M/s Jatayu Software Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITA 1068/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5345 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 13-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZINIK VASHAI
• Keywords: Business income; Bad and doubtful debts; Revised return; TDS
• Section: 143(3)

Judgement Text

1 | P A G E I T A N O . 1 0 6 8 / B A N G / 2 0 0 9 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A : BANGALORE BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI. GEORGE GEORGE K, JUDICIAL MEMBER I.T.A. NO.1068/BANG/2009 (ASST. YEAR : 2006-07) M/S. JATAYU SOFTWARE PVT. LTD., G-5, SWISS COMPLEX, NO.33, RACE COURSE ROAD, BANGALORE .. APPELLANT V. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -11(5), BANGALORE .. RESPONDENT APPELLANT BY : SHRI. B. S. RAVINDRANATH, CHARTERED ACCOUNTANT RESPONDENT BY : SMT. JACINTA ZINIK VASHAI, ADDL. CI T O R D E R PER DR. O. K. NARAYANAN, VICE PRESIDENT : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2003-04. THE APPEAL IS DIRECTED AGAINT THE ORDER O F CIT(A)-I AT BANGALORE, DATED.11.8.2009 AND ARISES OUT OF ASSESSMENT COMPLE TED U/S.143(3) OF IT ACT, 1961. 2 | P A G E I T A N O . 1 0 6 8 / B A N G / 2 0 0 9 2. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS R EGARDING DEDUCTION OF BAD DEBTS WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT WHICH AMOUNTS TO RS.38,38,181/-. FOR THE SAKE OF CLARITY THE RELEVANT BODY OF THE GROUNDS OF APPEAL IS REPRODUCED BELOW : I) THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEES CLAIM FOR DEBTS ACTUALLY WRITTEN OFF AS BAD IN THE BOOKS AMOUNTING TO RS.38,38,181/- AS THE CONDITIONS SPECIFIED IN SE C 36(1)(VII) & 36(2) OF THE ACT ARE SATISFIED. THE LIST OF BAD DE BTS WRITTEN OFF IN THE BOOKS ARE AS UNDER : A) INTEGRA MICRO SYSTEMS PVT LTD., RS.37,01,720/- B) TDS CERTIFICATES NOT RECOVERABLE RS. 22,003/- C) TATA CONSULTANCY SERVICES (TCS FOR SHORT) RS. 62,458/- D) BHARATI CELLULAR LTD., (BCL IN SHORT) RS. 52, 000/- RS.38,38,181/- II) AMOUNT DUE FROM M/S. TCS & BCL TOTALLING RS.1,14,45 8/- AS PER THE OPINION OF THE ITO SHOULD HAVE BEEN TAKEN T O THE NEXT AY 2004-05, THE ASSESSMENT OF WHICH WAS CONCLUDED UNDE R 143(3) & HAVE APPEALED BEFORE THIS HONOURABLE TRIBUNAL HENCE , REVISED RETURN CANNOT BE FILED. III) AS REGARDS UNRECOVERABLE TDS CERTIFICATES OF RS.22, 003/- WHICH WAS OFFERED FOR TAX IN THE YEAR OF SALES WAS WRITTEN OFF IN THE BOOKS HENCE, CIT(A) & AO HAVE ERRED IN NOT ALLOWING THE DEDUCTIONS CLAIMED. 3 | P A G E I T A N O . 1 0 6 8 / B A N G / 2 0 0 9 IV) RS.37,01,720/- DUE FROM SISTER CONCERN M/S. INTEGRA MICRO SYSTEMS PVT LTD WRITTEN OFF AS BAD & THE SAID SISTE R CONCERN HAS OFFERED THE SAME FOR TAX IN THE SAME ASSESSMENT YEA R HENCE THERE IS NO LOSS OF REVENUE. THE FACTS THEREOF WERE NOT CONSIDERED EITHER BY AO OR BY CIT(A) HENCE ERRED. 3. ON GOING THROUGH THE MATERIALS AVAILABLE ON RECO RD, WE FIND THAT THE AMOUNTS WRITTEN OFF BY THE ASSESSEE AS BAD DEBTS HA VE ALREADY BEEN REFLECTED IN THE ACCOUNTS WHICH ULTIMATELY LEAD TO COMPUTATION OF INCOME/LOSS OF THE ASSESSEE. SO THE CONDITION OF T REATING THOSE AMOUNTS AS PART OF BUSINESS INCOME HAS ALREADY BEEN SATISFIED. REGARDING THE EVIDENCE OF BAD DEBTS, THE ASSESSEE HAS SATISFIED BY WAY OF STATUTORY EVIDENCE PRESCRIBED BY WAY OF WRITING OFF THE AMOUNTS IN THE BOOKS OF ACCOUNT. THE SUFFICIENCY OF THE STATUTORY EVIDENCE AS WRITING OF F THE DEBTS AS BAD DEBTS IN ITS BOOKS OF ACCOUNT HAS BEEN CONSIDERED AND UPHELD BY ITAT, MUMBAI SPECIAL BENCH IN THE CASE OF DCIT V.OMAN INTERNATIO NAL BANK SAOG (MUMBAI) 286 ITR (AT) 08 (SB) (MUM). THE ABOVE S PECIAL BENCH DECISION HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT IN 313 ITR 128. THE MATTER WAS TAKEN BY REVENUE IN SLP BEFORE THE HONB LE SUPREME COURT WHICH HAS BEEN DISMISSED AS REPORTED IN 313 ITR (ST ) 03. THIS LEGAL POSITION HAS BEEN UPHELD BY THE HONBLE SUPREME COURT IN A S UBSEQUENT JUDGEMENT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD., V. JCIT (320 ITR 557). 4 | P A G E I T A N O . 1 0 6 8 / B A N G / 2 0 0 9 4. THEREFORE, WE FIND THAT AS PRESCRIBED IN THE STA TUTE AND AS EXPLAINED IN THE JUDICIAL PRONOUNCEMENTS OF THE APEX COURT, TH E ASSESSEE HAS SATISFIED THE CONDITIONS OF BRINGING THE AMOUNT FIR ST INTO THE ACCOUNTS AS PART OF TRADING RECEIPTS AND THEREAFTER WRITING IT OFF AS BAD DEBTS IN THE BOOKS OF ACCOUNT HAVE BEEN COMPLIED WITH. 5. IN THESE CIRCUMSTANCES, THE CLAIM MADE BY THE AS SESSEE IS IN ORDER AND IT HAS TO BE ALLOWED. WE DIRECT THE AO TO GIVE DEDUCTION FOR THE SAID AMOUNT MENTIONED ABOVE. 6. IN RESULT, APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 12TH DAY OF MAY, 2010, AT BANGALORE. SD/- SD/- (GEORGE GEORGE K) (DR. O. K. NARAYANAN ) JUDICIAL MEMBER VICE PRESIDENT MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, NEW DELHI 7. GF, ITAT, BANGALORE BY ORDER ASST.REGISTRAR