Fiserv Merchant Solutions Private Limited Vs ACIT (ITAT, Mumbai Bench)
Label Says “Provision,” Books Show Actual Write Off: Mumbai ITAT Quashes Section 263 Disallowance of ₹19.64 Crore Bad Debts
Summary: The assessee, Fiserv Merchant Solutions Private Limited, was engaged in providing services relating to payment-card transactions for acquiring institutions & merchants, including sale of Point of Sale machines. It filed its return declaring total income of ₹115.47 crore.
The return was selected for complete scrutiny through CASS. During assessment proceedings, the AO issued notices u/s 142(1) & 143(2), called for information & granted personal hearings through video conferencing. The assessment was completed u/s 143(3) r.w.s. 144B on 29 December 2023, determining total income at ₹120.37 crore after making an addition of ₹4.89 crore towards excess depreciation.
The audited financial statements reflected ₹21,73,74,373 as provision for bad & doubtful debts. In the computation of income, the assessee added back ₹2,09,28,630, while claiming deduction for the balance ₹19,64,45,743 on the ground that it represented merchant receivables actually written off in the books.
The PCIT invoked section 263, holding that the entire amount of ₹21.73 crore was merely a provision & hence inadmissible. According to him, the AO failed to properly enquire into the claim. He therefore disallowed the balance ₹19.64 crore through the revision order. The assessee challenged the revision before the Tribunal.
