Case Law Details
PCIT Vs VE Commercial Vehicles Ltd (Delhi High Court)
Introduction: In a recent appeal for Assessment Year 2010-11, the Delhi High Court has ruled on an important tax matter. The appeal, filed by the revenue authority, challenged an order from the Income Tax Appellate Tribunal regarding the deduction of bad debts. This article provides a detailed analysis of the case and its implications.
Detailed Analysis: The core issue in this case was the deduction of bad debts acquired by VE Commercial Vehicles Ltd (the respondent/assessee) from its predecessor-in-interest, Eicher Motors Ltd. (EML), as part of a scheme of demerger. The revenue authority argued that the deduction of these bad debts, amounting to Rs 5 crores, was not permissible under Sections 36(1)(vii) and 36(2) of the Income Tax Act, 1961.
However, it was not in dispute that the subject debts had indeed become bad. Furthermore, EML, the predecessor-in-interest, had previously offered these bad debts for taxation.
The Commissioner of Income Tax (CIT(A)) had previously ruled in favor of the respondent/assessee, a decision that was upheld by the Income Tax Appellate Tribunal.
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