Integrated Finance Co. Limited vs The Assistant Commissioner of Income Tax

K. Raviraja Pandian, J.—This appeal arising out of the order of the Income Tax Appellate Tribunal, Madras ''A'' Bench, dated 24.05.2006 in ITA No. 1854/Mds/2000 for the assessment year 2003-2004.

The facts of the case is that

(i) the assessee is engaged in the business of Hire Purchase and Leasing. For the assessment year 2003-04, the appellant filed its return of income admitting total income at Nil after setting of brought forward depreciation loss of assessment year 1995-96 and book profit u/s 115JB of Rs. 1,46,62,782/- on 27.11.2003. The case was taken up for scrutiny assessment by issuance of notice u/s 143(2) on 07.10.2004. Further a notice u/s 142(1) was issued on 09.12.2005. Assessment u/s 143(3) was completed on 30.03.2006 determining the total income at Rs. 4,66,38.817/-. While completing the assessment, the Assessing Officer among others disallowed the provision made by the assessee for non performing assets in the accounts for the previous year ended 31.03.2003. The Assessing Officer rejected the plea of the assessee that Explanation to Section 36(1)(vii) bad debts written off shall not include any provision for bad and doubtful debts. These amounts represent the diminution in the value of the amount receivable.

(ii) Aggrieved against the order of the Assessing Officer, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals), who confirmed the disallowances made by the Assessing Officer following the decision of the Madras High Court in the case of T.N. Power Finance Corporation''s case.

(iii) The assessee filed an appeal before the Income Tax Appellate Tribunal. The Tribunal by its order dated 04.09.2008, which is impugned in this tax case appeal, rejected the contention of the assessee.

(iv) The correctness of the same is now put in issue before this Court by formulating the following questions of law:

Whether on the facts and in the circumstance of the case the Appellate Tribunal was right in law in holding that the Appellant is not entitled to deduction of the provision made in respect of Non Performing Assets which are considered irrecoverable?

Whether the Appellate Tribunal was justified in not appreciating that the provision made in respect of Non Performing Assets if not allowable as a bad debt is allowable as a business loss?.

Heard the learned Counsel for the assessee, who fairly submitted that the two questions of law formulated in this appeal have already been considered and decided by the Division Bench of this Court against the assessee by its order dated 09.02.1999 made in Tax Case Appeal Nos. 107 to 110 of 2002 (TVS Finance & Services Ltd. v. Joint Commissioner of Income Tax, Special Range XI, Chennai).

Following the aforesaid Judgment dated 09.02.2009 made in T.C.A. Nos. 107 to 110 of 2002, the two questions of law now raised are answered against the assessee. The appeal is dismissed.