Cochin International Airport Ltd. Vs ACIT (Kerala High Court)
Kerala High Court held that revisionary proceedings by PCIT u/s. 263 rightly exercised since claim of provision for bad and doubtful debts was assumed by assessing officer to be correct without adequate enquiry. Accordingly, appeal dismissed.
Facts- The appellant, a domestic company engaged in operating and maintaining of the Cochin International Airport, is an assessee under the provisions of the Income Tax Act, 1961. The appellant had claimed deduction u/s. 80-IA of the Act in respect of the eligible activity of operating and maintaining the Airport, which is an infrastructure facility. The return was selected for scrutiny and was completed by order dated 27.3.2015. Since the 1st respondent-Department did not accept the claim of deduction u/s. 80-IA and also made various other disallowances, the appellant preferred appeal against the order and the same is stated to be pending.
During the said financial year, the appellant debited to the profit and loss account an amount of Rs.1,00,33,280/-towards the provision for bad and doubtful debts and the said amount was reduced from the amount of trade receivables and short term loans and advances. The Department examined this aspect and decided to accept the explanation and proceeded to issue the assessment order. However, the PCIT found that the said assessment was erroneous and prejudicial to the interest of the Revenue, and decided to invoke the jurisdiction u/s. 263 of the Income Tax Act, 1961 and issued a notice proposing to revise the order of assessment. Aggrieved by the order, the appellant preferred an appeal before the Income Tax Appellate Tribunal, which was dismissed by order dated 15.3.2018, which is impugned in the present appeal. While the appeal was pending, the assessing authority passed revised orders of assessment u/s. 143 of the Income Tax Act, 1961 on 21.2.2017 disallowing the deduction of the claim of doubtful debts amounting to Rs.1,00,33,280/-.
