S.K. OSWAL POLYMERS, MUMBAI V. DCIT 24(2), MUMBAI

CO 75/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7680 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 18-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: SHRIVIMAL PUNMIYA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL, JUDICIAL MEMBER A ND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.7675/MUM/2010 ASSESSMENT YEAR-2006-07 THE DCIT-24(2), PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA(E), MUMBAI-400 051 VS. M/S. S.K. OSWAL POLYMERS, SHOP NO. 7, JAI SAKET CO.OP. SOC., DADISETH ROAD, MALAD(W), MUMBAI-400 064 PAN-AAPFS 1095N (APPELLANT) (RESPONDENT) C.O. NO. 75/MUM/2012 (ARISING OUT OF ITA NO.7675/MUM/2010) ASSESSMENT YEAR-2006-07 M/S. S.K. OSWAL POLYMERS, SHOP NO. 7, JAI SAKET CO.OP. SOC., DADISETH ROAD, MALAD(W), MUMBAI-400 064 PAN-AAPFS 1095N VS. THE DCIT-24(2), PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA(E), MUMBAI-400 051 (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI C.G.K. NAIR ASSESSEE BY: SHRIVIMAL PUNMIYA DATE OF HEARING :24.09.2012 DATE OF PRONOUNCEMENT: 26.09.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER OF LD. CIT (A)-34, MUMBAI DT. 1.09.2010 PERTAINING TO ASSESSMENT YEAR 2006-07. ITA NO. 7675/M/2010 C.O. NO. 75/M/2012 2 2. GROUND NO. 1 OF THE APPEAL RELATES TO THE CLAIM OF BAD DEBTS BY THE ASSESSEE AMOUNTING TO RS. 4,44,436/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS WRITTEN OF BAD DEBTS AMOUNTING TO RS. 4,44,436/ - THROUGH THE PROFIT AND LOSS ACCOUNT. THE AO SOUGHT EXPLANATION FROM THE A SSESSEE. HOWEVER, ON RECEIVING NO PLAUSIBLE REPLY/DOCUMENTARY EVIDENCE, THE AO DISALLOWED THE CLAIM OF THE BAD DEBT. 4. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT VS OMAN INTERNATIONAL BANK 313 ITR 128. THE LD. CI T(A) AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES FOLLOWED THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF OMAN INTERNATIONAL BANK (SUPRA) ALLOWED THE WRITE OFF OF BAD DEBTS. 5. BEFORE US, THE LD. DEPARTMENT REPRESENTATIVE VEH EMENTLY ARGUED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAIL SO FAR A S WRITE OFF IS CONCERNED. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FI NDINGS OF THE LD. CIT(A) AND REFERRED TO PAGE NO. 52 AND 54 OF THE PAPER BOO K. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE PAPER BOOK SUBMITTED BY THE ASS ESSEE. WE FIND THAT THE ASSESSEE HAS ACTUALLY WRITTEN OFF THE DEBTS APPEARE D IN ITS BOOKS OF ACCOUNT. POST AMENDMENT TO SECTION 36(I)(VII) W.E.F. 1.4.198 9 THE ONLY OBLIGATION CAST UPON THE ASSESSEE IS TO ACTUALLY WRITE OFF THE BAD DEBTS. THE ASSESSEE NEED NOT HAVE TO ESTABLISH THAT THE DEBT HAS BECOME IRRE COVERABLE. WE FIND THAT THE ASSESSEE HAS DEBITED THE PROFIT AND LOSS ACCOUN T AND CREDITED TO THE RESPECTIVE DEBTORS ACCOUNT WHICH PROVE THAT THE DEB TS HAVE BEEN ACTUALLY WRITE OFF. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). WE ALSO DRAW SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN ITA NO. 7675/M/2010 C.O. NO. 75/M/2012 3 THE CASE OF T.R.F LTD. VS CIT 323 ITR 397. GROUND NO. 1 OF REVENUES APPEAL IS ACCORDINGLY DISMISSED AND GROUND NO. 1 OF THE C. O. IS ALLOWED. 7. GROUND NO. 2 RELATES TO THE DELETION OF ADDITION MADE BY THE AO U/S. 40(A)(IA) AMOUNTING TO RS. 40,813/-. 8. BRIEFLY STATED THE FACTS OF THE MATTER ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE AUDIT ORS IN THEIR AUDIT REPORT AT PARA 27(B)(IV) HAVE MENTIONED THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AT RS. 9,500/- WHICH HAS NOT BEEN PAID TO TH E CREDIT OF THE CENTRAL GOVERNMENT. THE AO FURTHER OBSERVED THAT THE SAID TDS PERTAINS TO REPAIR CONTRACTOR TO WHOM A SUM OF RS. 40,813/- HAS BEEN P AID. ACCORDING TO THE AO, THE SAID EXPENDITURE IS DISALLOWABLE U/S. 40(A) (I) OF THE ACT AND ACCORDINGLY DISALLOWED THE SAME AND ADDED BACK TO T HE INCOME OF THE ASSESSEE. 9. THE MATTER WAS CARRIED BEFORE THE LD. CIT(A). IT WAS EXPLAINED THAT THE ASSESSEE HIMSELF HAS DISALLOWED EXPENSES TO THE TUNE OF RS. 4,65,721/- IN THE COMPUTATION OF INCOME WHICH INCLUDES THE IMPUGN ED AMOUNT OF RS. 40,183/-. THE LD. CIT(A) WAS CONVINCED BY THE SUBM ISSION OF THE ASSESSEE AND ACCORDINGLY DELETED THE ADDITION OF RS. 40,183/ -. 10. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AMOUNT OF RS. 40,813/- IS IN ADDITION TO THE SAID A MOUNT OF RS. 4,65,721/- WHICH HAS BEEN ADDED BACK BY THE ASSESSEE IN THE CO MPUTATION OF INCOME. HOWEVER, THE LD. DR COULD NOT EXPLAIN AS TO WHERE F ROM THIS FIGURE OF RS. 40,813/- HAS BEEN DETERMINED BY THE AO. WE HAVE PE RUSED THE ASSESSMENT ORDER CAREFULLY AND THE PAPER BOOK SUBMITTED BY THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS ADDED A SUM OF RS. 4,65,721/- UND ER THE HEAD REPAIRS EXPENSES DISALLOWABLE. HOWEVER, AFTER GOING THROUG H THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET OF THE ASSESSEE, WE DO NOT FIND ANY MENTION OF THE FIGURE ADDED BY THE AO AT RS. 40,813/-. IN THE ABSENCE OF ANY SUPPORT NEITHER FROM THE ASSESSMENT ORDER NOR BY TH E LD. DR, WE DO NOT FIND ITA NO. 7675/M/2010 C.O. NO. 75/M/2012 4 ANY REASON TO SUSTAIN THIS ADDITION OF RS. 40,813/- . ACCORDINGLY, THE FINDING OF THE LD. CIT(A) ARE CONFIRMED. GROUND NO. 2 OF REVE NUES APPEAL IS DISMISSED AND GROUND NO. 2 OF C.O. FILED BY THE ASSESSEE IS A LLOWED. 11. GROUND NO. 3 RELATES TO DELETION OF THE DISALLO WANCE MADE ON ACCOUNT OF SALES INCENTIVE AMOUNTING TO RS. 12,14,374/-. 12. FACTS OF THE CASE ARE THAT DURING THE ASSESSMEN T YEAR, THE ASSESSEE HAS CLAIMED TO HAVE GIVEN INCENTIVES TO ITS PARTIES WHO BOOSTED THE SALES OF THE COMPANY. THE AO SOUGHT EXPLANATION FROM THE AS SESSEE IN RESPECT OF ITS CLAIM OF RS. 12,14,374/- AS SALES INCENTIVE. THE A SSESSEE REPLIED THAT THE SALES INCENTIVES HAVE BEEN GIVEN TO ITS SELLING PAR TIES WHO HELPED THE ASSESSEE TO BOOST ITS SALES. THE ASSESSEE FURTHER POINTED OUT THAT THE SALE DURING THE YEAR HAS GONE UP FROM 54.65 CRORES TO 93 .15 CRORES. THE AO FURTHER ASKED THE ASSESSEE TO JUSTIFY THE ALLOWABIL ITY OF THE SALES INCENTIVES SO CLAIMED. HOWEVER, AT THAT POINT, THE ASSESSEE SOUG HT 10 DAYS TIME TO FILE NECESSARY DETAILS. AS THE ASSESSMENT WAS GETTING BA RRED BY LIMITATION, THE AO DISALLOWED THE ENTIRE SUM OF RS. 12,14,374/- CLAIME D AS SALES INCENTIVE. 13. BEFORE US, THE REVENUE IS IN APPEAL AGAINST SUC H RELIEF AND THE ASSESSEE IS IN CROSS OBJECTION. THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED COPY OF BILL PERTAINING TO PURCHASE GOLD COINS WHI CH HAVE BEEN DISTRIBUTED AMONG THE PARTIES AS SALES INCENTIVE AMOUNTING TO R S. 12,14,374/-. THE LD. COUNSEL FURTHER POINTED OUT AT PAGE 44 TO 51 OF THE PAPER BOOK WHICH ARE NAME AND ADDRESS OF THE PARTIES TO WHOM SALES HAVE BEEN MADE ABOVE RS. 5,00,000/- DURING THE YEAR UNDER CONSIDERATION. AFT ER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE PAPER BOOK SUBMITTED, IN OUR CONSIDERATE VIEW, THIS ISSUE REQUIRES FURTHER VERIF ICATION AT THE ASSESSMENT STAGE AS THESE DETAILS WERE NOT MADE AVAILABLE TO T HE AO. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO FILE ALL RELEVANT DETAILS/DOCUMENTS PERTAINING TO ITS CLAIM OF SALES INCENTIVE OF RS. 12,14, 374/- THE AO IS DIRECTED TO VERIFY THE DETAILS FILED BY THE ASSESSEE AFTER GIVING REAS ONABLE OPPORTUNITY OF BEING ITA NO. 7675/M/2010 C.O. NO. 75/M/2012 5 HEARD TO THE ASSESSEE. GROUND NO. 3 OF REVENUES AP PEAL AND GROUND NO. 3 OF C.O. FILED BY THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (DINESH KUMAR AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 26 TH SEPTEMBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI