THE COMMISSIONER OF INCOME TAX vs. M/S KURLON LTD

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ITA/24/2009HC KarnatakaKAHC01011391200914 August 2012Bench: B.MANOHAR,K.SREEDHAR RAO2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered the questions of law against the Revenue, in view of the Supreme Court's decision in Civil Appeal No. 5293/2003 in the case of TRF Limited vs. Commissioner of Income Tax, Ranchi. The Court directed the Assessing Officer (AO) to comply with the observations of the Supreme Court in the cited case while passing the consequential order under Section 260 of the IT Act. Specifically, the AO is to ascertain whether the bad debt written off in the assessee's books of accounts in the previous years was in terms of Section 36(2) of the IT Act. The appeal filed by the Revenue is dismissed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax (the Revenue) against an order dated 29-08-2008 passed by the Income Tax Appellate Tribunal (ITAT), Bangalore in ITA No. 292/BNG/2008. The assessment year in question is 2001-02. The Revenue sought to set aside the ITAT's order, which had confirmed the orders of the Appellate Commissioner and the Assistant Commissioner. The dispute concerns the treatment of bad debts written off by the assessee, M/s Kurlon Ltd.

What were the issues?

1. Whether the substantial questions of law formulated in the appeal are to be answered in favour of the Revenue. This question arises from the Revenue's prayer to set aside the ITAT's order. The Revenue contended that the ITAT's order should be set aside, implying disagreement with the ITAT's findings. The Revenue sought to confirm the orders of the lower authorities. The Assessee, through Dr. R B Krishna, likely argued for upholding the ITAT's decision. The judgment does not explicitly detail the specific arguments of the assessee or the precise legal provisions forming the basis of the dispute beyond the general context of bad debts and Section 36(2).

Which sections of the Income-tax Act were involved?

Section 260,Section 36(2)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 14TH DAY OF AUGUST 2012 PRESENT THE HON'BLE MR. JUSTICE K.SREEDHAR RAO AND THE HON'BLE MR. JUSTICE B.MANOHAR ITA No.24/2009 BETWEEN : 1 THE COMMISSIONER OF INCOME TAX C.R.BUILDING, QUEENS ROAD BANGALORE.

2 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-11(5), C R BUILDING, QUEENS ROAD BANGALORE. ...APPELLANTS (By Sri K V ARAVIND, ADV.) AND : M/S KURLON LTD 3RD FLOOR, NORTH BLOCK MANIPAL CENTRE DICKENSON ROAD BANGALORE. ...RESPONDENT (By Dr.R B KRISHNA, ADV.) This ITA filed u/S.260-A of I.T.Act, 1961 arising out of Order dated 29-08-2008 passed in ITA No. 292/BNG/2008, for the Assessment Year 2001-02, praying that this Hon'ble Court may be pleased to:

2 i. formulate the substantial questions of law stated therein, ii. allow the appeal and set aside the order passed by the ITAT Bangalore in ITA No. 292/BNG/2008,dated 29-08-2008 confirm the orders of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income tax,Circle-11(5), Bangalore. This ITA coming on for hearing this day, K.SREEDHAR RAO, J, delivered the following: JUDGMENT In view of the decision of the Supreme Court in Civil Appeal No.5293/2003 in the case of TRF Limited -vs- Commissioner of Income Tax, Ranchi, the questions of law are answered against the revenue. However, while passing the consequential order under Section 260 of I.T Act, the AO shall comply with the observations of the Supreme Court in the cited case to find out whether the bad debt written in the books of accounts shown by the assessee in the previous years in terms of Section 36(2) of the IT Act. The appeal is dismissed. Sd/- JUDGE Sd/- JUDGE bkm.

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