- (1.) This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act"), has been filed by the assessee against the order dated 20-8-2003, passed by the Income-tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh (in short "the Tribunal"), in I.T.A. No. 316/Chandi/98 relating to the assessment year 1995-96. The assessee has claimed the following questions for determination by this court : (a) Whether, under the facts and circumstances of the case and on the true and correct interpretation of the provisions of section 36(1)(vii), 36(1)(viia), the Tribunal is justified in upholding the disallowance of deduction of Rs. 19,77,535 whereas both the sections are separate, distinct and operate independently? (b) Whether, under the facts and circumstances of the case, the Tribunal is justified in upholding the disallowance of deduction of Rs. 19,77,535 whereby when there is no judgment against the assessee the view favouring on the basis of true and correct interpretation of the provisions of law, objects of introduction of the section, circulars of the Central Board of Direct Taxes favouring the assessee be adopted?
(2.) The facts necessary for adjudication, as narrated in the appeal, are that the assessee is a corporation and an undertaking of the Haryana State and is engaged in development of industrial estates and infrastructural facilities. The assessee filed its return for the assessment year 1995-96 declaring an income of Rs. 3,71,78,674 on 29-11-1995. The assessee had created a provision for bad and doubtful debts under section 36(1)(viia) of the Act amounting to RS. 19,77,535. Besides this, there was already a credit balance in the provision for bad and doubtful debts for the assessment years 1993-94 and 1994-95, totalling Rs. 9,88,844. The assessing officer allowed bad debts to the extent of Rs. 1,10,53,000 but made disallowance of Rs. 19,77,535 and Rs. 9,88,844. The Assessing Officer, thus, disallowed the deduction claimed by the assessee under section 36(1) (viia) of the Act. The assessment was completed by the assessing authority under section 143(3) of the Act, vide order dated 7-2-1997, annexure A 3, at the income of Rs. 4,35,03,060.
(3.) Aggrieved by the order of the assessing authority, the assessee filed appeal. This claim of the assessee in appeal was dismissed by the Commissioner of Income-tax (Appeals) (for short "the CIT(A)"), vide order dated 5-1-1998, annexure A 2, which was affirmed by the Tribunal, vide order dated 20-8-2003, annexure A 1.;