DCIT Vs Bothra Shipping Services Pvt. Ltd. (ITAT Kolkata)
The Kolkata Tribunal upheld the order of the CIT(A) granting deduction under section 80-IA(4) to the assessee in respect of its Haldia Port Division, even though the claim could not be made before the Assessing Officer due to technical glitches in the return-filing process.
The assessee had been claiming deduction under section 80-IA(4) in respect of the said undertaking from AY 2016-17 onwards. The claim had also been examined by the Assessing Officer in scrutiny assessments for the earlier years. However, for AY 2022-23, the assessee could not make the claim before the Assessing Officer because of technical problems in filing the return.
The CIT(A), after examining the eligibility of the undertaking and the issues raised by the Assessing Officer, allowed the deduction by following the principle of consistency.
The Revenue contended that the deduction should not have been allowed since the Assessing Officer had no opportunity to verify the claim. The Tribunal rejected this contention, observing that the CIT(A) had undertaken a detailed examination of the claim and recorded reasons for allowing it. The Revenue could not point out any error, illegality or perversity in the findings of the CIT(A). Accordingly, the allowance of deduction under section 80-IA(4) was upheld.
The second issue related to the disallowance of bad and doubtful debts amounting to ₹53.34 crore. The CIT(A) had noticed that provision for doubtful debts amounting to ₹45.13 crore, out of the total provision of ₹54.48 crore, had been written back during FY 2021-22.
The Tribunal observed that the law merely requires the bad debt to be written off in the accounts. It is no longer necessary for the assessee to independently establish that the debt had actually become irrecoverable. The CIT(A) had also examined the relevant adjustment under Explanation 1 to section 115JB.
Since the Revenue failed to demonstrate any incorrect recording of facts, erroneous application of law or perversity in the appellate order, the Tribunal upheld the relief granted by the CIT(A) and dismissed the Revenue’s appeal.
Author’s Note: A genuine and consistently accepted deduction should not ordinarily be denied merely because it could not be claimed in the return due to a technical glitch. The powers of the CIT(A) are wider than those of the Assessing Officer in entertaining a legitimate claim. Further, after the amendment to section 36(1)(vii), the assessee is required to establish an actual write-off in the accounts and not the factual irrecoverability of the debt.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal filed by the revenue against the order of the CIT(A), NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no.NFAC/2021-22/10336066 dated 17.01.2025 for the assessment year 2022-23.
2. Smt. Aarati Agarwal & Rosy Banerjee, Advocates represented on behalf of the assessee and Shri Raman Garg, CIT-DR represented on behalf of the revenue.
3. It was submitted by the ld. CIT-DR that the revenue has challenged the action of the ld. CIT(A) in granting the assessee the benefit of deduction u/s 80IA(4) in respect of Haldia Port division. It was the submission that the assessee has submitted before the ld. CIT(A) that the assessee was unable to make the claim before the Assessing Officer on account of some technical glitches in filing the return. It was the submission that the ld. CIT(A) has deleted the addition in so far as the Assessing Officer had no opportunity to verify the same.
4. In reply, the ld. AR on behalf of the assessee submitted that the ld. CIT(A) deleted the addition following the principle of consistency and considering the fact that from the assessment year 2016-17 onwards, the assessee has been claiming the deduction u/s 80IA(4) in respect of Haldia Port and this has also been examined by the Assessing Officer in scrutiny proceedings from the said assessment years. The ld.AR drew our attention to pages 105 to 113 of the order of the ld. CIT(A) wherein the ld. CIT(A) has given a detailed explanation and reasoning in respect of each of the issues raised by the Assessing Officer and the assessee before granting the assessee the benefit of deduction u/s 80IA(4) of the Act.
5. We have considered the rival submissions. The revenue has not been able to show any perversity in the findings of the ld. CIT(A) and the revenue also was not able to show how the order of the ld. CIT(A) is erroneous in any manner. The only stand of the revenue is that the claim of the assessee was not before the Assessing Officer. The assessee has categorically stated that due to technical glitches in return filing procedure provided to the assessee, the claim could not be made before the Assessing Officer and that the issue has also been considered by the ld. CIT(A) and he has examined the issue and held in favour of the assessee. This being so, as no error or illegality in the order of the ld. CIT(A) has been successfully pointed out by the revenue, the findings of the ld. CIT(A) stand confirmed.
6. The ld. CIT-DR further drew our attention to the addition in respect of bad and doubtful debts which has been disallowed by the Assessing Officer to an extent of Rs.53,34,50,897/-. It was the submission that the assessee has not proved that the debts are actually bad. It was prayed that the order of the ld. CIT(A) be and that of Assessing Officer be restored.
7. In reply, the ld. AR on behalf of the assessee drew our attention to the findings of the ld. CIT(A) in pages 119 to 120 in his order wherein the ld. CIT(A) has categorically given a finding that the provisions for doubtful debts have been written back in the financial year 2021-22 relevant to assessment year 2022-23 to an amount of Rs.45,13,49,484/- out of the total provision of Rs.54,48,51,907/-. It was the submission that the order of the ld. CIT(A) is liable to be upheld.
8. We have considered the rival submissions. A perusal of the findings of the ld. CIT(A) clearly shows that the ld. CIT(A) has held that the said doubtful debt written back is an allowable deduction in terms of Item (i) of the deductions specified in Explanation 1 to section 115JB of the Act. The ld. CIT(A) has also considered the fact that the law requires that the bad debt should be written off and there is no requirement now for the assessee to prove the non-recoverability of bad debts. This being so, as no error, perversity, wrong recording of facts, wrong application of law has been specifically pointed out in the order of the ld. CIT(A), the findings of the ld. CIT(A) stands upheld.
9. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 15/09/2026.
