M/S MAFATLAL INDUSTRIES LIMITED,MUMBAI vs. DY COMMISSIONER OF INCOME TAX-CENTRAL CIRCLE-8(2), MUMBAI

O R D E R Per Padmavathy S (AM): This appeal is against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) (in short, [CIT(A)] dated 24/01/2023 for A.Y. 2011-12. The assessee raised the following grounds of appeal:-

2 ITA 881/Mum/2023 Mafatlal Industries Limited “1. (a) The Ld. CIT (Appeals) erred in law and facts in restricting the disallowance u/s. 14A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") merely to the tune of Rs.24,89,968/- without appreciating the fact of the case. (b) The Id. CIT (Appeals) erred in law and facts in not adjudicating on additional Ground 1A filed in the course of appellate proceedings praying for restricting the disallowance to investment which have actually yielded exempt income during the year under consideration.

2. The assessee is engaged in the business of manufacturing and trading of textiles. For the assessment year 2011-12, the assessee filed the return of income on 30/09/2011 declaring a total income of Rs.36,15,57,519/-. The return was processed under section 143(1) of the Income-tax Act (in short, ‗the Act). Subsequently the case was selected for scrutiny through CASS. The statutory notices were duly served on the assessee. The Assessing Officer completed the assessments by making the following disallowances:- (1) Disallowance under section 14A Rs. 70,89,262/- (2) Disallowance under section 36(1)(iii) Rs. 1,32,49,990/-

3 ITA 881/Mum/2023 Mafatlal Industries Limited (3) Pooja expenses Rs. 1,43,254/- (4) Expenses paid to relatives of deceased Employees Rs. 18,400/- (5) Disallowance of expenses under section 40(a)(ia) Rs. 1,24,89,740/- (6) Disallowance of advances written off Rs.10,01,15,907/- (7) Income declared as from other sources assessed as Income From house property Rs. 6,49,74,049/- 3. Aggrieved, the assessee filed appeal before the CIT(A). The CIT(A), with regard to the disallowance under section 14A, gave relief to the assessee by restricting the disallowance to the extent of the exempt income of Rs.24,89,968/-. On the disallowance of interest under section 36(1)(iii) of Rs.1,32,49,990/-, the CIT(A) deleted the substantial amount of disallowance and upheld the disallowance pertaining only to Silvia Apparels Limited for an amount of Rs.5,49,735/-. The CIT(A) gave relief to the assessee towards pooja expenses and the expenses paid to the relatives of deceased employees and Income declared as from other sources assessed as Income from house property. The CIT(A) upheld the disallowance made under section 40(a)(ia) and the disallowance of advances written off. Further aggrieved, the assessee is in appeal before the Tribunal. Disallowance under section 14A – Ground No.1 4. During the year under consideration, the assessee declared exempt dividend income of Rs.24,89,958/-. The assessee has made a suo motu disallowance of Rs.398/- towards demat charges under section 14A. The Assessing Officer made a disallowance by applying Rule 8D of Income-tax Rules, 1962 for an amount of Rs.70,89,660/-. Before the CIT(A), the assessee contended that –  During the year, there is no addition in quantum of investments;  For computing disallowance under section 14A, the value of investments to be considered should be restricted to those investments from which exempt income is received during the year; and  The disallowance should be restricted to the extent of exempt income

4 ITA 881/Mum/2023 Mafatlal Industries Limited 5. The CIT(A) gave relief to the assessee by restricting the disallowance to the exempt income of Rs.24,89,968/-.

―11. We have considered the submissions of both the parties and have perused the record of the case. The basic issue for consideration is that the investment, which did not yield any exempt income, should enter or not enter into the computation under Rule 8D, while arriving at the average value of investment, income from which does not or shall not form part of the total income. 11.1 In the present case, our decision is restricted only to the extent of interpretation of language employed in Rule 8(2)(iii). The submission of ld. counsel for the assessee is that this issue is now covered by the decision of the Hon'ble Delhi High Court in the case of CIT v. Hofcin India (P.) Ltd. & ITA No. 299/2014 , wherein it has been held that if no dividend income was earned, section 14A could not be invoked. The Hon'ble Delhi High Court has referred to the decisions, which we have noted earlier i.e.: - Shivam Motors (P) Ltd's. case (supra)

5 ITA 881/Mum/2023 Mafatlal Industries Limited - Winsome Textile Industries Ltd's. case (supra) - Lakhani Marketing Inc. case (supra) - Corrtech Energy (P.) Ltd's. case (supra). - CIT v. Hero Cycles Ltd. [2010] 323 ITR 518/189 Taxman 50 (Punj. & Har.). 11.2 The submission of ld. Principal CIT(DR) is that ITAT in the case of Delhi Special Bench in the case of Cheminvest Ltd. (supra) has specifically held that even if there is no exempt income, the provisions of section 14A are applicable in view of the decision of Hon'ble Supreme Court in the case of Rajendra Prasad Moody (supra). His submission is that the decision of Hon'ble Delhi Court reversing the decision of Special Bench in Cheminvest should not be followed because that is contrary to the principles laid down in Rajendra Prasad Moody's case (supra). 11.3 It is against these submissions, we first refer to the facts as were obtaining in these two decisions. 11.4 In the case of Cheminvest Ltd. (supra), the assessee had borrowed funds of Rs. 8,51,65,000/- and during the previous year relevant to assessment year 2004- 05 paid interest of Rs. 1,21,02,367/-thereon. Out of this unsecured loan, the assessee invested a sum in purchase of shares, which was shown as investment for the purpose of long term capital gains. The AO disallowed interest proportionate to the investment in shares, though no exempt income was earned during the year. The CIT(A) affirmed this but held that the net interest debited to the P&L A/c was required to be apportioned and not the interest expenditure. The Tribunal held that interest expenditure incurred by the assessee was for borrowing used for the purposes of investment in shares, both held for trading as well as investment purposes. Irrespective of whether or not there was any yield of dividend on the shares purchased, the interest incurred was relatable to earning of dividend on the shares purchased. The dividend income being exempted from tax by virtue of section 10(34) of the Act, the interest paid on borrowed capital utilized in purchase of shares, being the expenditure incurred in relation to dividend income not forming part of the assessee's total income, was held to be not an allowable deduction. In coming to the conclusion, the Special Bench primarily relied on the ratio laid down by the Hon'ble Supreme Court in the case of Rajendra Prasad Moody (supra). 11.5 In the case of Rajendra Prasad Moody (supra), the facts were that the assessees were brothers and each of them had borrowed. moneys for the purposes of making investment in shares of certain companies. During the relevant assessment year they paid interest on the moneys borrowed but did not receive any dividend on the shares purchased with these moneys. Both of them made a claim

6 ITA 881/Mum/2023 Mafatlal Industries Limited for deduction of the amount of interest paid on borrowed moneys but this claim was negated by the ITO and on appeal by the AAC on the ground that during the relevant assessment year the shares did not yield any dividend and, therefore, interest paid on the borrowed moneys could not be regarded as expenditure laid out or expended wholly and exclusively for the purposes of making or earning income chargeable under the head 'income from other sources', so as to be allowable as a permissible deduction u/s 57(iii). The Tribunal. however, on further appeal, disagreed with the view taken by the taxing authorities and upheld the claim of each of the two assessees for deduction u/s 57(iii). 11.6 In the backdrop of these facts the Tribunal's order was upheld by the Hon'ble High Court and Hon'ble Supreme Court. The Hon'ble Supreme Court, inter alia, held that it is the purpose of the expenditure that is relevant in determining the applicability of section 57(iii) and that purpose must be making or earning of income. It was further held that section 57(iii) does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction. It does not say that the expenditure shall be deductible only if any income is made or earned. There is in fact nothing in the language of section 57(iii) to suggest that the purpose, for which the expenditure is made, should fructify into any benefit by way of return in the shape of income. 11.7 Thus, in both the decisions viz. in the case of Cheminvest Ltd. (supra), and in the case of Rajendra Prasad Moody (supra), the issue related to allowability of expenditure which had direct nexus with the earning of income. The borrowing in both the cases has not been disputed being for acquiring shares. Hon'ble Delhi High Court has specifically held in para 21 as under:— "21. There is merit in the contention of Mr. Vohra that the decision of the Supreme Court in Rajendra Prasad Moddy (supra) was rendered in the context of allowability of deduction under Section 57(iii) of the Act, where the expression used is for the purpose of making or earning such income'. Section 14A of the Act on the other hand contains the expression 'in relation to income which does not form part of the total income.' The decision in Rajendra Prasad Moody (supra) cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed under Section 14A of the Act. " 11.8 In the case of Holcin India (P) Ltd. (supra) the facts were that the respondent- assessee was a subsidiary of Holderind Investments Ltd., Mauritius, which was formed as a holding company for 'making downstream investments in cement manufacturing ventures in India. In the return of income filed for the Assessment Year 2007-08, the respondent-assessee declared loss of Rs. 8.56 Crores

