KARNATAKA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD Vs. COMMISSIONER OF INCOME TAX , BANGALORE

JUDGEMENT

(1.) This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2009-10. The appeal was admitted by a bench of this Court vide order dated 27.02.2015 on the following substantial questions of law:

(2.) The factual background, in which the aforesaid substantial questions of law arise for our consideration need mention. The assessee is a company and is an undertaking of Government of Karnataka. The assessee is engaged in financing industrial units in the State of Karnataka. The assessee filed the return of income for the Assessment Year 2009-10 on 30.09.2011 declaring 'NIL' income under normal provisions of the Act. Thereafter, the assessee returned income of Rs.13,60,88,457/- under the provisions of Section 115JB of the Act. The return of the assessee was selected for scrutiny and assessment was completed under Section 143(3) of the Act. The Assessing Officer vide order dated 21.11.2011 determined the loss at Rs.1,73,60,700/- under the normal provisions of the Act and determined the book profits under Section 115JB of the Act at Rs.30,01,07,991/-.

(3.) The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 31.08.2012 partly allowed the claim of the assessee with regard to gratuity and leave encashment and partial relief was granted in respect of disallowance under Section 14A read with Rule 8D of the Income Tax Rules to the extent of Rs.1,03,08,426/-. However, the Assessing Officer did not grant any relief in respect of disallowance of provision for bad and doubtful debts written back. Being aggrieved, the assessee as well as the revenue filed appeals before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal vide order dated 02.05.2014 held that write back of provision for bad and doubtful debts to the extent of Rs.14,77,53,747/- is liable to be added to the profits for determination of book profits under Section 115JB of the Act and held that disallowance of Rs.49,75,359/- under Section 14A of the Act deserves to be added back while computing book profits under Section 115JB of the Act. In the aforesaid factual background, the assessee has filed this appeal.