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
