Madras in M/s South Indian Surgical Corporation Ltd. v. CIT

287 ITR 62High Court2006#2128 most cited

What is Madras in M/s South Indian Surgical Corporation Ltd. v. CIT authority for?

A deduction for a bad debt requires more than just pessimism about recovery; the assessee must be honestly convinced of the debtor's precarious financial position, particularly if the debt is owed by a government department or hospital where payment may depend on available funds.

54

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2015 to 2026.

Also referred to as

South Indian Surgical Corporation Ltd. v. CIT · 287 ITR 62 · bad debt deduction · provision for doubtful debt · precarious financial position · debt recovery · Section 36(1)(vii)

Sections most often in play

Section 36(1)(vii)Section 9(1)(vii)Section 40(a)(ia)Section 143(3)Section 195Section 40(a)(i)Section 92CA(3)Section 14A

Issues it is cited on

section 28(va)section 41(4)depreciation on softwaresection 2(42a)section 43(6)(c)section 9(i)(vii)non-compete feesection 43(6)section 36(1)(vii)section 41(1)management feesobjections before drp

Judgments citing Madras in M/s South Indian Surgical Corporation Ltd. v. CIT

ACIT, Chennai vs. Sundaram Finance Limited, Chennai

Appeals of the revenue stand partly allowed for statistical purposes

ITA 287/CHNY/2015[2006-07]Status: DisposedITAT Chennai09 Mar 2022AY 2006-07

Bench: Hon’Ble Shri Mahavir Singh & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./ Ita Nos.74/Chny/2015 (िनधाEरण वषE / Assessment Years: 2006-07) & आयकर अपील सं./ Ita Nos.75/Chny/2015 (िनधाEरण वषE / Assessment Years: 2007-08) & आयकर अपील सं./ Ita Nos.76/Chny/2015 (िनधाEरण वषE / Assessment Years: 2008-09) & आयकर अपील सं./ Ita Nos.77/Chny/2015 (िनधाEरण वषE / Assessment Years: 2009-10) & आयकर अपील सं./ Ita Nos.78/Chny/2015 (िनधाEरण वषE / Assessment Years: 2010-11) M/S. Sundaram Finance Ltd. Acit बनाम/ 21 Patullos Road Large Taxpayer Unit, Vs. Chennai – 600 002. Chennai. "थायी लेखा सं./जीआइ आर सं./Pan/Gir No. Aaacs-4944-A (अपीलाथ"/Appellant) : (""थ" / Respondent) & आयकर अपील सं./ Ita Nos.287 & 288/Chny/2015 (िनधाEरण वषE / Assessment Year: 2006-07) & आयकर अपील सं./ Ita Nos.289 & 290/Chny/2015 (िनधाEरण वषE / Assessment Year: 2007-08) & आयकर अपील सं./ Ita No.291/Chny/2015 (िनधाEरण वषE / Assessment Years: 2008-09) & आयकर अपील सं./ Ita No.292/Chny/2015 (िनधाEरण वषE / Assessment Year: 2009-10) & आयकर अपील सं./ Ita No.293/Chny/2015 (िनधाEरण वषE / Assessment Years: 2010-11) Acit M/S. Sundaram Finance Ltd., बनाम/ Large Taxpayer Unit, 21 Patullos Road Vs. Chennai. Chennai – 600002. "थायी लेखा सं./जीआइ आर सं./Pan/Gir No. Aaacs-4944-A (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ" की ओरसे/ Appellant By : Shri R. Vijayaraghavan (Advocate)-Ld. Ar ""थ" की ओरसे/Respondent By : Shri Kumar Ajeet- Ld. Cit-Dr

For Appellant: Shri R. Vijayaraghavan (Advocate)-Ld. ARFor Respondent: Shri Kumar Ajeet- Ld. CIT-DR
Section 143(3)Section 41(4)

…ransactions. The assessee relied on the decision of Hon’ble Madras High Court in CIT vs. Brilliant Tutorials Pvt. Ltd. 292 ITR 399 (Mad). However, relying upon the decision of Hon’ble High Court of Madras in M/s South Indian Surgical Corporation Ltd. V/s CIT (287 ITR 62) and the decision of Hon’ble Gujarat High Court in Dhall Enterprises & Engineers Ltd. (207 CTR 729), the claim was disallowed as was done in assessment order for AY 2005-06. The Ld. CIT(A), following appellate order for AY 2005-06, decided this issue in assessee’s favor against which the revenue is in further appeal before us. 12.2 We find that th…

A.Manohar Prasad, Chennai vs. ITO Media Ward 1, Chennai

In the result, the appeals filed by the assessee for assessment years 2007-08 & 2008-09 are treated as partly allowed for statistical purpose

ITA 1892/CHNY/2018[2008-09]Status: DisposedITAT Chennai22 Oct 2021AY 2008-09

Bench: Shri V. Durga Rao & Shri G. Manjunatha

For Appellant: Shri S. Sridhar, AdvocateFor Respondent: Shri. AR V Sreenivasan, Addl. CIT
Section 143(3)Section 147Section 148Section 36

…of assessment. The CIT(A) had also confirmed additions made by the AO towards disallowance of 50% bad debts by following certain judicial precedents including decision of Hon’ble Madras High Court in the case of South India Surgical Co. Ltd., vs. ACIT,[2006] 287 ITR 62 by holding that the assessee has failed to discharge his primary onus of demonstrating his compliance with conditions prescribed u/s.36(2) of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 5. The ld.AR for the assessee submitted that although the assessee has taken ground challenging validity of reopening of assessme…

A.Manohar Prasad, Chennai vs. ITO Media Ward 1, Chennai

In the result, the appeals filed by the assessee for assessment years 2007-08 & 2008-09 are treated as partly allowed for statistical purpose

ITA 1891/CHNY/2018[2007-08]Status: DisposedITAT Chennai22 Oct 2021AY 2007-08

Bench: Shri V. Durga Rao & Shri G. Manjunatha

For Appellant: Shri S. Sridhar, AdvocateFor Respondent: Shri. AR V Sreenivasan, Addl. CIT
Section 143(3)Section 147Section 148Section 36

…of assessment. The CIT(A) had also confirmed additions made by the AO towards disallowance of 50% bad debts by following certain judicial precedents including decision of Hon’ble Madras High Court in the case of South India Surgical Co. Ltd., vs. ACIT,[2006] 287 ITR 62 by holding that the assessee has failed to discharge his primary onus of demonstrating his compliance with conditions prescribed u/s.36(2) of the Act. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 5. The ld.AR for the assessee submitted that although the assessee has taken ground challenging validity of reopening of assessme…

Siemens Ltd, Mumbai vs. JCIT Sp RG 30, Mumbai

Accordingly ground raised by the assessee is allowed for statistical purposes

ITA 2018/MUM/2011[1997-98]Status: DisposedITAT Mumbai10 Dec 2019AY 1997-98

Bench: Shri S. Rifaur Rahman, Am & Shri Ram Lal Negi, Jm आयकरअपीलसं./ I.T.A. No. 2018/Mum/2011 (निर्धारणवर्ा / Assessment Year: 1997-98)

For Appellant: Shri Nitesh Joshi, ARFor Respondent: Shri T. Kipgen, DR
Section 37(1)

…nting to Rs. 46,85,460/-. 31. Before us, Ld. AR submitted that write-off of the bad debts has been made before the transfer of the Telecommunications business. He relied upon the decision of the Madras High Court in case of South India Surgical Co Ltd v ACIT 287 ITR 62 is concerned in that case the debtor had acknowledged the debt but was unable to pay due to paucity of the funds. In the present case, in respect of the said debts, the debtors have withheld the payments in view of other commercial reasons. He further submitted that the party-wise details of amount written-off above Rs. 2 lakhs is at Pg 82 of the…

ACIT Non Corporate Circle 20(1), Chennai vs. Sun Tv Network Limited, Chennai

In the result, the appeal of the assessee in ITA No

ITA 994/CHNY/2018[2009-10]Status: DisposedITAT Chennai12 Nov 2018AY 2009-10

Bench: Shri N.R.S. Ganesan & Shri A.Mohan Alankamonyआयकरअपीलसं./I.T.A.No.889 /Chny/2018 (िनधा"रणवष" / Assessment Year: 2008-09) Vs The Acit, M/S. Sun Tv Network Limited, Non-Corporate Circle 20(1) Murasoli Maran Towers, Chennai – 34. 73, Mrc Nagar Main Road, Mrc Nagar, Chennai – 600 028. Pan: Aadcs4885K (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri Ruby George, CITFor Respondent: 06.09.2018
Section 143(3)Section 147Section 148Section 250(6)

…l Comm Pvt. Ltd.” does not have any bearing on the issue under consideration for the relevant assessment year. (iv) Reliance was placed in the decision of the Hon’ble High Court of Madras in the case of South India Surgical Co. Ltd. v. ACIT reported in (2006) 287 ITR 62, the Hon’ble High Court of Madhya Pradesh in the case of Binodiram Balchand & Co. v. CIT reported in (2001) 251 ITR 819, Chennai Bench of the Tribunal in the case of M/s. Tractors and Farm Equipments Ltd., v. ACIT in ITA Nos.2094, 2095 & 2096/Mds/2016 vide order dated 28.10.2016 and the Cochin Bench of the Tribunal in the case of Abad Fisheries v.…

M/S Sun Tv Network Limited, Chennai vs. ACIT Non Corporate Circle 20 (1), Chennai

In the result, the appeal of the assessee in ITA No

ITA 889/CHNY/2018[2008-09]Status: DisposedITAT Chennai12 Nov 2018AY 2008-09

Bench: Shri N.R.S. Ganesan & Shri A.Mohan Alankamonyआयकरअपीलसं./I.T.A.No.889 /Chny/2018 (िनधा"रणवष" / Assessment Year: 2008-09) Vs The Acit, M/S. Sun Tv Network Limited, Non-Corporate Circle 20(1) Murasoli Maran Towers, Chennai – 34. 73, Mrc Nagar Main Road, Mrc Nagar, Chennai – 600 028. Pan: Aadcs4885K (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri Ruby George, CITFor Respondent: 06.09.2018
Section 143(3)Section 147Section 148Section 250(6)

…l Comm Pvt. Ltd.” does not have any bearing on the issue under consideration for the relevant assessment year. (iv) Reliance was placed in the decision of the Hon’ble High Court of Madras in the case of South India Surgical Co. Ltd. v. ACIT reported in (2006) 287 ITR 62, the Hon’ble High Court of Madhya Pradesh in the case of Binodiram Balchand & Co. v. CIT reported in (2001) 251 ITR 819, Chennai Bench of the Tribunal in the case of M/s. Tractors and Farm Equipments Ltd., v. ACIT in ITA Nos.2094, 2095 & 2096/Mds/2016 vide order dated 28.10.2016 and the Cochin Bench of the Tribunal in the case of Abad Fisheries v.…

Yogendra Khandelwal, Jaipur vs. JCIT, Jaipur

In the result, the appeal of the assessee in ITA No

ITA 735/JPR/2016[2011-12]Status: DisposedITAT Jaipur25 Sept 2018AY 2011-12
For Appellant: Shri P. C. Jain (Adv.)For Respondent: Shri J. C. Kulhari (JCIT)
Section 201Section 40

…satisfied based on the information available that the debt is bad and that would be sufficient requirement of the amended provisions. 12. Our attention was invited to the judgment of the Madras High Court in South India Surgical Co. Ltd. v. Asstt. CIT [2006] 287 ITR 62. In case the amount was payable by a Government Department (hospital). The Tribunal there had taken the view that the debt could not be claimed as bad on the mere ground that the hospital and the Departments might make payments as and when funds are provided. The Madras High Court after considering the various judgments was pleased to observe that…

Tranter India Pvt. Ltd., Pune vs. Deputy Commissioner of Income-Tax, Pune

In the result, appeal of the Assessee is allowed

ITA 478/PUN/2016[2010-11]Status: DisposedITAT Pune09 Feb 2018AY 2010-11

Bench: Ms. Sushma Chowla, Jm & Shri D. Karunakara Rao, Am

For Appellant: Shri Manoj SolankiFor Respondent: Shri Prashant Gadekar
Section 143(3)Section 37

…vernmental bodies/Public Sector undertakings. The total debts receivable by the assessee from these Government bodies works out to Rs.10,08,993/-. Relying on the judgment of Hon’ble Madras High Court in the case of South India Surgical Company Ltd. Vs. ACIT 287 ITR 62, which is relevant for the proposition that the Government cannot be a bad debtor, the AO distinguished the Supreme Court judgment in the case of TRF Ltd. Vs. CIT 190 taxmann 391 (SC) and proceeded to make disallowance by giving the following finding (Para No. 7 of the AO) : “The Hon’ble Supreme Court held in the above case that it is enough if…

Deputy Commissioner of Income-Tax vs. M/S. Tranter India Pvt. Ltd., Pune

In the result, appeal of the Assessee is allowed

ITA 377/PUN/2016[2010-11]Status: DisposedITAT Pune09 Feb 2018AY 2010-11

Bench: Ms. Sushma Chowla, Jm & Shri D. Karunakara Rao, Am

For Appellant: Shri Manoj SolankiFor Respondent: Shri Prashant Gadekar
Section 143(3)Section 37

…vernmental bodies/Public Sector undertakings. The total debts receivable by the assessee from these Government bodies works out to Rs.10,08,993/-. Relying on the judgment of Hon’ble Madras High Court in the case of South India Surgical Company Ltd. Vs. ACIT 287 ITR 62, which is relevant for the proposition that the Government cannot be a bad debtor, the AO distinguished the Supreme Court judgment in the case of TRF Ltd. Vs. CIT 190 taxmann 391 (SC) and proceeded to make disallowance by giving the following finding (Para No. 7 of the AO) : “The Hon’ble Supreme Court held in the above case that it is enough if…

Olympus Elevator Private Limited, Chennai vs. ACIT, Chennai

In the result, the assessee’s appeal (in ITA No

ITA 149/CHNY/2015[2009-2010]Status: DisposedITAT Chennai15 Jun 2017AY 2009-2010

Bench: Shri Sanjay Arora & Shri Duvvuru Rl Reddy

For Appellant: Shri Sanath Kumar Raha, Jt. CITFor Respondent: 15.05.2017
Section 143(3)Section 28Section 36(1)(vii)Section 37(1)

…from Government/Government organizations, making the claim of a debt being not realizable or even of entailing expenditure that much improper, i.e., assuming, as contended by the assessee, no breach of contract (refer: South India Surgical v. Asst. CIT [2006] 287 ITR 62 (Mad)). The matter, which is principally factual, is, accordingly, setting aside the impugned order, restored the file of the AO for fresh determination. Here it may be pertinent to mention that a debt written off u/s. 36(1)(vii) has to be, nevertheless, a genuine claim (DIT(IT) v. Oman International Bank SAOG [2009] 313 ITR 128 (Bom)). 4. The se…

Olympus Elevator Private Limited, Chennai vs. ACIT, Chennai

In the result, the assessee’s appeal (in ITA No

ITA 148/CHNY/2015[2009-2010]Status: DisposedITAT Chennai15 Jun 2017AY 2009-2010

Bench: Shri Sanjay Arora & Shri Duvvuru Rl Reddy

For Appellant: Shri Sanath Kumar Raha, Jt. CITFor Respondent: 15.05.2017
Section 143(3)Section 28Section 36(1)(vii)Section 37(1)

…from Government/Government organizations, making the claim of a debt being not realizable or even of entailing expenditure that much improper, i.e., assuming, as contended by the assessee, no breach of contract (refer: South India Surgical v. Asst. CIT [2006] 287 ITR 62 (Mad)). The matter, which is principally factual, is, accordingly, setting aside the impugned order, restored the file of the AO for fresh determination. Here it may be pertinent to mention that a debt written off u/s. 36(1)(vii) has to be, nevertheless, a genuine claim (DIT(IT) v. Oman International Bank SAOG [2009] 313 ITR 128 (Bom)). 4. The se…

South India Surgicals Co. Ltd., Chennai vs. ACIT, Chennai

In the result, the appeal of the assessee is partly allowed

ITA 3088/CHNY/2014[2010-11]Status: DisposedITAT Chennai01 Jul 2016AY 2010-11

Bench: Shri A.Mohan Alankamony & Shri. G. Pavan Kumar

For Appellant: Shri. A.S. Sriraman, AdvocateFor Respondent: Dr. B. Nischal, IRS, JCIT
Section 143(1)Section 143(2)Section 143(3)Section 36(1)(vii)

…and supplying surgical instruments. In assessee’s own case the jurisdictional High Court considered amendment in Sec. 36(1)(vii) of the Act with effect from 01.04.1989. The assessee has accepted the decision of the High Court in Surgical Co. Vs. ACIT (2006) 287 ITR 62 (Mad). But the assessee further relied on the decision of Apex Court in the case of TRF Ltd. Vs. CIT (2010) 323 ITR and the ld. Assessing Officer based on above findings and Apex Court decision of M/s.TRF Ltd case (supra) is of the opinion that the case law is inapplicable to Government debts and the assessee company has accepted the judicial…

DCIT vs. Treads Direct Limited, Coimbatore

In the result, the appeal of the assessee is partly allowed for statistical purposes and the appeal of the Revenue is dismissed

ITA 2941/CHNY/2014[2010-11]Status: DisposedITAT Chennai30 Dec 2015AY 2010-11

Bench: Shri Chandra Poojari & Shri G. Pavan Kumar

For Appellant: Shri. Philip George, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 36Section 36(1)

…recoverable. We rely on the decision of Apex Court in the case of T.R.F. Ltd vs. Commissioner of Income Tax (2010) 323 ITR 397(SC) and also similar issue was dealt by the Jurisdictional High Court in the case of South India Surgical Co. Ltd vs. ACIT (2006) 287 ITR 62 (Mad) where it was held as under:- ‘’It is not sufficient for the assessee to say that he became pessimistic about the prospect of recovery of the debt in question. He must feel honestly convinced that the financial position of the debtor was so precarious and shaky and that it would be impossible to collect any money from him. The question is r…

Treadsdirect Limited, Coimbatore vs. JCIT, Coimbatore

In the result, the appeal of the assessee is partly allowed for statistical purposes and the appeal of the Revenue is dismissed

ITA 2794/CHNY/2014[2010-2011]Status: DisposedITAT Chennai30 Dec 2015AY 2010-2011

Bench: Shri Chandra Poojari & Shri G. Pavan Kumar

For Appellant: Shri. Philip George, Advocate
Section 143(1)Section 143(2)Section 143(3)Section 36Section 36(1)

…recoverable. We rely on the decision of Apex Court in the case of T.R.F. Ltd vs. Commissioner of Income Tax (2010) 323 ITR 397(SC) and also similar issue was dealt by the Jurisdictional High Court in the case of South India Surgical Co. Ltd vs. ACIT (2006) 287 ITR 62 (Mad) where it was held as under:- ‘’It is not sufficient for the assessee to say that he became pessimistic about the prospect of recovery of the debt in question. He must feel honestly convinced that the financial position of the debtor was so precarious and shaky and that it would be impossible to collect any money from him. The question is r…