THE DCIT, Baroda V. DANIEL MEASUREMENT & CONTROL(i) P.LTD., Baroda

ITA 1161/AHD/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0308 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO.1161/AHD/2009 (ASSESSMENT YEAR: 2004-05) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. (APPELLANT) VS. DANIEL MEASUREMENT AND CONTROL (INDIA) PVT. LTD., 299/300 GIDC ESTATE, BEHIND NOVINO BATTERY, MAKARPURA, BARODA. (RESPONDENT) PAN: AABCD 3608 F ON BEHALF OF REVENUE MR.SHELLEY JINDAL, CIT (DR) ONBEHALF OF ASSESSEE MR. J.P. SHAH. ( )/ ORDER DATE OF HEARING : 1-1-2013 DATE OF PRONOUNCEMENT : 15 -2-2013 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT (A)-V, BARODA DATED 3-12-2008 FOR THE ASSESSMENT YEAR 2004 -05. ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 2 2. IN THIS CASE, ASSESSEE HAD FILED MISC. APPLICATI ON NO.58/AHD/2012 DATED 2-3-2012 WHEREIN IT WAS SUBMITTED THAT WHILE DECIDING THE APPEAL ITA NO.1161/AHD/2009 ON 2-3-2012 ONE OF THE GROUNDS WIT H RESPECT TO WRITE OFF OF BAD DEBTS WAS NOT CONSIDERED BY THE HONBLE TRIB UNAL. IT WAS THUS PRAYED THAT THE ORDER BE RECALLED TO ADJUDICATE THE AFORESAID GROUND. AFTER HEARING THE PARTIES THE CO-ORDINATE BENCH VIDE ORDE R DATED 22-6-2012 HELD AS UNDER:- WE HAVE PERUSED OUR ORDER DATED 2-3-2012 IN CASE O F THE ASSESSEE AND ALSO HEARD BOTH THE SIDES AND GONE THROUGH HON BLE APEX COURT DECISION IN CASE OF TRF LTD. VS. CIT (SUPRA). WE CO NSIDER THAT RATIO OF DECISION OF HONBLE APEX COURT IN CASE OF TRF LTD. VS. CIT (SUPRA) HAS TO BE CONSIDERED IN THE LIGHT OF THE FACT OF TH E CASE OF THE ASSESSEE. THIS ASPECT WAS LEFT INADVERTENTLY IN THE IMPUGNED ORDER OF THE TRIBUNAL, WHICH NEEDS THE HEARING OF THE ISSUE FROM BOTH SIDES. ACCORDINGLY WE HOLD THAT IT SHALL BE IN THE INTERES T OF THE JUSTICE TO RECALL THE IMPUGNED ORDER OF THE TRIBUNAL TO THE EX TENT OF GROUND NO.4 OF APPEAL ONLY AND THE REGISTRY IS DIRECTED TO FIX THE APPEAL TO THE EXTENT OF GROUND NO.4 IS DUE COURSE. 3. IN VIEW OF THE AFORESAID ORDER OF THE CO-ORDINAT E BENCH THE MATTER WAS HEARD ONLY ON THE GROUND WITH RESPECT TO WRITE OFF OF BAD DEBTS. 4. THE FACTS WITH RESPECT TO THE AFORESAID GROUND A S CULLED OUT FROM THE ORDERS ARE AS UNDER:- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED WRITE OFF OF SUNDRY BALANCES A GGREGATING TO RS.1,27,54,.092/-. THE ASSESSEE WAS ASKED TO FURNIS H THE DETAILS OF THE BALANCES WRITTEN OFF AND ALSO TO SUBSTANTIATE ITS C LAIM. THE ASSESSEE ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 3 INTERALIA SUBMITTED THAT IT HAD WRITTEN OFF THE AFO RESAID AMOUNT AS BAD DEBTS IN THE BOOKS OF ACCOUNTS. IT WAS ALSO SUBMITTED THA T THE AMOUNT REPRESENTS OUTSTANDING AMOUNTS IRRECOVERABLE FROM THE PARTIES AND SINCE THE PAYMENTS WERE NOT FORTHCOMING IT WAS WRITTEN OFF IN THE ACCO UNTS. A.O. DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND HE DISALLO WED THE CLAIM OF ASSESSEE FOR THE REASON THAT ACCORDING TO THE A.O. WRITING OFF OF BAD DEBTS BY ASSESSEE WAS NOT AN HONEST JUDGMENT BUT WAS MERE LY ON ACCOUNT OF HIS CONVENIENCE. HE WAS FURTHER OF THE VIEW THAT THE DE BTS WERE NOT AT ALL BAD DEBTS. HE ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED BY THE ACTION OF THE A.O. THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT (A). 6. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AFTER PERUSAL OF THE DETAILS DELETED THE ADDITION BY HOLD ING AS UNDER:- 11. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO OBSERVATIONS OF A.O. AS REGARD THE CLAIM OF A PPELLANT U/S.36(1)(VII) AS BAD DEBT IS CONCERNED, COMPLETE P ARTICULARS HAVE BEEN SUBMITTED. THE DETAILED REASONS FOR BAD-DEBTS ARE IN THE NATURE OF DEDUCTIONS FROM VARIOUS BILLS RAISED. THE QUESTI ON AS TO WHEN THE DEBT BECAME A BAD WOULD HAVE TO BE OBJECTIVELY DETE RMINED ON THE MATERIALS AVAILABLE ON RECORD. THE QUESTION WHETHE R A DEBT HAS BECOME BAD OR NOT MUST BE DECIDED FROM THE VIEW POI NT OF POSSIBILITY OF THE REALIZATION OF THE DEBT AND THE ASSESSMENT O F SUCH POSSIBILITY HAS TO BE FIRST A BONAFIDE DECISION FOR WRITE OFF B EING DICTATED BY THE REALITY IN THE LIGHT OF THE EVENTS TILL THE TIME TH E DECISION IS TAKEN. THE DECISION SHOULD BE TAKEN FROM THE VIEW POINT OF A B USINESSMAN AND ALSO AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. CONSIDERING THE SUBMISSIONS AND ARGUMENTS ADVANCED BY THE A.R., I AM OF THE CONSIDERED VIEW THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE DISALLOWANCE MADE BY THE A.O. DESER VES TO BE DELETED. THE A.O. IS THEREFORE DIRECTED TO DELETE T HE ADDITION OF ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 4 RS.1,27,54,092/- MADE BY THE A.O. ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 7. AGGRIEVED BY THE AFORESAID ACTION OF THE CIT (A) , THE REVENUE HAD FILED THE AFORESAID APPEAL. 8. BEFORE US THE LD. D.R. SUBMITTED THAT THE ASSESS EE DID NOT FURNISH THE REQUIRED DETAILS BEFORE THE A.O. HE POINTED OUT TO THE OBSERVATION MADE BY THE A.O. IN THE ORDER WHEREIN THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS TO SHOW ANY JUSTIFICATION AND REASON FOR WRITE OFF OF BAD DEBTS. HE FURTHER POINTED OUT THAT THE ASSES SEE HAD NOT PRODUCED EVIDENCE LIKE COPY OF THE RELEVANT ACCOUNT OF THE R ESPECTIVE YEARS TO SHOW THAT THE AMOUNTS WERE TAKEN INTO ACCOUNT WHILE COMP UTING THE TOTAL INCOME. THE ASSESSEE HAD ALSO NOT PRODUCED THE COPY OF PART IES ACCOUNTS TO SHOW THAT THE ACCOUNTS WERE WRITTEN OFF IN THE RESPECTIV E ACCOUNTS IN THE F.Y. 2003-04. THE LD. D.R. FURTHER POINTED OUT TO THE F INDING OF THE A.O. WHEREIN THE A.O. HAD POINTED OUT THAT THE ASSESSEE HAS NOT PLACED ON RECORD ANY GENUINE EFFORTS MADE BY THE ASSESSEE TO RECOVER THE BAD DEBTS. IN VIEW OF THESE FACTS, THE LD. D.R. SUPPORTED THE ORDER OF TH E A.O. 9. THE LD. A. R. ON THE OTHER HAND SUBMITTED THAT I T HAD SUBMITTED THE DETAILS LIKE NAME OF THE PARTIES, PARTYWISE DETAILS OF SALES, DESCRIPTION OF THE ITEMS SOLD. THE YEAR IN WHICH THE AMOUNTS WRITTEN O FF WAS OFFERED TO TAX AND THE DATE OF LAST PAYMENT RECEIVED. THE LD. A.R. FUR THER SUBMITTED THAT THE MAJOR WRITE OFF PERTAINS TO GCPTCL OF RS.1,07,67,74 2/- WHICH WAS DUE FOR MORE THAN 3 YEARS. THE LD. A.R. THUS SUBMITTED THAT IT HAD FURNISHED THE ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 5 NECESSARY EVIDENCE FOR WRITE OFF OF BAD DEBTS ALONG WITH MAJOR AMOUNT AND OTHER DETAILS. HE THUS SUPPORTED THE ORDER OF CIT ( A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT (A) WHILE ALLOWING THE CLA IM OF THE ASSESSEE HAS GIVEN A FINDING THAT THE ASSESSEE HAD SUBMITTED COM PLETE PARTICULARS WITH RESPECT TO ITS CLAIM OF BAD DEBTS U/S. 36(1)(VII). WE FURTHER FIND THAT CIT (A) HAS NOT DOUBTED THE DECISION OF THE ASSESSEE TO WRI TE OFF THE BAD DEBTS. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CIT (A) HAS ALLOWED THE CLAIM OF THE ASSESSEE IN WRITING OFF THE DEBT AS BAD DEBT S. BEFORE US NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE FINDINGS OF CIT (A). WE FURTHER FIND THAT IN THE CASE OF TRF LTD., VS. CIT (2010) 323 ITR 397 (S.C.) THE HONBLE APEX COURT HAS HELD AS UNDER :- AFTER APRIL 1,1989, IT IS NOT NECESSARY FOR THE A SSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECO VERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 11. IN THE PRESENT CASE THE FACT THAT DEBTS HAVE BE EN WRITTEN OFF IN THE ACCOUNTS HAVE NOT BEEN CONTROVERTED BY REVENUE. IN VIEW OF THE AFORESAID FACTS AND IN VIEW OF THE AFORESAID DECISION OF THE HONBLE APEX COURT, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT ( A) AND WE THUS UPHOLD HIS ORDER. THUS THE GROUND OF THE REVENUE IS DISMISSED. ITA NO 116 1/AHD/2009. . ASSESSMENT Y EAR 2004- 05 . 6 12. IN THE RESULT, GROUND NO.3 OF REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 15 2 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) V, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD 1.DATE OF DICTATION 1 - 1 -2013 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 3 / 1 / 2013 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 4 - 1 -2013. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2013 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2013 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2013. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER