Karnataka High Court
The Commissioner Of Income Tax vs M/S Wipro Finance Limited on 2 April, 2008
Wk
C)
"-.".-.5-7
Q-A
PRESENT.
THE HON'BLE MR..lIISTI(.'E f %
BETWEEN; "
rm "|'l"U"\'l 11')' "
uVLuLv1n-TAX; V _ _ V
THE COhiMiS1Si§érJEE.g)§' A 2*
QtJE1aNsRoAD; .
BANGALORE P~_s.so ..COMMON APPELLANT.
(B:.*sP1 i3".R:.V ADV.)
-I'v'L"S.- ~.'u'§%'!i'R{.}- E-'.NC}'_-'. LEMITIJD,
ST MARKS ROAD CROSS,
A . _ BANGALORE -560 001. ...COMMON RESPONDENT
'»{P;s'Y SR1 I).L.N.RA0, SRIJOUNSEL. SM'I'.S.R.ANURADHA.
P C1'-IATVEER "'u'1'viAR ASSTS., SR} ASHANKAR,
T AND SR1 MLAVA. ADVS.)
2
THESE APPEALS ARE FILED BY THE APPELLANT
U/S.260A OF 'l'HE. 1.'1'.AC'l' PRAYING comm' fs:s~;"r_
ASIDE THE APPELLATE ORDERS DATED 12.12.26C3_;V~A_'ND_"
3.5.2004 PASSED IN ITA No.794/Bang/2oe0,yy'2~IPAf A-
NG.?95:'BANG;"2{}9u" RESPE.C'l'1'J}LLY. _ .. , _ " ,
THESE APPEALS HAVING BEEN
FOR JUDGMENT AND COMING QN FOi?,v.PRON¢)U'f§T.CvEMENT'P
$1'-' JUD{}}vENT ARAL-I NAGAEAJ. .-L "THE
FOLLOWING:
in these ~§p¢;y:aea1s;5'_AVV1':lV1'e.' has challenged
I legality and 12.12.2003 ( for the
asseasmfe " 3';6Vi2IJ04 { 12: the assessment
year income Tax Appeliaie 'i'ribu11a1,
Bangalme " 'fliench ( Hereinafter referred to as
'ift2bu'i2a}" V fof"""vshort) respectively in HA Nos. T
795./.Ba11_g,/2(,)0(J, The Respondent-Assessee is
eoamV1on___vin' two appeals and, though the "p*"'1'"2t reveiree
for our consideration and decision as many as 3
'sabstahfial questions of law in HA No. 106/2004 and four such _
-qaestions in [TA No. 633/2004, one of them is common in both
¢--3'r\""-1..
the appeals. These substantiai questions of iaw ar' r~i'§-..:j-rd
without affecting the substance of each of them and they: .,
under:
"(1) Whether on facts and in the 9circurnstanoe's':~-9 A ;, a
of the case, the Income t'»i"a)_; Appellate 'l'ribii1tai: is '_ 9
justified in holding mates dis-a'iio_wanees':.: of
'nests "assessme'nt.years ( 1996-97
and 1i,_,?f9tt), fiheiideieted on the ground
Zittis-aliowaiicesweire the subject matter
the -nassessrnent order dated 29-1-1999
passed under of the Act in respect of
' the sameassesssrnent years'? ( common question in
9 tJD.th'the apoea'Is'')°
9' = {V.'Z}tt3'».f1ie....-r .1; facts and in the circumstances
of the Tribunal is justified in setting aside
.. addition made in respect of the dis-allowances on
tiirovlsion for bad and doubtful debts' that were
made by the Assessing Officer in the Assessment
Order for the year 1997-98 and remanding the matter
to the Assessing Officer for fresh consideration of
c~5""-v'?
the claim of the assesses'? ( in l'l'A No. 633 I 2004"
'.s.1.:10,s3,$c9 " 9 A
for the assessment year "91_997_-98 __
E.
'B'
E
8
9»
$53..
no _
5'
%
E
(D
0
§
exchange fluctuation that was_v_41_9:nad_e by fl1e'Assessing
Officer'? (in rm No.s33 I zooms; 9
1A\\u1..,.41... I' +T'..--. 1 '. . ' = '~
pr} vvucsuoi' ui'1g1 "33 3.l1'..i_ik!, 3 '.G11C'e'n mtau '63
1
1
&SSt:'SSfIP.et1'iT;V.' that the
capitalisation' st'tnet sum is to be treated as
revemeexpe;s¢s--:e( 633 I 04 only)
' _ A ";2..'€"1'he.briet't'ztcts leading to the filing of rm No. 106 / 2004
hytltet revenue varev under:
" "(a) " The respondent-assessee viz: Wipro Finance
" . 3' Limited, Bangalore fiied its return of income
for the assessment year 1996-97 on dated
2.12.1996 declaring a total loss of Rs.
4,l4,3t%,?22!=. it was processed under
Section 143(1)(a) of the Act. On dated
26.3.1999. 'file Assessing Officer
completed assessment and passed the
ffigng _._i
~--~...,_,.-----
a.
1;! .1..|t._' '
assessment order determining the total
taxable in em at Rs. 16,48,l8,()10./-
making certain dis-allowances that were. ' L.
claimed by the assessee in respect ef.. the ff '
depreciation, provision as to
doubtful debts and urlderxotlrer §ieads5and"" '_ V
also rnekieg certain add_itiens;_ '7
Assessing Officer added to the iiieonie i'1:_fl1e ~ --~ It A
said assessment sorder 'diss1lowanee.. or
depreciation to time '.Of:_
17,36,44,507/- on pretective basis; 'dtouglt
the same was added" torthe-»r.ineonie et' fee
assessee the bloek. Assessment Order
dated 29.01 . that was __rr1ade. " ursuant to
the search efvthe_ premises 1ef.t1ie'}es'sessee on
31.1997.
(b)::' 'Aggrieved »b:yj--tl1e. saidorder of assessment
"!iateti;_.V26.3.1--99'9', «the assessee preferred its
' - e.a,i,::rpea1':§ie?;iet'r;ire«':tl1e Cormnissioner of Income
._ ~ Ta;%c,(«V..Appear1_s'-). _[ -C'iT(A) for short ] which
. . cameto. loe«..aiiowed in part, whereby the
_ Co1nr:1is'sio11er-- granted certain reliefs to the
assessee. Aggfieved by the said order, so far
as itrelate-:'é to refiasel to greet eertain. other
..reliefs,""tire assessee filed its further appeal
before the Tribunai in ETA No. 794 1' Bang H
' '£0010. The Tribunal. by passing the
' ..i1';.1pugned order, allowed the said appeal
granting farther reliefs to the assessee. It is
this order which is challenged in the present
appeal.
€--S-'"-"'17..--~.
