PRINCIPAL COMMISSIONER OF INCOME TAX 2 vs. GUJARAT LEASE FINANCING LTD

C/TAXAP/1028/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1028 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 2 Versus GUJARAT LEASE FINANCING LTD ========================================================== Appearance: MR MR BHATT, SENIOR ADVOCATE with MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 13/08/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.For the assessment year 2004­05 Revenue has filed this appeal raising following questions “(A)   Whether the Appellate Tribunal has erred in allowing the bad debt claim of the  assessee   ignoring   the   fact   that  the debts in question were not trading debts of   the   assessee   as   required   u/s.36(1) (viii) of the IT Act ?

(B)       Whether   the   Appellate   Tribunal  ignored   the   fact   that   the   assessee   has  debited the principal amount which could  never   appear   as   a   debt   on   account   of  trade?  (C)     Whether   the   Appellate   Tribunal  has  erred   in   treating   the   hire   purchases   as  stock in trade ?   Page 1 of 3

C/TAXAP/1028/2018 ORDER

(D)     Whether the Appellate Tribunal has  failed   to   consider   that  the  assessee   is  not   a   banking   entity   where   bill  discounting can be accepted to be trading  receipt and the resultant debt be treated  as bad trading debt ?

(E)     Whether the Appellate Tribunal has  substantially   erred   in   deleting   the  disallowance of depreciation amounting to  Rs..925304/­ on leased assets ?

(F)     Whether the Appellate Tribunal has  substantially erred in law and on facts in  not

allowing

the

addition

of Rs.14,64,19,561/­   to   the   Book   Profit u/s.115JB of the Act in contravention to Explanation   1   of   Section   115JB   of   the Act?”

2.Questions   (A)   to   (D)   pertain   to   the assessee’s claim of bad debt arising out of its business of lease financing. By separate order passed today in Tax Appeal No.1024 of 2018   in   case   of   this   very   assessee,   such questions were considered but declined. 3.Question (E) pertains to assessee’s claim of depreciation   on   the   leased   assets.   Such question was considered in assessee’s   case in Tax Appeal No.1023 of 2018 and dismissed today. 4.Question (F) pertains to the addition of sum of   Rs.14.64   lacs   (rounded   off)   to   the assessee   book   profit   computed   in   terms   of Page 2 of 3

C/TAXAP/1028/2018 ORDER Section   115JB   of   the   Act.   The   Tribunal deleted such addition relying on the judgment of the Supreme Court in the case of  Apollo Tyres Ltd., vs. Commissioner of Income­tax, reported in 255 ITR 273.