7 ITA 881/Mum/2023 Mafatlal Industries Limited approximately. The respondent-assessee had declared revenue receipts of Rs. 18,02,274/- which included interest of Rs. 726/- from Fixed Deposit Receipts and profit on sale of fixed assets of Rs. 16,52,225/-. As against this, the respondent assessee had claimed administrative and miscellaneous expenditure written off amounting to Rs. 8.75 Crores. For the Assessment Year 2008-09, the assessee had filed return declaring loss of Rs. 6.60 Crores approximately. The assessee had declared revenue receipts in the form of foreign currency fluctuation difference gain of Rs. 12,46,595/-. It had claimed expenses amounting to Rs. 7.02 Crores as personal expenses, operating and other expenses, depreciation and financial expenses. 11.9 In both the assessment orders, the Assessing Officer held that the respondent- assessee had not commenced business activities as they had not undertaken any manufacturing activity or made downstream investments. It was observed that the respondent-assessee, after receiving approval of Foreign Investment Promotion Soard (FIPS) dated 20.12.2000 acquired shares capital of Ambuja Cement India Ltd. This, the Assessing Officer felt, was not sufficient to indicate or hold that the respondent-assessee had started their business. He, accordingly, disallowed the entire expenditure of Rs. 8.75 Crores for the Assessment Year 2007-08 and Rs. 7.02 Crores for the Assessment Year 2008-09. 11.10 Ld. CIT(A) did not agree with the findings of Assessing Officer that the business of the respondent- assessee had not been set up or commenced. The CIT(A) observed that the respondent-assessee had been set up with the business objective of making investment in cement industry after due approval given by the Government of India, Ministry of Commerce and Industry vide letter dated 18.12.2002 and 20.12.2012. It was observed that in fact, the respondent-assessee was not to undertake any manufacturing activity themselves. After considering the FIPS approval and the purchase of shares in the said company of Rs. 1850.91 crores, ld. CIT(A), inter alia, observed that the assessee was engaged in the business of holding of investment and was entitled to claim expenditure provided. There was a direct connection between expenditure incurred and business of the assessee company. However, he pointed out that since the business of the respondent-assessee was to act as a holding company for downstream investment and as it was an accepted fact that they had incurred expenses to protect their business and explore new avenues of investment, the provisions of section 14A were applicable. 11.11 The Hon'ble High Court observed that the reasoning given by the CIT(A) was ambiguous and unclear and on clarity being sought from the Revenue it was pointed out that "the stand of the assessee contained a contradiction to the extent that on the issue of setting up of business, it was stated that the assessee had 8 ITA 881/Mum/2023 Mafatlal Industries Limited incurred expenditure on acquiring the shares, therefore, the assessee could not now take different stand than the one taken in the first issue". 11.12 The Hon'ble High Court, after considering in detail the decision of ld. CIT(A) finally observed in para 13 as under: "13. We. are confused about the stand taken by the appellant-Revenue. Thus, we had asked Sr. Standing Counsel for the-Revenue, to state in his own words, their stand before us. During the course of hearing, the submission raised was that the shares would have yielded dividend, which would be exempt income and therefore, the CIT(A) had invoked Section 14A to disallow the entire expenditure. The aforesaid submission does not find any specific and clear narration in the reasons or the grounds given by the CIT(A) to make the said addition. Possibly, the CIT(A), though it is not argued before us, had taken the stand that the respondent-assessee had made investment and expenditure was incurred to protect those investments and this expenditure cannot be allowed under Section 14A." 11.13 Thus, Hon'ble Delhi High Court primarily decided the issue regarding applicability of section 14A even if no dividend income was earned. The Hon'ble High court in paras 14 to 16 of its decision observed as under: '14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant-Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad v. M/s. Lakhani Marketing Incl, decided on 02.04.2014, made reference to two ' earlier decisions of the same Court in CIT v. Hero Cycles Limited, [2010] 323 ITR 518 and CIT vs. Winsome Textile Industries Limited, [2009] 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I v. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is Of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax II Kanpur, v. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held:- "As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total 9 ITA 881/Mum/2023 Mafatlal Industries Limited income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the C1T(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of Rs. 2,03,752/- made by the Assessing Officer was in order"

15. Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether Income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent assessment year. For example, long term, capital gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax: It is an undisputed position that respondent assessee is an investment company and had invested by purchasing a substantial number of shares and thereby securing right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not all improbability. Dividend may or may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax. 16. what is also noticeable is that the entire or whole expenditure has been disallowed as if there was no expenditure incurred by the respondent-assessee for conducting business. The CIT(A) has positively held that the business was set up and had commenced. The said finding is accepted. The respondent- assessee, therefore, had to incur expenditure for the business in the form of investment in shares of cement companies and to further expand and consolidate their business. Expenditure had to be also incurred to protect the investment made. The genuineness of the said expenditure and the fact that it was incurred for business activities was not doubted by the Assessing Officer and has also not been doubted by the CIT(A).' 11.14 Now the position of law as stands is that the decision of Hon'ble Jurisdiction High Court is directly on the point in dispute whereas the decision of Hon'ble Supreme court in the case of Rajendra Prasad Moody (supra) has been rendered in the context of section 57(iii), the applicability of which has been ruled out by Hon'ble Delhi High Court in the case of Cheminvest (supra).

10 ITA 881/Mum/2023 Mafatlal Industries Limited 11.15 Under Article 227 of the Constitution of India, the courts function under the supervisory jurisdiction of Hon'ble High Court. The decisions rendered by Hon'ble High Court are binding on all subordinate courts working within its jurisdiction. In this regard we may refer to the following decisions:— '(i) CIT v. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom.), wherein on the issue of "whose decision is binding on whom", the. Hon'ble Bombay Court considered in detail the hierarchy of the courts and has observed as under: "It is also well-settled that though there is no specific provision making the law declared by the High Court binding on subordinate courts, it is implicit in the power of supervision conferred on a superior Tribunal that the Tribunals subject to its supervision would conform to the law laid down by it. It is in that view of the matter that the Supreme Court in East India Commercial Co. Ltd. v. Collector of Customs AIR 1962 SC 1893 (at page1905) declared: "We, therefore', hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and they cannot ignore it. ...." This position has been summed up by the Supreme Court in Mahadeolal Kanodia v. Administrator General of West Bengal AIR 1960 SC 936 (at page 941) as follows: "Judicial decorum no less than legal propriety forms the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if judges of co-ordinate jurisdiction in a High Court start overruling one another's decisions. If one Division Bench of a High Court is unable to distinguish a previous decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view, the result would be utter confusion. The position would be equally bad where a judge sitting singly in the High Court is of opinion that the previous decision of another single judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench." The above decision was followed by the Supreme Court in Baradakanta Mishra v. Bhimsen Dixit, AIR 1972 SC 2466, wherein the legal position was reiterated in the following words (at page 2469) : "It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court

11 ITA 881/Mum/2023 Mafatlal Industries Limited and start proceedings in direct violation of it. If a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer," (ii) CIT v. Sunil Kumar (1995) 212 ITR 238 (Raj.), it was observed as under: "The point which has been raised could have been considered to be debatable because other High Courts have taken a different view. But since the view taken by this court is binding on the Tribunal and other authorities under the Act in this State, it could not be considered to be a debatable point in view of the decision of this court in the case of CIT v. M.L., Sanghi [1988] 170 ITR 670." (iii) Indian Tube Company Ltd. v. CIT & others (1993) 203 ITR 54 (Col.) , it was observed as under: "In the impugned order, respondent No.1 has rejected the petitioner's contention by stating that, although the Calcutta High Court had held that an assessee was entitled to interest on such refund calculated up to the date of the order passed consequent upon an appeal or revision of the original assessment, this view had not been accepted by the Bombay High Court, the Allahabad High Court and the Kerala High Court. Respondent No.1, accordingly, chose to accept the view of the Bombay, Allahabad and Kerala High Courts in preference to the view of the Calcutta High Court. In my view, the order of respondent No. 1 cannot be sustained on the simple ground that respondent No. 1 is an authority operating within the State of West Bengal and is bound by the decisions of the High Court of this State (see CIT v. Indian Press Exchange Ltd. [1989] 176 ITR 331 (Cal) ; East India Commercial Co. Ltd. v. Collector of Customs AIR 1962 SC 1993, paragraph 29). In that view of the matter, the impugned order must be set aside and the Commissioner is directed to consider the matter afresh in keeping with the decisions of this court after giving the petitioners an opportunity of being heard. At least 48 hours clear notice must be given to the petitioners. The 12 ITA 881/Mum/2023 Mafatlal Industries Limited Commissioner will communicate the final order to the petitioner within eight weeks from the date of hearing. (iv) CIT v. J.K. Jain [1998] 230 ITR 839 (P&H), observing as under: "We have carefully examined the records and have heard learned counsel representing the parties. We are in respectful agreement with the view expressed by the Allahabad High Court in Omega Sports and Radio Works' case [1982] 134 ITR 28, as also the decision of this court in Mohan Lal Kansal's case [1978] 114 ITR 583. Following the decision in the two cases referred to above, we hold that it was not a case of divergence of opinion inasmuch as the opinion expressed by this court was binding upon the Tribunal."' 11.16 Therefore, in our considered opinion, no contrary view can be taken under these circumstances. We, accordingly, hold that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. 11.17 As far as argument relating to meaning to be ascribed to the phrase 'shall not' used in Rule 8D(2)(iii) is concerned, the Revenue's contention is that it refers to those investments which did not yield any exempt income during the year but if income would have been yielded it would have remain exempt. There is no dispute that if an investment has yielded exempt income in a particular year then it will enter the computation of average value of investments for the purposes of Rule 8D(2)(iii). The assessee's contention that if there is no certainty that an income, which is exempt in current year, will continue to be so in future years and, therefore, that investment should also be excluded, is hypothetical and cannot be accepted. 11.18 In view of above discussion, the matter is restored back to the file of AO for recomputing the disallowance u/s 14A in terms of above observations. Thus, revenue's appeal is dismissed and assessee's cross-objection, on the issue in question, stand allowed for statistical purposes, in terms indicated above.‖ 8. In the instant case, the AO has considered the entire investments for the purpose of arriving at the average investments, which is not in conformity with the ratio laid down by the decision of the Delhi Special Bench (supra). Further from the perusal of the CIT(A)‘s order, we notice that this plea of the assessee has not been considered by the CIT(A). We, therefore, respectfully following this decision

13 ITA 881/Mum/2023 Mafatlal Industries Limited of the Special Bench, remit the issue back to the AO to recompute the disallowance u/s. 14A r.w. R.8D(2)(iii) taking into account only those investments for computing average value of investment which yielded exempt income during the year. This ground of the assessee is allowed for statistical purposes Disallowance of interest under section 36(1)(iii) – Ground No.2

14 ITA 881/Mum/2023 Mafatlal Industries Limited The Ld.AR further submitted that the ratio laid down by the jurisdictional High Court in the case of CIT vs Reliance Utilities & Power Ltd 313 ITR 340 (Bom) should be applied for the disallowance made towards advances given to Silvia Apparels Limited also. The Ld.DR relied on the order of the lower authority.

15 ITA 881/Mum/2023 Mafatlal Industries Limited Disallowance under section 40(a)(ia) – Ground No.3 11. During the course of assessment, the Assessing Officer noticed that the assessee has made a payment of Rs.1,24,89,740/- to LKP Merchant Financing Ltd towards the lease rent for use of machinery on settlement for unpaid lease rent pertaining to period prior to 01/06/2007. The Assessing Officer further noticed that the assessee has not deducted tax at source on the said payment. The assessee submitted before the Assessing Officer that the requirement to deduct tax under the provisions of section 194I towards lease rent on machinery was only with effect from 12th July, 2006, and prior to that the definition of rent did not include payments for use of machinery. The assessee further submitted that the lease rent for use of machinery pertained to unpaid lease rent prior to 01/06/2007 and, therefore, tax was not liable to be deducted under section 194I of the Act. The Assessing Officer did not accept the submissions of the assessee and proceeded to disallow the amount of lease rent paid under section 40(a)(ia). On appeal, the CIT(A), upheld the disallowance for the reason that the payment of lease rent has been made and claimed during the year and, therefore, the same is squarely covered under section 194I of the Act.

17 ITA 881/Mum/2023 Mafatlal Industries Limited Accordingly, we see no infirmity in the order of CIT(A) confirming the disallowance. This ground is dismissed.

Disallowance of advances written off – Ground No.4 & 5

19. We heard the parties and perused the materials on record. We notice that in the P&L Account (page 45 of paper book), the assessee has shown provision or doubtful advances written back net of advances written off. We also notice that in the computation of income (pages 2 to 11 of paper book) , the assessee has added back the said amount. Therefore, we see merit in the submissions of the Ld.AR that the advances written off and written back are mere book entries since the entries are adjusted in the statement of income. We also notice that the assessee has made a written submission in this regard before the Assessing Officer stating that the amount has not been claimed as a deduction in the statement of income and accordingly, no disallowance is warranted. In our considered view, if the assessee has not claimed the bad debts written off as deduction in the computation of income then making the disallowance now would result in double disallowance. We, therefore, remit the issue back to the Assessing Officer with a direction to examine the issue afresh with regard to whether the provisions made towards advances written off / written back are only book entries and that no claim is made in the computation of income. With regard to the claim that the bad debts should

20 ITA 881/Mum/2023 Mafatlal Industries Limited be allowed as a deduction, since the issue is remitted back for fresh examination, the assessing officer further directed to verify the claim of the assessee that amount should be allowed as a deduction based on the evidences submitted and decide the issue in accordance with law. It is ordered accordingly.