ACIT, CORPORATE CIRCLE-1(2), BHUBANESWAR vs. M/S. WESTERN ELECTRICITY SUPPLY COMPANY OF ORISSA LIMITED, BHUBANESWAR

PDF · subscribers
ITA 221/CTK/2017Status: DisposedITAT Cuttack31 January 2018AY 2011-122 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in deleting the provision for contingent liability, as it was an unascertained liability not allowable. The revenue's appeal was allowed for statistical purposes.

What were the facts?

The Assessing Officer disallowed a contingent liability of Rs. 1,18,17,136/- paid to a service provider, treating it as an unascertained liability. The CIT(A) deleted this addition, considering it a write-off of bad debt.

What were the issues?

Whether a contingent liability created against creditors and service providers, being an unascertained liability, is allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Asse ssment Year : 20 11- 201 2

considering the submission of ld Departmental Representative and materials available on record.

4.

The brief facts of the case are that the assessee derives income

from distribution of electricity. During the course of assessment

proceedings, on perusal of Note 8 of auditor’s report, the Assessing

Officer noticed that contingent liability of Rs.1,18,17,136/- paid to M/s.

K.S.Techno Enterprises has been created against creditors and service

providers. The Assessing Officer disallowed the contingent liability

against the creditors and service providers and added the same to the total income of the assessee.

5.

On appeal, the CIT(A) deleted the addition observing that it is actually the write off of bad debt.

6.

Before us, ld D.R. supported the order of the Assessing Officer.

7.

We have heard the submissions of ld D.R, perused the orders of lower authorities and materials available on record. The sole dispute in this appeal is with respect to deletion of addition of Rs.1,18,17,136/- in respect of provision for doubtful debts. The contention of ld D.R. that the CIT(A) has erred in deleting the provision of contingent liability

irrespective of the fact that in assessment proceedings, the Assessing

Officer based on the auditor’s report found that the assessee has created

a provision towards the creditors and service providers and also such provision being unascertained liability cannot be allowable under the Asse ssment Year : 20 11- 201 2

Ltd (supra) after providing adequate opportunity of hearing to the assessee.

8.

In the result, appeal filed by the revenue is allowed for statistical purpose.

Order pronounced on 31 /01/2018. (N.S Saini) JUDICIALMEMBER Cuttack; Dated 31 /01/2018 B.K.Parida, SPS Copy of the Order forwarded to :

1.

The appellant : ACIT, Corporate Circle - 1(2), Bhubaneswar.

2.

The Respondent. Western Electricity Supply Co. of Orissa Ltd., N-1/22, IRC Village, Nayapali, Bhubaneswar.

3.

The CIT(A)-2, Bhubaneswar

4.

Pr.CIT-2, Bhubaneswar BY ORDER,

5.

DR, ITAT, Cuttack

6.

Guard file. //// SR.PRIVATE SECRETARY ITAT, Cuttack

More judgments on Section 37

All 4,334 judgments and leading authorities on Section 37 →

Latest GST High Court judgments

Search GST case law →