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KERALA FINANCIAL CORPORATION ETC.
v.
COMMISSIONER OF INCOME TAX, KERALA
JANUARY 11, 1996
[KULDIP SINGH AND B.L. HANSARIA, JJ.)
Income-tax Act, 1961 :
Bad debts-Observation regarding refund of tax made in the main
judgment at paras 9 to I 5 deleted-On the advances being written off steps
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could be taken by the assessee in accordance with the relevant provisions
relating to bad debts.
State Bank of Travancore v. Commissioner of Income Tax, [1986) 2
SCC 11=158 ITR 102, referred to and· explained.
CIVIL APPELLATE JURISDICTION : I.A. Nos. I to 6.
IN
Civil Appeal Nos. 4636 to 4641 of 1994.
From the Judgment and Order dated 24.10.84 of the Kerala High Court
in l.T.R. C. Nos. 279 and 280 of 1979.
J. Ramamurthy, B.B. Ahuja, R. Satish and B.K. Prasad for the Appel-
lants.
P.S. Poti and N. Sudhakaran for the Respondent.
The Order of the Court was delivered by
HANSARIA, J.
A
B
c
D
E
F
These applications are by the respondent (revenue) in the afore noted
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"T;i
appeals, which were disposed of by judgment dated May 12, 1994. 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 ofTravancore v. Commissioner of Income Tax, [1986] 2 SCC 11 (158
!TR 102), which view was followed while disposing of the appeals. This
H
365
366
SCPREME COURT REPORTS
[I996] I S.C.R.
A
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. In aforesaid paras, however, it came to be stated that on the advances
B
become 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 had not said so. This is not disputed by Shri Poli who had
appeared for the appellants.
It is accordingly stated that the observation made relating to refund of
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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 reiatable to
bad debts.
D
The applications are disposed of with these observations.
G.N.
Applications are disposed of.
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Lex