6
3. Stated in nutshell, the facts leading to the appeal in--.1'l'A
No. 633 / 2004 are as under:
(i) The respondent «-assessee 'tiled;i'ts'
ineeeie en dated 529.Il.«1997 .gfor" . the»? A
assessment year l997t:98;'dl..elosing. loss'ef..__
Rs. 18,23,58,67Eu'_-. It'was~.preeessed"adder: "
Section 143(1)(a) "of the A 'income "[_l'ar: 'A at (3
hereinafter referredpte as 'tl'te_Aet'-'). °,After
disallowing eertai.a._p"elai:ns of the assessee
with regard to the depteeiatirnr, provision for
doubtful debts, ' prev?isionVf_ 'i'e*r'~ contingencies
and supply. _i_"ren1s._ *'after~..'V_1;-mllcing certain
.. additions on~.ti*the search which was
_ cetid_ucte'd dn 3.} ._.l premises of the
_..'a.s"se'ss_ee,"---tl1e"~Assess_ing Ofiioer passed the
"-P;ssessment'~.' ~ dated 16.3.2666
.. ff. determining the""~ta§<able income at Rs.
"".;'?,,_3'll,2'09662{-- as against the loss of Rs.
~ '1l§,i"»:'.5,5'a,6'--ii)i}.. strewn by the assessee in its
a V ret_urns.= V
{ii} ~- ._.A.ggrie'ved by the said order of assessment,
tlieassessee preferred its appeal before the
. (.':i'i'(A) which came te ue allowed in part
"giving some reliefs to the assessee.
" Aggrieved by the said order of the Ci'i'(A),
se far as IT related to the refusal to allow
some of its claims, the assessee-company
preferred its further appeal lsefere the
Tribunal. By passing the impugned order,
the Tribunal allowed the entire claim of' the
assessee to the extent et' Rs. 3,56,57,72?/-.
'I'herefore, aggrieved by the said order, the
revenue has filed the present appeal.
<-5'V'\.-'
4L .1113: First Substantial Question sf Law
above is common in both these appeals. it . the~
disallowance of a sum of Rs. 17,36,44,5()'7[-nflforbthe 'assessnient
year 1996-97 and another surni
ss..es.:1__e__t year 1997--98 which were..clairned'b3,r:t1ie assessee for
these rspective essesssmenfi years is, tiggirecistlon on its various
assets. The assessment liasheen made.by'ithe.'A'A'ssessir" Authority
on the 'Protectivel3shssis'for ..the--..*'reLasonsmthat these sums were
disallowed 'i'ssme'»--Assesssing._ fsufilority in his assessment
999% respect of block assessment for
.....a V-- ' V i' it
Uu'"1' dfitfiii .«.;.~
E0
' [ms
the block oeriod compri.sins~~llof prvious years 1991-92 te 1996-97
includes tl1e-..grevious years relevant to these assessment
irrrjuestiorr..viz., 1996-97 and 1997-93.
As "to this protective assessment, Indra Kumar, the
learned" Senior Counsel for the appellant--revenue, strongly urged
that' though the concept of 'protective assessment' is not
.e p.ovi.si_ns of the Act, it has been
3
Wu
Assessing Authority passed the respective Mas"essnter-t» .--"i**lers.,:ter
3
ecogiised by various High Court and also the Supreme Court atide
cc"dir"ty, in etder to protect t..e i.n.t..-est of the revenu'e,.f;the 5 _.__ 9
the said assessment years disallowing the .. 3saidi -s1'nns'~ tot ;, .'
depreciation on the ground that the Assessment 9
29.1.1999 asscd -3; it i..- ;__-espectp_.ofA' ~the=_,b1ock 'eperiodiiwliich
includes the previous year' felev"-ct tit assesssment years,
was challenged bythje assessee court in
No. 5053 / 1999 attd was iwithdrawn, before
=3-
.e 'l'ri-,1na1t".a;ndc. ttgerefore-t if the saitiesder of block assessment is
held to hei".not._a'i'g*'l'132i. in the. event, the -eve-_ue
would be_deprii';ed'of the lettied on the said disaliowances. As
9' agairisti" this, ASri.15.L;"txt*;i{ao the learned counsel for the
vehemently contended that though the
c"rcept ot'.p.reteet1t'e essess.r.ne..t ha... --en _ecognised by various
High Courts and 1-lonihle 'Supreme Co' ' "' could 'tot be seen
aniassessrnent in respect of the very same assessee and as to the
very same amount of income assessed in the Block Assessment on
the "round t..a. it was 1 ndisclosed one.
9
6. It is not in dispute that a search was commenced:
prernis.-s of he asssssee .11 11,199? and it came to be"conciuded it
on 28.2.1997 and, during the said sear'-h, "
seized certain documents pertaining to the assets in 'respeet_ a a
which depreciation was clai1ned'iVl_3'y.._Vt3l1e assessee iinlthe.prev.ious
ye-.rs fallhg within the block period besides being _relev_aint to the
that based on the' 1 Assessing Authority
concluded the"b1ocleassessinent_for period comprising
of the pr"evious'js?eai to'-~199fi-9'7 and passed the block
sc '
:= '
$3..
is derw scbaln
nun. v. w v y with
11
III ll
by theassessee initiailyibefere this court by fiiing w .r. 1' '.
3 V' afler ire to be withdrawn, before the Tribunal by
is also not in dispute that the Tribunal allowed
appea1'i.o1ding that the said block assessment was barred
by ihnitation and, thereafter, ch"ii"ng'"g ul s*'d nrder, the
revenue filed l'l'A No. 296 / 03 which is now disposed of
ii ~. us. Thus it is clear that as on the date of passing of the
respective orders of assessment in respect of the assessment years
(__g'$f}'"-----..---"»-
puni-
1::
1996-97 and 1997-98, the said block assessment order
29.01.1999 was already passed and its correctness was " .
y the assesse
7. Therefore it is the case of flreilittevenae
legality and correctness ofthe said
to be decided, as a protective._.measare,.."Assessing»Authority
wa.s justified in bringing ii amounts of
depreciation which assessment
order. At para Order pertaining to
observed tiiat the order passed Under Section
158130 {on 'depreciation claims made by the
iassesseei for flie.p&_assessinent year 1996-97 to the tune of Rs.
faiied "-to _e's'ta.'ni1s the genuineness of its so caiied lease
it iA"*trar1saction's----and to prove the existence, location and identity of
assets and the assessee had challenged the said disallowance in
'i.¢:wr--it: petition before the tiorfble high court of iiarnataira on the
.:*~r*--v--
fill
fi--d.
plea that the disallowance cf the depreciation could not be nfiade
in the block ass;-ss.---nt as well as on protective basis. e-in "
respect of such disaiiowance fo" the "ssessment year.
5.". 1
Assessing Authority has observed Para f1i'§l'o. ': let'
assessment 1&3 order that the sssesseelicornpany
ti.-p.e.-ia-i-n -f Rs. 47.12 crores andsame disallowed
29.01.1999 as it fo_und_' '"61 ent"r"d
into certain genuine and the
assessegtiad said disallowance in a writ petition
bef"r" on various grounds
and theret'ore., net 'dlepr'ci'tion t" the tune of Rs.
