ACIT VILLUPURAM CIRCLE , VILLUPURAM vs. TAMIL NADU STATE TRANSPORT CORPORATION (VILLUPURAM) LIMITED , VILLUPURAM

आदेश / O R D E R

PER BENCH:

2.0 Shri B. Srinivasa Rao, CIT represented on behalf of the Revenue and Shri V.Jagadisan, CA, represented on behalf of the assessee.

3.0 As all the appeals are related to the same assessee and inter- connected, all appeals are disposed off by this common order.

4.1 In all the appeals, the issues are common being against the action of the Ld.CIT(A) in deleting the disallowance of the ‘Exceptional item’ representing the passes issued by the assessee to the students which had been written off for the AY 2012-13. There is an additional issue being against the action of the Ld.CIT(A) in deleting the addition representing the disallowance to social cost which had been written off. In respect of & 1943 to 1948/Mds/2017 CO Nos.158 to 161/Mds/2017 :- 3 -: the Cross Objections, it was submitted by the Ld.AR that the issue was only against the re-opening of the assessments.

4.2 It was submitted by the Ld.DR that the issues in respect of the student passes were that the assessee had debited certain sums as ‘Exceptional item’ in the P&L A/c. The same was questioned by the AO and the assessee had responded that the assessee is providing Public Transport Services and the assessee had issued passes to the students and raised claims to the Government for reimbursement. The accounting entry is passed by debiting the receivables from the Government and crediting the partial income. The Government does not release full claim made by the assessee’s Corporation every year. Subsequently, the Government had issued orders to write off the claim in respect of the passes and the same was claimed as ‘Exceptional item’ in the annual accounts. It was submitted by the Ld.DR that the bare facts were that the Government of Tamil Nadu reimbursed only 80% of the losses arising out of the Concessional Bus Passes Scheme. As the assessee was not getting the reimbursement, it was submitted by the Ld.DR that, the assessee company never challenged the short payment by the Government but meekly accepted whatever payment was made by the Government, which gave rise to suspicion that the transactions are colourable in nature. It was a submission that the Ld.CIT(A) had deleted the same by holding that the same has been written off in the assessee’s books as irrecoverable. It & 1943 to 1948/Mds/2017 CO Nos.158 to 161/Mds/2017 :- 4 -: was a submission that the order of the Ld.CIT(A) was liable to be reversed.

4.3 In reply, Ld.DR vehemently supported the order of the Ld.CIT(A).

4.4 We have considered the rival submissions.

4.5 A perusal of the order of the Ld.CIT(A) shows that the Ld.CIT(A) in Para Nos.7.2.1 to 7.2.4 has examined the details. The Ld.CIT(A) has taken into consideration that the assessee has written off the amount after only receiving the Government Order and consequently, the only option available to the assessee is to write off the balance amounts in its books. The Ld.CIT(A) has followed the principles laid down by the Hon’ble Supreme Court in the case of M/s.TRF Ltd., wherein it has been held that after 01.04.1989, it is not necessary for the assessee to establish that the debt in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. In fact, the Government Order referred to by the Ld.CIT(A) clearly specifies that the Managing Directors of all the State Transport Undertakings had been requested to withdraw their reimbursement dues, if any, payable from the Government for the period up to 2010-11 from their books of accounts and treat the claims of the student concession reimbursement from the Government as fully settled up to 2010-11. In view of the Government Order as also in view of the fact that the Revenue has not been able to & 1943 to 1948/Mds/2017 CO Nos.158 to 161/Mds/2017 :- 5 -: dislodge the findings of the Ld.CIT(A), we find no reason to interfere with the same, consequently, ground raised by the Revenue against the action of the Ld.CIT(A) in deleting the disallowance of the ‘Exceptional item’ stands dismissed.

5.1 In regard to disallowance of social cost, the subsidy received from the Government had been disallowed. The Ld.DR submitted that the same was also in respect of 100% and 50% concession passes issued to the students during the year 2011-12. It was a submission that face value of the student passes issued was nearly Rs.144.00 Crs. However, the amount received from the students was only to an extent of Rs.1.43 Crs. and the amount reimbursed by the Government was only Rs.79.61 Crs. and leaving the balance of Rs.62.99 Crs. It was a submission that though the assessee has claimed that the free/concessional bus passes scheme is a Welfare Scheme of Government of Tamil Nadu and the Government has to bear the cost of the scheme, it was a submission that the Government of Tamil Nadu has availed/purchased the services of the assessee for providing the Free Concessional Bus Pass Scheme but has not fully paid to the assessee’s company. He reiterated his arguments as being similar to the issue of the disallowance of the ‘Exceptional item’.

5.2 In reply, Ld.AR vehemently supported the order of the Ld.CIT(A). & 1943 to 1948/Mds/2017 CO Nos.158 to 161/Mds/2017 :- 6 -:

5.3 We have considered the rival submissions.

5.4 A perusal of the order of the Ld.CIT(A) at Para No.7.1.1 to 7.1.10 shows that the Ld.CIT(A) has taken into consideration the fact that the assessee has written off the said amount only on the basis of the Government Order issued by the State Government. The Ld.CIT(A) has taken into consideration the fact that the assessee is fully owned by the State Government who also provides the subsidy funds at reduced rate of interest, etc., to the assessee and consequently, the assessee would not have any choice, but adhere to the orders/directions of the State Government. Further, the Revenue has not been able to point out any specific defect in the findings of the Ld.CIT(A). This being so, we find no reason to interfere with the orders of the Ld.CIT(A) on this issue and consequently, the same is held in favour of the assessee. Consequently, the appeals filed by the Revenue in & 1943 to 1948/Mds/2017 stand dismissed.