CORDOBA ENGINEERING PRIVATE LIMITED,KOLKATA V. INCOME TAX OFFICER, KOLKATA

ITA 2388/KOL/2025

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Cordoba Engineering Private Limited appealed against the order of the National Faceless Appeal Centre, which confirmed the addition of 2,74,02,549 to the assessee's income for the Assessment Year 2022-23. This amount represented bad debts written off by the assessee during the year. The Assessing Officer had initially disallowed the deduction, citing insufficient evidence that the debts were irrecoverable. However, the Tribunal, referencing the Supreme Court's decision in T.R.F. Ltd. vs. Commissioner of Income-tax and CBDT Circular No. 12/2016, found that the mere writing off of debts as irrecoverable in the books is sufficient to claim a deduction under Section 36(1)(vii) of the Act.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840942 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 23-10-2025
• Other Referred Cases: T.R.F. Ltd. vs. Commissioner of Income-tax [2010] 323 ITR 397 (SC), Principal Commissioner of Income-tax-2 vs. Tata Chemicals Ltd. [2024] 162 taxmann.com 11 (Bombay), Nuevosol Energy (P.) Ltd. vs. Assistant Commissioner of Income-tax Circle-16(1) [2025] 170 taxmann.com 85 (Hyderabad - Trib.)
• Laws Referred To: Section 36(1)(vii) of the Income Tax Act, Section 36(2) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR PATI
• Assessee Lawyers: MANISH TIWARI
• Keywords: Set aside; Bad and doubtful debts

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.2388/KOL/2025 (Assessment Year: 2022-23) Cordoba Engineering Private Limited 23A, 7th Floor, Room No.17, Netaji Shubas Road, Kolkata- 700001, West Bengal Vs. Income Tax Officer, Ward 1(1), Aaykar Bhawan P-7, Chowringhee Square, Kolkata- 700069, West Bengal (Appellant) (Respondent) PAN No. AABCC0348K Assessee by : Shri Manish Tiwari, AR Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 03.02.2026 Date of pronouncement: 26.02.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 25.08.2025 for the AY 2022-23. 2. The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹2,74,02,549/- as made by the ld. AO on account of debts written off by the assessee during the year. 3. The facts in brief are that the assessee filed the return of income on 04.11.2022, declaring total loss of ₹4,21,394/- which was revised subsequently on 28.12.2022, declaring the same loss. The assessee is engaged in the business of fabrics and manufacturing of Printed from counselvise.com Page | 2 ITA No. 2388/KOL/2025 Cordoba Engineering Private Limited; A.Y. 2022-23 automobile parts having factory at Adityapur Industrial Area, Jamshedpur. During the year the assessee wrote off bad debts amounting to ₹2,74,02,549/- as bad and also filed before the ld. AO the documents as called for during the assessment proceedings. However, the ld. AO observed from the said documents that these were not enough evidences that the debts had really become bad and become irrecoverable and finally added the same to the income of the assessee by observing that expenditure is not allowable for the want of fulfilment of conditions as per Section 36(1)(vii) of the Act and 36(2) of the Act. 4. In the appellate proceedings, the ld. CIT (A) simply affirmed the order of the ld. Assessing Officer 5. After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has written off ₹2,74,02,549/- as per the details below:- Sl. No. Particulars Address PAN Amount (in Rs.) Year in which income was recorded 1. Heavy Engineering Corporation Limited Plant Plaza Road PO-Dhurwa Ranchi-834004 AAACH4534P 2,72,11,712 F.Y. 2010-11 to F.Y. 2013-14 2. Tata Steel Limited General Office Near PO Bistupur Jamshedpur-831001 AAACT2803M 34,307 3. TRF Limited !6F6+4CP, Burma Mines, Jamshedpur Bagbera Colony, Jharkhand-831007 AAACT6352M 90,530 F.Y. 2017-18, F.Y. 2018-19, & Prior to F.Y. 2017-18 4. Invasive Protective Security B-41 Phase-II, Industrial Area, Adityapur Jamshedpur- 832109 AAACI3896F 66,000 Total 2,74,02,549 5.1. We also note that the assessee has booked the sale corresponding to these debts in the earlier assessment years and Printed from counselvise.com Page | 3 ITA No. 2388/KOL/2025 Cordoba Engineering Private Limited; A.Y. 2022-23 thus, offered the income to tax. During the year the assessee has only claimed debts as bad u/s 36(1)(vii) read with section 36(2) of the Act. In our opinion, the mere writing of debts as bad is enough for claiming the deduction and assessee is not required to prove anything while on the other hand, the assessee has adequately proved before the ld. AO as well as the ld. CIT (A) by furnishing all the evidences qua these debtors. The ld. AO as well as the ld. CIT (A) have not appreciated the ratio laid down in the case of T.R.F. Ltd. vs. Commissioner of Income-tax [2010] 323 ITR 397 (SC) by the Hon'ble Apex Court and circular no.12/2016, dated 30.05.2016, wherein it has been clarified that once the debts is written off as irrecoverable in the books of account, the requirement to demonstrate the recovery is not mandatory by law. Similar issue has been laid down by the Hon'ble Apex Court in the case of Principal Commissioner of Income-tax-2 vs. Tata Chemicals Ltd. [2024] 162 taxmann.com 11 (Bombay)/[2024] 469 ITR 250 (Bombay)[07-03-2024] and by the co-ordinate bench in case of Nuevosol Energy (P.) Ltd. vs. Assistant Commissioner of Income-tax Circle-16(1) [2025] 170 taxmann.com 85 (Hyderabad - Trib.)[27-11-2024]. We also note that the CBDT vide Circular no. 12/2016, dated 30th May, 2015, clarified that the claim for bad debt is admissible u/s 36(1)(vii) of the Act, once the debts is written off in the books of account even if the debtor recovery status has not been conclusively established ,the relevant part of the circular is as under:- “4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under Section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section(2) of sub-section 36(2) of the Act.” Printed from counselvise.com Page | 4 ITA No. 2388/KOL/2025 Cordoba Engineering Private Limited; A.Y. 2022-23 6. Considering these facts and circumstances and the ratio laid in the above decisions , we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26.02.a2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.02.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "