J U D G M E N T

S.VAIDYANATHAN, J.

AND C.SARAVANAN, J.

The appellant, a leasing company is engaged in the business of hire, purchase, finance, leasing of motor vehicles and bill discounting etc. The appellant had filed its return of income under Section 139 of the Income Tax Act, 1961 on 31.10.2002 for the Assessment Year 2002- 2003. In the return, the appellant had declared a “taxable income” of Rs.52,51,21,000/-.

2. The said return was processed under Section 143(1) of the Income Tax Act, 1961. Thereafter, the return was scrutinized. A notice under Section 143(2) of the Income Tax Act, 1961 was issued to the appellant on 11.08.2003. The Assessment was thereafter completed under Section 143(3) of the Income Tax Act, 1961 on 31.05.2005. The income of the appellant was re-determined as Rs.57,36,86,630/-.

3. The Commissioner of Income Tax later invoked Section 263 of the Income Tax Act, 1961 and issued a Show Cause Notice dated 04.04.2006 to the appellant to revise the assessment on the ground that an amount of Rs.338.92 Lakhs was wrongly debited under the head “Provisions and Write Off” as a diminution in value of repossessed stock was not an allowable expenditure.

4. The appellant replie