KERALA FINANCIAL CORPORATION ETC. v. COMMISSIONER OF INCOME TAX, KERALA

The Order of the Court was delivered by

HANSARIA, J.

These applications are by the respondent (revenue) in the afore noted G "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 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 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.

The applications are disposed of with these observations. D G.N. Applications are disposed of. '·