,-.24,ss;5sv§§3s./5 a.~.i* seemed in para 111 of the said biock
.___assessm:ent order has been disallowed on a protective basis.
1
8.<T:As to the disallowance of a sum of Rs. 17,3'1,"il,62" -
K 'V V' tiorthe Zlissessment year 1996-97, the C1'l'(A) has observed at para
ofltis _rd.er as: "' the contention that protective assessment are
'm'.;l.
not permissible in lcw dees no. appear t- be c_rrect, protective
(S"'j'\---v-sac
12
assessments do create the possibility of double assessmentppofiptlie
53
331716 ii'IC"i'1"1%, ¥'1"1&" iE':6 11': B13 "ends G1
0 persons, -1' l_ivai_:1___:_-'.:_.v__ _
of the same person but its effect is only Jternporary'aaidfoniyifcrp a it i
limited purpose i.e., to ensure that the 'interest:'of'the-.revenue..in:;_A
ensuing that the income to be asseS4\;ed is 2netV:lefi_unassessed and
e.tima.elv ow! one ass.ssn1-nt -f_.tl1e«sa:n_e income_AAis_goii1g to
stand, and there wouid be no doubifv ='.'_.V He has #3"; u1"i'
observed at para.v1.ii:on_ pag;'eV'3f4' thin" case the block
assessment is:held..to~-beV__nuil_Vandyoidiiby the Hon'ble High Court
there would giitiy case=ofiidcuble% assessment of the wrong
claim of°xd*--r'ci"tio'*=.tencese..block assessrnent and .he in
regular _assessment)_ ';and_ the disallowance of depreciation in
V' -regular assestsmentiniadev on a protective basis would become
a.re'g:u.l'ar on a regular basis and that, on the other hand,
the E-i*1'bte _E..igh ..e.ds the. .h..- clock 8.-..S.-S=.!.--!!I subsists,
K When thedisallowance of' depreciation in reguiar assessmen' would
getaeietea.
(3.7%----.-
13
9. While observing so, the learned C1'l'(A) confirrned-«._the
order of the Assessing Authority so far as it relates: ..
disallowance of the said amount of depreciation it it
+-
I
-4
assessment year on prot-ea-tive
disallowance of Rs. 24,38,5S,935.!'--_'i'or ii
98, the (.21'l'(A) has observed at of the
contentions are on the ddop.t_ed.t'or assessment
year 1,9e--9'! and whi-h are dealt irsfhis in [PA 54/00-
V1/Cl'i'(A)/1ff9f'9*i¢2()ri'(i of.ev.eri.d't*_ 4a"rdvt1r*t*t}t° euservatiorts mad.-
order iiwould apply with equai
at paras __5__,6,'?~ . Vof_ptbe:':said
force. Thus, 'based. 'on'the'reasons -assigned by him in his order in
the .ppea1i"*ta{hereiii tlieassiessment order for the assessment year
was art
(I
' ofthe said iamioent in respect of the assessment year 1997-95.
'1*{1yj.--;Ap'sito deletion of the disallowance of depreciation for
the iassessrrient year 1996-97, the Tribunal has observed at para
~ ii"«r. " .
no.o. ct its order as birds! .-
"Reguiar assessment and intact': assesrrerrt cannot
stand simultaneously In view of the 5' eciflc
provision in Explantion to Sub Section 2 ofSect1'on
(-S"'r\-ax»
14
held by the CIT-A. Accordingly, we direct to do«~~sv3_« V' _ A4
In the result, the appeal is allowed " --~
1583A of the ITACI. Double addition has i' go csfl
"-3.
Further, as to deletion of similar disaiiowanee fof' ffefifeeiation riff
the assessment year 1997-98, the-..'_;'ribana1'has takexjr same L»
view as above.
11. Sri. Indra Kumar, tfie iearneel' §Senjor"_eo"unsel representing
the Appellate-Revenge has reliefi u15onj1he'fe11owing decisions in
support of 1e55;.~._». efigenrio';s"onv'pro'teetive assessment.
i), l ._ (' 9!¥r'%3."}4."el,'254" HR Page .249 ( Commissioner
ii') {V".'i'.-.'.':}g'£ )_".'el.234 1'!!! Page 464 (Jagannath
..Bawri and others -- vs - Commissioner of
Income tax and others)
' (rem )VoL 43 on Page 337 (Lalji Haridas
' * _ Income-mx-Gfficer and another } ( C11h.otx.a..lal
Haridas V. M1). Karnik and another)
., .
1:. : -' " .
-1 _ - .
'i-7
(1998) Vol; 234 HR Page 733 ( N.R Paper
and Board Limited and others - vs «--- Deputy
Commissioner of income 'i'ax)
:5---7"*\..---.
15
In first of these decisions i.e. in the case of C'onmissione.if"ej'
income ;I'..«.x -- vs -- gm- Sirtgh ( 1998 ) vo;.~mtri=s
249 which was aiso considered it' iii' f.'.i't'{A), it.is--»oiiserved V" "
Hon'ble High Court of Allahabad as under 3 it
"It is settled that when there' ~.1'_s a doubt as so Aweigh
person amongst the two was'e«..Vltat3le to .asse's.sea'.
parallel pi-oceedtngs __may bee___take_r1=.agatr:st--.both and
alternative assessments' may ;also" be flamed. 1t"is"also
equally true that while.-agpfs3:.eett--t3e is
permissible, it is not open._to.'the tnconr-was appellate
authorities corrsttrttredninderiithe Act to inaice a protective
order. I }eori;9e'rmtt asgsessment of the same
income sueoessiveijj tr:4.d§ffe.rer;'t' hands.» The tax can only
be levied and «:LjollebteciV'tni_'fiaeiianetsiof the person who
llL1S~'I'ét;I3.{}3V££5r.'lt°J'1é:i?l*'t'l1é:..ir2COt'?2é'~an¢f is liable to pay tax
theiteon_". A ' '
12. Ono carefui reading of the above o'oser'v'°ti"rr it could
3 V' '-be no.ticed,that the nsessment of the same income on protective
.bssis"'was-znadetite said case in respect of two different persons
ot~.;..¢ g.oond€--};h;tL11-_e was doubt as to which of the two persons
"therein" was iiabie to be assessed and the 'iriuunai, e...-es
considering both the assessment orders had upheld one of them by
= ...cenceiing the other. But the same is not in the instant cases here
inssmnh as the protective assessment has been made in each case
¢""""*-E"...-"F?-7\.-"
16
..erein in respeet of the same disallowance, which \_a'as~
the block assessment and ii' r*s'pe"-t of "are. "
protective assessment herein is so made on the ground 'tiiat__.thee T
correctness of the said block assessment order wasand v
therefore if that order were to heV":'ultirnatel§.r"helr;l_ intralid, the
um ;'.'u':'t as
assessrne"t "rate on
assessments \afould..__ beeoine anti enforceabie'.
