IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 2ND DAY OF JANUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE MOHAMMAD NAWAZ INCOME TAX APPEAL NO.81 OF 2010 BETWEEN:
1. THE COMMISSIONER OF INCOME-TAX, C.R. BUILDING, QUEENS ROAD, BENGALURU.
2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(4), C.R. BUILDING, QUEENS ROAD, BENGALURU. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADVOCATE) AND:
M/S. TELCO CONSTRUCTION EQUIPMENT CO., LTD., JUBILEE BUILDING, NO.45, MUSEUM ROAD, BENGALURU-560 025. ... RESPONDENT (BY SMT. JINITA CHATTERJEE, ADVOCATE FOR SRI. S. PARTHASARATHI, ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN INCOME TAX APPEAL NO.407/BANG/2009, DATED 11.09.2009, AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(4), BENGALURU, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS INCOME TAX APPEAL COMING ON FOR FINAL HEARING THIS DAY, RAVI MALIMATH, J., DELIVERED THE FOLLOWING:
J U D G M E N T For the assessment year 2004-05, the Assessee filed a return of income. It had computed the income under the regular provisions of the Act, as well as the book profits under Section 115 JB of the Act. The Assessing Officer proceeded to compute the total income liable to tax in accordance with the provision of Section 115 JB of the Act. A show cause notice was issued under the provision of 263 of the Act. It was found that the Order of assessment was erroneous and prejudicial to the interest of the revenue in as much as Bhavishya Kalyana Yojana and that the provision for ‘doubtful debts’ had not been added back to the profits for the purpose of computation of book profit under Section 115 JB of the Act. On considering the explanation of the Assessee, the Commissioner of Income Tax (A) held that the order of assessment is erroneous and prejudicial to the interest of the revenue and the provision for doubtful debts had not been added back to the profits for the purpose of computation of book profit under the provision of Section 115JB of the Act. Questioning the same, the assessee preferred an appeal. The Tribunal by placing reliance on the earlier assessment order in the assessee’s own case, held that it is not necessary to add back to the profits for the purpose of computation of book profit. Hence, the present appeal by the revenue.
2. Sri. K.V. Aravind, learned counsel for the appellants contend that even in the assessee’s own case, the matter was remanded to the Tribunal for fresh consideration, by following the judgment in the case of VIJAYA BANK Vs. COMMISSIONER OF INCOME TAX reported in [2010] 323 ITR 166.
3. The same is disputed by the respondent’s counsel.
4. Even in the Assessee’s own previous case for the assessment year 2001-02, such an exercise was ordered to be done. Thereafter, the Tribunal having done the exercise, rejected the appeal against the revenue. The said Order was challenged in Income Tax Appeal No.244 of 2015, before the High Court wherein by the Order dated 10.03.2016, the appeal of the revenue was rejected.
5. Under these circumstances, we are of the view that the assessment requires to be done by the Tribunal so far the assessment year 2004-05 is concerned. Therefore, the matter stands remitted to the Tribunal for a fresh consideration, with a direction to look into the records and to record a finding as to whether the bad and doubtful debts are reduced from the loan and advances of the debtors from the assets side of the balance sheet and thereafter, to re-compute the income under Section 115JA of the Act. The contention of the assessee if raised with regard to the applicability of Section 115JA of the Act, is kept open for adjudication.
Consequently, the appeal is disposed off.
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JUDGE JUDGE Snc*