed theclaim of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 7. The claim was disallowed on the ground that the debtshave been taken over from the sister concerns voluntarily onlyas a measure of support to it and knowing fully well that thesame was irrecoverable. Thus, the claim for write-off,according to the Assessing Officer, was liable to be denied. Inappeal, the Commissioner of Income Tax (Appeals) allowed theclaim of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 8. We find, as a matter of fact, that the Tribunal hastaken note of the position that the Memorandum and Articles ofAssociation permitted the assessee to carry on the business ofmoney lending and the transactions in question have been held tobe in the realm of business activity. 9. There is no dispute raised before us on this factualposition. In the light of the same, the second substantialquestion of law is also answered in favour of the assessee andagainst the Revenue. 10. Accordingly, both the Tax Case (Appeals) aredismissed. No costs.sl Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant RegistrarTo1. The Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai.2. The Commissioner of Income Tax(Appeals)-I, Coimbatore.3. The Assistant Commissioner of Income Tax, Company Circle-I(1),Coimbatore. +2cc to Mr.K.Krishnamoorthy, Advocate, S.R.No.3011/19+1cc to Mr.T.R.Senthil Kumar, Advocate, S.R.No.2948/19 T.C.(A) Nos.1270 & 1271 of 2009SR(CO)kak(20/02/2019)