KERALA FINANCIAL CORPORATION VS COMMISSIONER OF INCOME-TAX
1997 P T D 663
[218 I T R 159]
[Supreme Court of India)
Present: Kuldip Singh and B.L. Hansaria, JJ
KERALA FINANCIAL CORPORATION and others
Versus
COMMISSIONER OF INCOME TAX
I.As. Nos. 1 to 6 in Civil Appeals Nos. 4636 to 4641 of 1994, decided on /01/1996.
Income-tax-
Income---Bad debt---Sticky advance---Advance written off---Steps could be taken in accordance with provision relating to bad debts---Observations in Kerala Financial Corporation (1994) 210 ITR 129 that refund could be claimed of tax paid on interest---To stand deleted.
The majority in State of Travancore v. CIT (1986) 158 ITR 102 (SC) had held that in case of "sticky advances", on the assessee writing off the advances, the same would become bad debts and could be so dealt with by the assessee as permitted by the relevant section of the Income Tax Act. 1961. In Kerala Financial Corporation v. CIT (1994) 210 ITR 129 at page 134 (SC), the Court observed that on the advances becoming bad debts, refund of tax paid on the interest could be claimed by the assessee in accordance :with law. The majority in State Bank of Travancore (1986) 158 ITR 102 had not said so. On applications by the Department, the Court stated that the observation in Kerala Financial Corporation (1994) 210 ITR 129 relating to refund of tax would stand deleted.
State Bank of Travancore v. CIT (1986) 158 ITR 102 (SC) and Kerala Financial Corporation v. CIT (1994) 210 ITR 129 (SC) ref.
J. Ramamurthy and B.B. Ahuja, Senior Advocates with (R. Satish and B.K. Prasad with them) for Appellants.
P.S. Poti, Senior Advocate with (N. Sudhakaran with him) for Respondent.
ORDER
B.L. HANSARIA, J.---These applications are by the respondent (Revenue) in the aforenoted appeals, which were disposed of by judgment, dated May 12, 1994 (see (1994) 210 ITR 129). It has been averred in these petitions that what was held in paras. 9 to 15 of the judgment is not consistent with what was decided by the majority in State Bank of Travancore v. CIT (1986) 2 SCC 11; (1986) 158 ITR 102, which view was followed- while disposing of the appeals. This stand has been taken because what the majority had held in the aforesaid case was that in cases of "sticky advances" what could really be done is that on the assessee writing off the advances, the same would become bad debt and could be so dealt by the assessee as permitted by the relevant section of the Income Tax Act, 1961. In the aforesaid paras., however, it came to be stated that on the advances becoming bad debts, refund of tax paid on the interest could be claimed by the assessee in accordance with law. It is apparent that the majority in State Bank of Travancore's case (1986) 158 ITR 102 (SC) had not said so. This is I not disputed by Shri Poti who had appeared for the appellants.
It is accordingly stated that the observation made relating to refund of tax in the aforesaid paragraphs of the judgment would stand deleted. Instead we state on the advances being written off, steps could be taken by the assessee in accordance with the provisions of the Income-tax Act relatable to bad debts.
The applications are disposed of with these observations
M.B.A 114/FCOrder accordingly.