ORDER
R. Gururajan. J
1. The Income Tax Appellate Tribunal, Bangalore Branch (for short 'the Tribunal') has chosen to refer the following questions of law for our consideration Under Section 256(1) of the Income Tax Act:
1) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the disallowance made by the Assessing Officer in respect of 'Corporate Guarantee Obligation' amounting to Rs. 18,67,21,730/- does not come within the purview of 'prima facie adjustment' as laid down Under Section 143(1)(a) of the IT Act
2. The assessee is a company. The assessment year involved is 1994.-95. While processing the return of income Under Section 143(1)(a), the Assessing Officer found from the return and the accompanying documents that a sum of Rs. 18,67,21,730/- representing 'Corporate Guarantee Obligation' had not been debited to the profit and loss account. It was claimed as a revenue deduction in the statement of consolidation of return of income. According to the assessment officer, the above, was not a prima facie admissible deduction. He disallowed the same. An appeal was filed. The appellate authority confirmed the disallowance and aggrieved by that order, an appeal was filed before the Tribunal. The Tribunal accepted the case of the assessee and ruled that the prima facie adjustment was made out in its order. In the light of the order of the Tribunal, the Revenue sought for a question of law and after hearing, the question of law as referred to above was (sic) for (sic) consideration . (sic)
3. Heard Sri. Seshachala, learned Counsel for the Revenue. He takes us through the entire material on record to contend that no prima facie case as such was made out in terms of Section 143 of the Income Tax Act. He argues that there is no liability on the part of the Company and that herefore, the disallowance by the assessing officer is proper and legal. He finds fault with the order of the Tribunal.
4. Sri. Parthasarathi, learned Counsel would support the order.
5. After hearing, we have carefully perused the material on record. The adjustment explanatory sheet is available and in terms of the said adjustment, it is seen that the assessing officer has chosen to disallow the corporate guarantee obligation in the following manner:
This payment is in the nature of discharge of a liability on behalf of another company of the group, viz. U.B. Elostomers Ltd., as a guarantor of the loans borrowed by M/s. U.B. Elostomers Ltd. Since this payment is a recoverable debt from M/s. U.B. Elostomers Ltd., the same cannot be claimed as a deduction in the statement of computation of income.
6. Aggrieved by the disallowance of this item, an unsuccessful appeal was filed by the appellate authority. Thereafter, the matter was taken to the Tribunal and the Tribunal has chosen to accept the case of the assessee in the impugned order.
7. A reading of Section 143 would show that adjustment is permissible under three circumstances:
(i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified.
(ii) Any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed;
(iii) Any loss carried forward, deduction, allowance or relief, claimed in the return, which, on the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed.
8. Prom a reading of the above, what is clear is that while considering a proceeding Under Section 143(1)(a) , what is required to be noticed by the assessing officer is only a prima facie consideration and not a detailed full proof consideration as is being done at the time of final proceedings. It is only an enabling provision providing for allowance/disallowance depending upon the prima facie case on the facts and circumstances of each case. Prima facie case would depend upon several circumstances available on record. The dictionary meaning of 'prima facie' is 'at first sight'; 'on the first appearance'; 'n the face of it'. Therefore, 'prima facie' cannot be equated to a debatable detailed consideration in terms of Section 143 of the Act. If the material at the first sight provides for a prima facie admissible or not admissible, then, the assessing officer is free to consider he case in terms of Section 143 of the I.T. Act. In the case on hand, the assessing officer has virtually decided the issue while disallowing the Corporate Guarantee Obligation in the case on hand. The appellate authority also has taken into consideration, the various aspects of the matter as though the appellate authority was deciding the case finally. The Tribunal on noticing the approach of the assessing officer and the appellate officer, rightly, in our view, has chosen to say that a debatable issue cannot be decided under Section 143(1)(a) of the Act. What is required to be seen is a prima facie consideration for the purpose of allowance or disallowance depending upon the material placed on record. Admittedly, in the case on hand, an agreement is available and so also Guarantee Obligation as to whether the guarantee can be enforced etc., is at the stage of final hearing and it cannot be decided at the first sight or t the first appearance as has been done in the case on hand.
9. We are satisfied that on the facts of this case, a prima facie case as such was made out as rightly ruled by the Tribunal. The Tribunal's findings in the given circumstances cannot be faulted on the facts and circumstances of this case. In fact, our findings get further strengthened in the light of the 'subsequent acceptance of the claim by the Tribunal. Therefore, we are satisfied on facts that prima facie case as such was made out by the assessee on the facts and circumstances of this case. We also deem it proper to say at this juncture that prima facie case is not to be understood as a proof of obligation by way of evidence etc. Prima facie consideration has to be prima facie or to use the dictionary meaning 'at the first sight' or 'the first impression' . It may be that impression may be varied/modified or even destroyed at the stage of final hearing. That final hearing approach has not to be the approach at the first impression namely, prima facie impression in terms of Section 143 of the Act.
10. The Revenue places before us the Judgment of the Supreme Court reported in : [1956]30ITR174(SC) (Madan Gopal Bagla v. Commissioner of Income-tax, West Bengal). A reading of the said Judgment would show that it is not a case of prima facie consideration under Section 143 of the Act.
11. This Court in : [1996]218ITR298(KAR) (God Granites v. Under Secretary, Central Board of Direct Taxes and Ors.) has chosen to hold that under the guise of effecting Under Section 143(1)(a), the assessing officer cannot decide the debatable issues.
12. We are satisfied that in the given circumstances, a prima facie adjustment was made out by the assessee. In the result, we deem it roper to answer the questions of law against the revenue and in favour of the assessee.
13. Ordered accordingly. No costs.