Further, whereas': nrotective assessments
in the made chapter, in the instant
cases, if ,..s is made under Chapter X1V--B
which provi'&es'vfor -.specliai.>7procedure for assessrnent of search
.. .. _ casrfi Protective~--------ssessments have been made under Section
of regular assessments for the respective
via, 1996-97 and 1997-98. Therefore, the
E
above" ohservatioiis of 'nlon"oie High Co-'rt of Allahabad cannot we
applicable to the facts of the present cases.
13. In second of the above decisions viz, {"i':3'2'8) 'Jet. 234
HR 464 (Jagannath Bawri and others -- vs ---- Conunissioner of
f£"'\.--5---\¢
17
income tax and athets) the observations of the High
v-+.
Hm. iudm-m:-ni read as nndAr;,_
_ 1,. ........,. M "V111
I tl tp gfi .tV\'3.AJ'-r G u1u_; 5.uu.un 1
"Protective assessment -- ambigyfly as to"
to chagge qftax --- Department can rfztalre 'assessntentsp on V
two persons in respect of same, irgeenie '--. 'Such "
assessirierits iiiade to protect :'m'eres_r '~ '
otherwise assessment proceedings ma_v'vbecomet'£2ar2'ed_VV
by time against perscn_finaIb2faz¢g1zi. to be £i:IE2fe..o '
These observations are 't1ot_«"efipliosbIee'-to the facts of the
present cases inasmuch as both the substtiutive'_'..and protective
assessment." in the hsegtdh case. were"mitdeVui1der.ilA1e same provisions
assessment year' respec't--.of~«the two different assessees which is
not so in the._ihstant'eeses'. "
14.' .1-.:_ Lair. oftue 2-...o.re said deoisi_n.s -e1i.-ed 11190.. b', the
tieafiied Seziior couzisei for the appeiiant-re"ei'rue viz., (1261) v I. fl
V . Haridas v. !ncome--Tax Oflicer and another,
. 2 t ,.:Hor1'ble Supreme Court has observed as under:
"In cases where it appears to the income-tax
auflvorities that certain income has been received
during the relevant year but it is not clear who has
received that income and, prime fizcie, it appears that
* 4_ inciuded assessment year 1995-96.
fill-I
:50
the income may have been received either byA or by B
or by both together, it be open to the :'ncome--ta2«;v
authorities to determine the question who »
responsible to pay tax by taking assessment " ff
proceedings both agaI'nstA and B. "
Suffice to say that for the reasons stated su1pra'iiin lrespeict :5.'
.,hserva.L-ns .1' Lin.' _1e High Conrt:V:of_Allaheb__ad andeuasatasiin
first and second of the decisions ..r"et'e; ed to 'eh-two', these
observations of Hon'b1e Supreme 'not appiicabie to
the facts of this cases; *_-.
15, __In of Hideciisions relied upon by the
learned Senior~eoiins:e1.pptisejappellaiit-revenue viz., ( 1998) Vol.
234 [TR 733- (N. Limited and others v. Dqmty
J
sis.-aw of' ,3 _. the facts narrated on page No.734
of:ti1.e_jud_g1nent'were as under:
_ " « "_ir+f1=i:¢re was a search and seizure operation in the
A ease .of----tiie assessees and the block assessment under
Ch'apte1*XlV-B of the said Act was made for the block
period fiorn April 1, 1985, till January 6, 1996, '.I.r!1ie-h
In those
"proceedings, the total income. of' the assessees for the
it said period was worked out in accordance with the
provisions of section ISSBB of the Act and after giving
credit for the aroount disclosed, me assessment order
unaawus
was made. The assessees' appeals in respect of the said
19
assessment orders passed under Chapter XlV=B of the
act were pending before the Tribunal. The Assessing
Ofiicer issued notices to the assessees under sect7:o"n-V_f"--«.V"'-
143(2) with a view to completing the assessznent'*for~____i' 9'
assessment year 1995-96 pursuant to the returns flied 'r. 9' i
the assessees. in a wnt petition it was eentendedhy ._
assessees that the total income for<the-assessiiientr _
1995-96 was already computed in the assessntent.Aorders'_ .
for the block period and, therefore; no " " "
is assessment for the assessme'nt..__.year "I995-96 9;:-ouid be _
eorr.pt.-ted and that the returns of 'i-neozne filed -by" "
respect of the assessment year 1995-96 were required to
be fiiei _
it was on the above facts, Gujarath
observed on page_Ir\'o,_7-35 as under:
5'He1d-.. (i)'t_hat"-the "noti:_:es{ issued under section
143(2) were-iri;_respect-.of'vtiie regular assessment and the
Asseissingp 11)t"f1eer" ,w§tl_1i.n jurisdiction to proceed
with the same per'secti.on 143(3) and make a regular
assessment of th:e~ total dirt-,oo.:ne:'ioss of the previous year
for the assessrnetit *1 995-96 notwithstanding the fact
that the" said Vprevieusv-year was inciuded in the block
_§period for the purpose of assessment of the undisclosed
5___"i~no_orne.,_ and thatseeh assessment was already done and
1=aas.tire4snhject-matter of chauenge before the Tribunal.
_ " qn.e'stion or problem that may arise in implementing
the'said_pro'vision or other provisions of Chapter XIVJ3
ihad_no~h_earing whatsoever on the question whether the
Assessing Omcer had jurisdiction to proceed with the
em year 1995--96 in
z . 'L
regular assessment tor the assessrn
" r thebase of the assessees;
(ii) that there is no need to give any reasons or grounds
for proceeding with such regular assessment and the
requirement of section 147 of there being reason to
in xzvlsu
(4j'*L.'\4
T
20
believe that any income charge-'hie to tax has escaped
assessment, can never be read into the provisions of1_
section 143(2). The only requirement for issuance oi
notice under section 143(2) fin' calling upon"'"th[e=._
assessees to attend office and produce evidence V in' 2. '
support of the returns is that the Assessing. ,.(}§freer'
should consider it necessary or exgsedierrtpto-'_<ensure*that'
the assessee had not understated the income 'or'has--.not'
contented excessive loss or has not'unde_rpaid theitax in *
any manner;
On plain reading of the above pobservationsiiitis elearthatthe said
observations cannot be made a.pp1ieaiile to.._'t'aot_s of the present
I.'-as.-s inasmuch block: asessrnern been made under
III
Chapter X; vi---
'_' a_r_ r the ;;r!'Gt$y'i.1'Je)..9.SS:';S..l!!l3.=l1tS have been made
A
under Chapter :ii.e.,.;'Seotion. V143) of the '-t "s rrguler
assessnients land; :_the: block assessment and regular
assessntent have'-heeniniarte in respect of the same assessee.
V "support of its findings that the same amount of
relatifon to the same previous years which fell wiuiin the block
ii V. period, the Tribunal has referred to in its impugned orders the
21
provisions of Section 158BA of the Act including expiartationic)
to sub-section (2) of Section 158BA . The said provisions'.,
under:
" 159.-BA. Assessment of undisclosed7income"e.s_ s ' ' .
result of search:-(1) Notwithstanding anything»eontaine'df'c A
in any other provisions of this Act,' afier.'the'v3t'}
dav of June, 1995 a searchis initiated 'under Seetienvl32
V
or books of account, other documents of are
requisiti net! tinder _-Section V1.32'-A in the case offany
person, then, the Assessing offieerj shall proceed to
assess the undisclosed in.ecmeji;s seeeréshee with the
provisions of this Chapter.._
(2) The tota1"p1.ni'idisotosed--:sinconieiirelating to the block
period. shfefi hep. _eha:'ged*t_o titxgjat the rate specified in
Seetieh li;3,'_,ss itieoihejof block period irrespective
o_f'..the_ previous ppycaf or years to which such income
teiates 'sit-Li irrespective of _ the fact regular
assessn1ent"~ffor_A '2t_11yca.ippon.e' or more of the relevant
assess1nent'yeat's'iS P'-hiding or not.
A [Eiiplanattomé For the removal of doubts, it is
s hereby cieciered_ti1a*~;--
~ the income assessed in this (..'.hsp.er ._hsll not be
included in the regular assessment of every
previous year included in the 'oiock period."
'rm th" plain reading of ...e ewove nrovisions, it is
'1?'
an
1!.
clear that the assessment of undisclosed income reiating to the
IN?
lb-J
block period shall have to be made only in accordance with the
provisions of Chapter XIV-B which provide special procedtirepliibfw-. V V
seen a..s..ssn1.e..t and that the total undisclosed inconieljielatingii '
the block period which is assessed under ishapter' p_
be included in the regular assessment offiany '~
included in the block period. 1ntheli:ipsesent'case,. asssasiyae
se__r-h of the premises of tl1e;*--re;sponJ_i1er;_t assesseesvas corninenced
clear that the to"'1l99o-97 comprised
the block years 1995-96 and
1996-97 are the 'years for the assessment years
19%-97 it is further clear that since the
- .searc_h_jiWaslV'cornrnence(i___or1 3.1.1997, w'1'1e of thy' -'revious
the previous year 1996-97 upto 1.3.1997 i.e.
the ot'_lclon_nr1encement of search fell within the block period.
. sis bei~ng'*so, undisclosed income relating to these two previous
I-v-.
"iyears'"e:«on1d not be assessed on *-protecti-v-e ease' as part c he
_reg'u1ar assessments for the assessment years 1996-97 and 1997-
98 as has been done by the Assessing Authority in these appeals.
¢""*""'\...---"
2'3
'therefore, as rightly held by the Tribunal, in its impugned orders,
the same income which was assessed as the undisclosed..iiieoiiie":,,
i"r the block period cool.-. n._t_ have been assessed: ' '
protective basis for the assess'"""fi -y»eai.:$
As such. the findings of the Tribunal. ._regard it
the impugned orders do not call u "these
eppeals. ..o..s.-qo....t_,, suhstaiitial pertaining to
'protective assessment? Wiii.e'n"vésjfccitttiteti '1.":s§3'.. two appeals
requires to be ansi?iered'v the '.afii~:::nativé" and aganm the
Appellant ------Rei}enue:.i -1 ;; is ,_
question of Law pertains to
_ 'proyfgsionpforié debts. '1l1e assessee had claimed
1996-97 allowance of a sum of Rs.
'provision for be anu do"bti'el e.e...s and :1: the
assessinent 1997-98 he had also claimed such aiiowance t"
Rs.10,36,92,864/- which is inclusive of a sum of
L{.s.i1',i1'?,é1,000/-, which has been 'written oil' during the relevant
-15
previous year. 'in Aseessine L...c..-. allowed this sum of
....S"""""u.z-.«-
.
GA 44 l{s.1,17_,61,00(J/- which had been 'written off' and dis-allowedjthe claim lb- 1{,s,9,l8,21,864/- for the assessment year nothing is merriored in the AS"%SS:":';%i1lOl'w'.'-l' es.t.... uela:i'1.n_ es- 1 J the assessee for Rs.85,88,515/- for thelassessrnicnt ye.ar'--«i996r: b when the said dis--allowance wasVc_lral_lengled._before Itlie the appeal filed by the assessee, th<e.___4(_i:.fi-'.ll_(.l+'t.)p, confirnted the same.
19. The concnrrent Officer and the first Appellate Atitlierity were ehnllengedljbyp assessee Company '*1 it: rp-peel lillribnnal, while observing in its impugrled Assessing Aumerity did no. give sufficientopportnr1it})'.'ti§' 1lie..l:gp;ssessee for submitting before him the details? in resipect_:ioi'th'e saidiainounts claimed as bad and doubtful . details axlailiable on record were inadequate for giving its flip' _ _ c _ ii "_'LJ.Ll ag p issue, remanded the matter pertaining to ii 3::
A h4""U"reconsiderithe entire issue pertaining to the claim of the assessee as it provision for bad and doubtful debts. 'l'herefore, we have to = ..-ei<amine whether the order of remand passed by the Tribunal is justified having regard to the material available on record.4
c.___ N um
20. It is the contention of the learned eom1sels:"foi' the assessee that the assessee had not been given Officer sufiieient to place on . .
d 1 1 g'.1\Al\1'gé,nn efin an 'Wm m "PM ' "Wu _ V under Section 36 (l)(vii) of end_titterefore.ithe.. -' quite justified in remanding the to the with a direction to reconsider cleigiitiessessee deduction under Section 36 V'(l)(vii) of the '1'n'bunal has observed at 'on 1.; _ '.o.237_fits~:_-der _s I.1_r1d--:-
"5Q3 ----jjiria' tectistiietd 't ilsgméaiiabie on records are inadeag(uate::;to_deal-with'tlsi.s_issue. In fact, the CIT(14) in hisorderp at para No.13 has expressed similar difficulty'.dealin_g_iwith"his issue. It is stated by the "Cl3i'(A) ' that-..'ceriain* opportunity was given to the ass-essee to._s"itl?té:it,._tFie' details was not complied by the ' V assessee.' - The-assessee's version is that the details V noibe_ _ submitted as adequate time was not given "lgviithe C'1T(A). We see no purpose in dealing with this issue detail in view of the inadequacy of the details. in fi}fitfl.vt'lt3 C.'TqG-4.) held' it: issite against the assessee igetrlraiwing inference for non submission ofthe details. _>ii"'e find sufiicient force in the request of the AR that ., " ssufiicient opportunity must be given to submit the details. We also find the issue imrolves a substantial disallowanae final opportunity must be given to the assessee to file the details. In view of this we set aside the issue and send it back to the Assessing (2iii'cer with a direction to reconsider the entire issue afiresh afier calling for the details required to consider the claim.
('\-----f'''\./' ('---u-26
' .
'l «.
f££.'?'E3"h s:u:.. de*'".s M ma called by the assessing ofilcer. In cas the~~assess-eel fails to furnish the complete details :1 ~ reasonable opportunity claim for pmyision. may be disallowed. However. in s_ueh.__even_t theassessing ojjfleer shall allow the claim fizr baa' :;*ebts"i:;» _ ' subsequent year where the elaiiéi sis' asziertained aird 6-";'Vstalised." V' ' the assessee shall also :.}'~be-
'c
21. As to the opporutiiialgiven 'to. by the Assessing Officer for in of its claim on provision forbad a.ndV_dostbtl'ii_V1Vclebts.lfhޤ._'(,3ll1'(A), has observed
9.. pa.
~' ~' 1 "-
E . t:' r 2 .~ . " 'V ' .
.. No.13 onl;.33:~.ge 110:?!" e. ..1s._er..;e:°-as ltmder.
-**il7heV'assessee.~ hastclaiined--the amounts debited to P & L A/cl: 'deb'ts_:writien ofl' as well as provision for {doubtful andixadiiances' are items eligible for _ _ dediiation.ui:dei%_S'ealion 36 ( 1 ) ( vii ). These being for"'idetl!£cIion. the onus is on the assessee to I-
n"
..
E lgrrc-.1e «mat me claim was allowable under the income } = " = H - l..' 1.. 1.. ..- L-
-.1' Atrt, ...ei'e are certain tests wntcn ruTa"vt: i u I .39 in "cf vcotti_l3.lied_ibr examining the _ _r.ree.t.ne._s of' .
. tiifi opinion. the assessing ofiicer should have called lvjbr the details of various amounts debited and asked the assessee to explain how each of the items fulfil the requirement of valid write ofif Instead of doing this, the assessing officer has adopted the criterion that the 27 amounts debited to individual accounts of debtors and wht'ch)'brtn part of 'bad and doubtjitl debts written ofi7~~~._"" d it quattfjz jbr deduction under Section 36(1) (vii) _ 'the provision for doubytiit debts and advances' do not. qualtfiz because the debt is not made the 4' accounts of debtors. The _os._sflesstn'g-- Ahiojjiicer 1 A' observed that the ciaim of 'bczd, dou'bym'w..qe:btV":, i ... .' " ' ' w"ttte"t '3?' IS otbwobte sender Seettoii-.3é.,{ I-..
N-up ""'\..
*4 id
-.
'Inu-
ts not clear from the"-recorii tbjtot ueijjfieatton the assessing Qffcer has made, this vtiegiordfii i V i ..
22. After:'eonsicliesiitg.:tiief-- observations of the 'L. .. .141 remanding tile rnatter. Authority wun a dis"-ti":
to reconsider issue of provisi'on as to bad and doubtfitl debts. deciuetions claimed ibythe assessee towards the provision for 'v44iufs1V:"_j..ai;lvances being Rs.85,88,5l5/- for the " t%"3aear.e1997§9s itre substantial amounts. There is concurrence as to on this fact by the Cl'l'(A) and the tribunal that the iassess-company should have been given sufficient opportunity to 'tree before the Assessing tint nritv 11" the details i.-- esp t o LI-UIIJNJI VJ 'ill. Irjfiw ¢-5-""x/' 28 e e" eh item ef debts in or". t- es.a-li._h, its case that the same. ;-an allowable under Section 36 t 1 ) ( vii ) of the "t. 2- ' the Tribunal remanded the matter to the Asse_ssing'0ffieer, it-did not examine in detail, in its impugned order} the oorreeti1ess{'orI1.e_* omerwise oftite ass..ssn1___t_ order andelso the order ofCi'i'(A.) by appiying the provisions of Sefjtien '%e*~{...'iv~.}'{«~.vii ) 9.nd«e...n,.éI.nation to it and Section 36 ( 2 ) of'the_a_Ae't. for aiiowarre of deduction as debt o1if_Aaii_v as provision for bad and amraiassts. *1'se;reisre;s we do not find any valid 1 reasons to ii"H""'i7"c':'1t:'»_Wi'§§fi 'th.e'seoV'eoneu;;'ent tindings recorded by the in CD Cl'1'(A) and the 'l'ribuna._i~ in'thieisirespective orders. 'i'h"t"t"*re, ' ' have to. ansvver 2'". substantial question of law in the "V"affirindati3ie' ma 'again"st'the Appellant-Revenue' H e fourth substantial questions of iaw as frained above perta. or into deletion of disallowanee of the claim of the assessrie for the assessment year 1997-98 to the tune of i '1' ,a3,5t)9f- and "ilowenee of add'..i_..a1 -1at_rn ,1' the assessee for Rs.2,46,04,4l8/- for the same assessment year t'rrt was "made ¢£fiv~_..\, 29 by the assessse b_f_re the Tribunal for the first time ( the subject matter of 1'i'A No.'e33/2t,.):1. ) i.. .espect of liability of the assesses due to exchange fiuctui.tiens:; "
disallowance was made by the Assessing Agnthoritgr on flta. the same has been 'capital.t:rr~...nature'll:bnt' in nature' s e""te'tded uv Lie assesse:e._arrd_» thisldisallovtiance had 1 been confirmed by the r|\ -
111< (I! ('3 .' fir! .£a"|'.
asset' -.issessee~compan§¥ is that in pursuance l\I 'i ofthe agreement. r.'a"ate<i"?:i.,Vii1'i;'_i294- ""*° em'-"red. int- -y it with Comtfrpll Weaith_l.)_e'selopmevnt Corporation ( for short ), me assessee availed 'r'roin"C}l'5Q"'certain amount of foreign currency I n I ' Vivlosln as o.n--:5 :--,5__.'1 I, its 'v"'l"e jumeee t- R.s.2-,35,12,805/- 'om " at Rs.25,88,S5,U7'8/~ as on the re'r'vant dates on loans were availed resulting in foreign exchange it * dirfierilnce of Rs.3,56,S7,727/- with consequent increase in the iiabiiity of the "ssessee. .'i.....er case of the assessee is that, of this amount, a sum of Rs.2,46,04,41tif- was due 'to the 4-.sse.s on r\$_""'-'1...-4 L9 CD use for leasing' and the same came to be 'capitalised' and asum of RS!1710,S3!909l_ was due 'to stock on here' and I expenditur' 'iid meretore, the same was .0 he ..es.ed' in nature'. This amount of eisirrsedi 'e.y».__ru assessee as deduction came to be dihsallowed by Authority and this disallowance :thedt;3l'l'(A). Besides tuis, me assesseeVms1d_AlsetoreitheL»V%/tribunal for the first time an additiorlst eiainti-"for as deduction towards exchsnge the assesses had erroneous1y«Vtrerrtec'l essdtsliiiin nature. 'Ute Tribunal, uy irrgpugrrel the Assessing Officer to delete ~._11Ild allow" '&s.....deducti0n Rs.2,46,04,41'8/- which was sssessee for the first time before the Tribunal as additional_ of deduction. Both the deletion of V ' -» .disai1owsfi1ee l\ v-4-.
Deal J. 1\.»'.). 1!} 53,904'.-. and allowarroe of deduction of 1{s.2;46,U4,418/- are challenged in rm N0.633f20('l4-. '_,;"U'¥-»._'__,_..' 31
25. Sri Indra Kumar, the learned Senior Counsei ._ the appe1lant--revenue strongly contended that the" "
committed a serious error in reversing the icoricurrerit tindingsiiof Assessing Authority and (3l'l'(A) as toniiidisa-Alilciuvance_iiof._ti1e account of foreign exchange.jjuctuationiihoitiing thatthe revenue in nature. He also committed another serious flin additional claim of the assessee for the first time iiii H c loss incurred by it on account t'oreign which an'o"nt was net so claimed _either'eetbre_thei Assessing Officer or before Cl'l'(A).
ll 1} ' n , frericentra Sn i).L.N.R"o, Srriirr Co"n"°-1, rerresenting assessee in 1'i'A No.633/2004 contended that since the of the assessee-company has been that of hire nurcltasetii leasing of assets and inter corporate deposits etc. the 'said than '*1 frrrign """re*i"3»' was availed V he -messes f r financing the purchase of the assets for the purpose of leasing as '__¢-r\......,..
part of its business ..i.d .he-e1ors, the said ".tn-_.nt -1' ine_VeasedV liability incrred by the assessee as a result _ i fluctuations was rightly held by the 'l'ri_buna_las and hence the impugned order so far iix/flVrel_ates to disallownnce of this amount does-njotecall for in 2 4i.',.--_...._.._,.;3....,..... rm. 1 use aenaaauu LUI 'J.I..
this appeal. As to the ;--add1:1 Anal int-». 0 Rs.2,46,04,418/- allowed the said claim was made by the the 'l'ribu11al, the learned jresgio1idehnt:'ha,ssessee contended that the amount VVallowanee'i ifnsthtime before the Tribunal and tlieret:bre,LAthe'"iinding':-at"thellribunal as to allowance of the said V. cainiotnhe "lobe illegal as the same was allowed after e'~consideeing. "fti:e.i~..a.erial tlia. was _vail.ble on ec rd:
it perusal of the order of assessment, as to the claim of C: a;ss-ssee fir Rs.l,lLl,S3,9U9.l- as d-du.eti_n n aceo1_n_t o.fforei_q1 exchange fluctuation it could be u: t in said deductimi claimed on the ground that it was revenue expenditure and not *\é' 33 e-"pitel exnenditure inesmueh as the said loan in foreigi cu,rrenci'y._V was availed by the assessee ft the 'p"rmse oftinancing :., of various assets for the purpose of leasinguthe same its ii business. Since the Assessing Authority negati_iJedtl1i'sycontenitiionofieg at the assessee and held that the said_'liability'v.ol" the tesseisseeyyytsas ii eepit... in ne._.;-e inasmuch theAy_sai:tl:_lom1 ~ iayilledfiiby the assessee f*r th" purchase cf plants and maehineries which were 'ibis View of the Assessing and consequently disallowa_nees.of: by the Assessing Ofiicer was confirmed" the imrther, it is an undisputed fact that additi"-1"' aeieuiit elf . P§s,2',4§_ .;Ll4,.41l$_f-- that was claimed by the " 2 t_ assessee before . f__'1__'_1iibunal dednetkn tewerus exchange tluctuation;~was"'~not claimed by the assessee either before the Assessing or before Cl'l'(A). It is also undisputed that this iVV_a1noun;v§es shown by the assessee before the Assessing Officer as f'eapl;.el« in e. H.owever__._ The Tribunal allowed both the claims of i the assessee.
34
28. As could be seen from para 16 of the assessmentvofglerg.
in response to the explanauon called 11! -3! the A.sessi_ng"0ffice1?; _.__ A' the assessee company vide letter dated 7.3.j':UUii sieie~ ..,{1,:S:A CL ''1'','': trearmem' q'.EL1:.r:!2ange }'Za¢:.Jations"'.v.0uld «. i' depend on the purpose for wr'n'ch._the E'CB'was avaz'Zcd.__ _ We enclose as /innexure 1'. a'-va.sfaie'rnerit'siiic-'wing ifaeii manner in which the aggregate eatcfiange flucntatioris has been arrived ai' and men acccvunfing treatment fliezreafi T0 the 92:!-en!' ECLIE éwasrhe purpose of 'stock on hire'. the e:cahar:ge'i_fluctu'aiio.nis'on that account has been ta _i'r'2e' P;_'ofi".=';."a:2d Loss Account. .ilceorfi2ling:Ey. c;at..bj"!{$';!.;€.J?.98,jI49 relating to stoclpon 44hi?§ife_-JwavsjdeE:ited_._.tojj-the Pi-'ofit and Loss Account _f!'.h_,e P.-*qfii"--.'and' 'Loose'-.gA'ccounr was also deb.ited iiéifli 'tfienet .'.c_>}'s's_a:z _)€9_r_jvan€! cover aggregating taiRs.3.3é..982/'-.1"?' * ' L- the the accounting for exchange at page ..o.63 ._f L-.. {,1 net book, the aseeaseg ., that exchange fluctuation relating 'o leased
--. of Rs.2,46,04,4l8/- (which was claimed as addiiieigaiiiaalhloivaiice before the Tribunal for the first time) was and a sum of Rs.1,07,98,149/- which has been claimed as has been sh-wn L be the exchange fluctuation relating to 'stock on hire' debited to Profit -"id 1..o"~"- Account. ;---S""'\-\...-\__,.
-'1:
J.)
29. In this regard, the Assessing Authority has observed-at para No.16 of his order that a part of the exchange "
has been capitalised and the Profit and Loss Account statingIA_that.. osueh, '6'24s';\':'1"i§'v't.iI"!'tgf'§__ J fluctuation relates to stock on hire that although. of V the a:,-ee1nent between the V__assessee:v:'c(anpany speaks of the rn'nn"r in which the business of the assessee companytias' to no diteet link between the lfease_:_o1% availed and there are no orw1'1ershinr 'on'theVVassets in favour of the CDC inasmuch as al.'tn_e' have been owned by the assessee company on which tlieltiepseli'-i"tion has been uaitne... while so 3 V' .Aobs-efviiigt the Assesvsing'01T1cer held in the same paragraph that thex_bifuifeatioii the CDC based on leased assets and the stock on his onl} instrument created by the assessee company to _.1-.
achiexiejax uvantcge and t..ere.or.-, the -x-__a.nge fluctuation debited to the tune of Rs.1,07,9'8,749x'-t along with othrrs to the . tune of Rs.2,55,l60/- totaling to Rs.1,10,53,909/- claimed as deduction by theassessee has been disallowed. .\~ .56
30. The above findings of the Assessing Authority iieve. U.-en continued .31 the Q1'l'{A). On this issue the lean1sfi~.Li1iV1'(_"A) "
has observed at para No.i3.5 of his "rder that the phrase *';f.e.c.-'-:
an hire" used by the assessee itseifis aimisnemiariashiper-jacieofi.isi f the case inasmuch as it is not at':,_z9'a.r_f with-rradinge.'sta;k¢_Vas tihevi biisiness of the assessee is not trading.in~.stock'buiileasing and hire purchase fii'ic"a"i"é' avid ihei'e,.e're i;.e earmenr of the Exchange jluctuati.Qn lassis' has iiexrrzieaaiture. At para 20 of the ssssiss,te¢cm)iiasiism observed that the agreemeai'(by.rheTas§essee"--with'ACDQ..ciearb; shows that the loan fer and other equipments to be used in iIs'*busines.~:_ which..~*inciua'ea' Hire Purchase as we $5.
9"'.
3 V' aetivitiy and t:'i--'.--.'----.'--.","the purpose for which the foreign loan wa.s{ij{:}r' acquisition ofptam' and machinery. which are .t.,e assets" in the business Qfthe assessee and as such the A "*iricreaseci__ hiiabiiity of the ey reason of excuange fluctuation is capitai in nature. Further, at para 21.4 of his order, '1: ~ it C1'1'(A), while concurring with the fmdings of the Assessing A-.tl_-r'1ty on this issue, has held the Assessing Ofiicer was correct ##fi 37 in not allowing the sum qfR.s'.1,10,53,909/'~ as a dedu¢r2'or;.4i_:i31_
31. On careful reading of fl1e:v'Jirn__ongned_ assessee and reversing the conciirri_ng the" ~t'inCtirigs.l2§ot" the Assessing Authority aJ1d:f1:3'i,%fvlit£1all1aSiArl1itide only a single paragraph discussionV_Vat».,par_a ;Nc}6,5 "eif--- its order from mind to abovelcoiteiisfreiititiridiingsr.ot"tl1e:;Assessing Authority and the Cl'1'(A) and Tribunal that Section 43A of the Act isanlotr aopiicaljie:.t'e-- issue is quite contrary to the I :-
C. C :-
C V very case"of.tl1e assessee as borne out f.r.,.. _.: n n1".
.. .
'. ....' .... U rub} U116 DI] ~ 'ivakurnar, the Manager, Taxation and Accounts Sectioniaof"fli6»~_as~s'es'see company has stated in his letter dated "ft:/re exchange fluctuations attributed to loan used " Aiaeqyiring leased assets was added to the «.2- st on as per ."" Jfi ' 1... A)' '«£:r€€é'§OP? 4314 uf fries nut 11 ul t wmle 'llowfirig the appeai of ti1e'< 38
32. .'.1..her, thugh the Tribunal has stated in its order as: "for these rasons W" seed that Sec.z'o.-2 applicable for the issue before us". it isquite appa1'ent_~fro1n'the dd impugned order that no reason whatsoever is assigned '1.'..J_1nal suppozting this view. Further more, the obseijvation of fne'i'r1sun": u t "j'%ma" ee--*;fewe§.{a=e§?e~--ari!ised.,?Lr pose of regutar finance business e4¢:rt*;'_eci"'o12§':'»oy " is also n'*t supported by any «reasons beiagnot founded on any facts 0" r°°°rd- 'lfitdddtecorded its reasoned t"1dingiia as-to"how"£the findings of the Cl'l'(A) supported. eorourrii"' those of ...e Assessing Authority. eouid not be sustained on facts and in law so . * fatthey relate todisallowance of claim of the assessee for Rs. of exchange fluctuation. Therefore, we afe"««..oi' ..__*{h'e:vtAopinion that th" irapwned eras: of t..e '1'ri.-una1 reversingdidthe concurrent findings of the Assessing Authority and d €d1'l'(A) as to the disallowance of this sum of Rs. 1,10,S3,909/-_ ' ' '"'de._erves to be set aside.
,.§""*----~"'*' 39
33. As to the ad.ition_al claim of the assessee-company'efor._ Rs.2,46,04,418f- which was made by it for the trrst tiaiL"be;er;'1' ;_. ii' the Tribunal on the ground that the assessee haLi"'eri{cneousiy treated the same as capital in nature;-:.the'_" 'tribunal-,i has" not assrgnea any reasons whatsoever. its "irnpug_ned' orderm [in i aiiowing the 's dutuetien. 'no.7-l'hev«7l'rihu..al iiasnotf stated anything in its impugned order asses"-ee had erroneously capitali.sed.tl1e agriottiu the Assessing A-.thority *2 ; whyl:,.the"'ass_essee--didnot inake this claim before the "'i'i'{A' 'R'; we} asfte r.ee:'t..;~allage.. ;l~:o: came to be corrected by the assessee so as to "get the. aiiow'd by a~ 'tribunal ? {,.. careful reading' the mrpugned order of the Tribunal on this . 'tissue; weirhave no alteriiatiive but to hold the Tribunal has allowed of assessee for additional amount of Rs. 2,46';t)4,4_i8.'e Qwitiiout ary 'oasis aid as such, ....e impugned order . das to this allowance also deserves to be set aside. '34. in View "f our fore gciug dis.-I..ssi..ny we answer the first ?
40 which is common in both rm Nos. res/zsss and s33.I2eo4 sii...;;. the ' affirmative ' and against the appellant-revenue . the Tribunal is quite justified in orderi11g.deietiQn i of the depreciation as made by the Assessi_ngji if Se"-ti'"'1 143(3) ef the income 1 A for the assessment years impugned orders. of the relate to the deletion of the 3respej¢:tive:A__A that were dissliew-ed basis in the 'l"l;.'4'l;VVVciv't1 1 r "'1" interference in these appeals. " V x"v4"" '''-''~.-'-- -----------n--. C an nnnnntl uni etc i. I 'I f " . 1 ulI§WUI IIIKI BIJDUIIII plantation-has Q- .5 F the disallowance on provision for bad and ' affirmative ' and against the appellant-
7._n-eveiiue iioldiiig that the Tribunal is quite justified in remauding "if te the Assessing A..t.1-r11:y pe.rtai___ing to the assessment _ ._ A "L "M .
K years 1997-98 after setting aside both (1 rs 01 ll! Assessing Authority and the Commissioner of Income Tax (Appeals), with a €_,'S'5-"\.'__,...
direetien to the Assessirs Authmty to eenside: a.1es.. ..'.e es..s\.~. of the assessee-company as to provision for debts and dispose of the matter ineeeor"
giving the assessee sufficient snbstafl
36. We answer'tlie:M«&hir--dl andi"fonsth«snhstantiel questions of law that have znrisen in ll.A..N(».63a/2004 In the ' negative ' flu.
_ L-
i.
and in fayoiivr ieviinne in "'""""" is ""'* 'i I. iuul I IRJI % sf the claim of the assessee to tiie for assessment year 1997-98 and in allowing assesses for l{s.2,46,04,4l8/- for ,' 'exehange fluctuations. Consequently, we set aside the 1" * of the Tribunal pertaining to the assessment year far as it relates to the deletion of the disallowance of * I ..f the to the tone -f R_ss1,10,53, 5091- and the of the further eiaim of fi' asressee 's to additional amount of Rs.2,44,04,4l8/- Accordingly, both the appeals in l'l'A tr-"'\'/' «In A-'\-
'Ind Accordingly, both the appeals in [TA Nos. 106/2004'.
633/2004 stand disposed of. No order as to costs.