M/S.Bangalore Electricity Supply Company Limited vs. Assistant Commissioner Of Income Tax
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Cause title — parties, addresses and appearances
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE S.G.PANDIT)
This Income Tax Appeal is filed by the assessee, Bangalore Electricity Supply Company Ltd. under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), challenging the Order of the Income Tax Appellate Tribunal “C” Bench, Bangalore (hereinafter referred to as ‘the Tribunal’) in ITA No. 426/Bang/2023 dated 06.01.2025 for the assessment year(hereinafter referred to as ‘AY’) 2017-18, wherein, the appeal filed by the assessee is partly allowed.
The brief facts of the case are as under: The assessee filed the return of income (hereinafter referred to as ‘ITR’) for the AY 2017-18 on 30.10.2017. HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB Subsequently, a revised return was filed by the assessee on 26.03.2018. The return filed by the assessee was selected for scrutiny and notice(s) under section 143(2) and 142(1) of the Act were issued on 30.04.2019. The assessment Order under section 143(3) of the Act was passed on 30.12.2019 making an addition of Rs.425,01,09,066/- and the book loss claimed by the assessee was also added back to book profit. Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)). The CIT(A), vide Order dated 29.03.2023, partly allowed
the appeal filed by the assessee. Hence, both the Revenue and the assessee were in appeal before the Tribunal. The Tribunal vide the impugned Order dated 06.01.2025 has partly allowed the appeal filed by the assessee and dismissed the appeal filed by the Revenue. Challenging the Order passed by the Tribunal, the assessee is before this Court, whereas, the Revenue has not filed any appeal challenging the same. HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB
The appeal was admitted on 18.11.2025 to examine the following substantial questions of law: i. Whether the Tribunal’s decision not to allow the a sum of Rs.0.22 crores representing the materials unreturned/materials excess drawn during earlier years for the Assessment Year 2017-2018 as business loss is perverse in the facts and circumstances of the case.
ii. Whether the Tribunal’s decision not to allow a sum of Rs.2.21 crores representing the advances given by KPTCL to contractors in earlier years for the Assessment Year 2017-2018 as a business loss is perverse in the facts and circumstances of the case.
iii. Whether the Tribunal decision not to allow a sum of a sum of Rs.0.27 crores representing materials issued to the employees during earlier years and not returned for the Assessment Year 2017-2018 as a business loss is perverse in the facts and circumstances of the case HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB
Heard Sri. Annamalai S, learned counsel for the assessee and Sri. Y V Raviraj and Sri. Dilip M, learned counsel for the Revenue.
Learned counsel for the assessee, Sri. Annamalai S would submit that the Tribunal erred in not allowing Rs.0.22 crores representing the materials unreturned/materials excess drawn during earlier years, Rs.2.21 crores representing the advances given by KPTCL to contractors in earlier years for the Assessment Year 2017-2018 and Rs.0.27 crores representing materials issued to the employees during earlier years and not returned as a business loss. The learned counsel for the assessee would submit that after the receipt of Audit enquiry, the assessee has arrived at a conclusion that the above amounts could not be recovered and hence, the same has to be written off and treated as business loss. Learned counsel for the assessee would further submit that if the matter is remanded back to the AO, then the HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB assessee would be in a position to explain with satisfactory evidence that the above amounts are purely business loss and nothing else. Thus, it is prayed that the appeal filed by the assessee be allowed.
Per contra, Sri. Y V Raviraj, learned counsel for the Revenue would support the Order passed by the Tribunal and submit that the Tribunal has examined the issue in proper perspective and has recorded the reasons in paragraph 36 of the impugned order which requires no interference. Thus, it is prayed that the appeal filed by the assessee be dismissed.
Having heard the learned counsel for the parties and on perusal of the entire appeal papers, we are not inclined to interfere with the Order passed by the Tribunal
for the reasons recorded hereunder: It is an undisputed fact that before the AO, CIT(A) or the Tribunal, the assessee has not been able to produce any evidence on record to prove that the aforesaid HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB amounts that has been sought to be treated as a business loss, did incur in the AY in question. Moreover, the Tribunal has rightly recorded that, once the assessee has treated the above amounts as bad and doubtful debts, the question of treating the same as a business loss would not arise. As pointed out by the Tribunal, at the mere asking of the assessee, the said amounts cannot be treated as business loss, unless the assessee has produced sufficient evidence to substantiate the claim. It is not the argument of the assessee that no opportunities were granted to the assessee before the AO or the CIT(A). The issues raised by the assessee would necessarily involve an adjudication on the facts of the case. The Tribunal being the final fact- finding authority, in paragraph 36 of the impugned Order has recorded its findings on the same. The learned counsel for the assessee has failed to point out any perversity in the Orders passed by the Tribunal. In such circumstances, we are of the considered opinion that the Tribunal was justified in disallowing the claim of the assessee to treat HC-KAR
CNR: KAHC010357162025 NC: 2026:KHC:39224-DB the aforesaid amounts as business loss. No substantial questions of law come up for consideration. Thus, the appeal stands dismissed. No order as to costs. (S.G.PANDIT) JUDGE (DR.K.MANMADHA RAO) JUDGE
NC CT:bms List No.: 1 Sl No.: 59
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.