KERALA FINANCIAL CORPORATION Versus COMMISSIONER OF INCOME-TAX

ORDER

1. 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.

2. 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.

3. The applications are disposed of with these observations

4. M.B.A 114/FC Order accordingly.