ACIT, New Delhi V. M/s Getit Infomediary Ltd., New Delhi

ITA 118/DEL/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0126 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: T R TALWAR
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. 117 & 118/DEL/2011 ASSESSMENT YEARS: 2006-07 & 2007-08 ACIT, VS. GETIT INFOMEDIARY LTD., CIRCLE 12(1), 8B, BAHADURSHAH ZAFAR MARG, NEW DELHI. NEW DELHI. AABCG7022L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. MONA MOHANTY, SR. DR RESPONDENT BY : SH. T.R. TALWAR, ADV. ORDER PER I.P. BANSAL, J.M. BOTH THESE APPEALS ARE FILED BY THE REVENUE THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) DATED 29 TH OCTOBER, 2010 FOR ASSESSMENT YEARS 2006-07 & 2007-08. GROUNDS OF APP EAL IN BOTH THE YEARS ARE IDENTICAL EXCEPT DIFFERENCE IN FIGURE. GROUNDS OF APPEAL FOR A.Y. 2006- 07 READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS ERRONEOUS, PERVERSE, ILLEGAL AND AGAI NST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,92,860 /- ON ACCOUNT OF BAD DEBTS. 3. THE APPELLANT CRAVES TO LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. FOR A.Y. 2007-08 THE AMOUNT REFERRED IN THE GROUNDS OF APPEAL IS 70,21,854/-. ITA NOS. 117 & 118/D/2011 2 2. IN BOTH THE ASSESSMENT YEARS THE AO HAS DISALLOW ED 25% COMPONENT OF THE BAD DEBTS WRITTEN OFF BY THE ASSES SEE IN ITS BOOKS OF ACCOUNT WHICH WAS DUE FROM GOVERNMENT TELEPHONE DEP ARTMENT. FOR SUCH DISALLOWANCE THE AO HAS RESTED HIS FINDINGS ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THESE DEBT S HAVE BECOME BAD. ACCORDING TO AO THE CHANGE IN LAW, IF ANY W.E .F. 1.4.1989 IS THAT CONDITION REGARDING ESTABLISHING BAD DEBT IN A PART ICULAR FINANCIAL YEAR HAS BEEN REMOVED BUT THE PRIMARY CONDITION OF PROVI NG THAT THE DEBT ITSELF IS BAD STILL REMAIN. IN ABSENCE OF ANY EVID ENCE PRODUCED BY THE ASSESSEE TO SHOW THAT DEBT HAS ACTUALLY BECOME BAD, SUCH CLAIM OF THE ASSESSEE COULD NOT BE ALLOWED. AS IN THE EARLIER Y EARS 25% OF SUCH DEBTS WERE BEING DISALLOWED, THE DISALLOWANCE HAS B EEN MADE IN BOTH THESE YEARS. THESE DISALLOWANCES HAVE BEEN DELETED BY THE LD. CIT(A) BY FOLLOWING THE ORDER OF ITAT DATED 26.6.07 IN RES PECT OF A.Y. 2003-04 THE COPY OF WHICH IS PLACED AT PAGES 13 TO 17 OF TH E PAPER BOOK, WHEREIN RELYING UPON THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. AUTO METERS LTD. 292 ITR 345 (DEL.)ITAT HAS DEL ETED THE ADDITION ON THE GROUND THAT W.E.F. 1.4.1989 THE ONLY CONDITION PREVAILED FOR ALLOWANCE OF BAD DEBT WAS THAT IT WAS TO BE ALLOWED IF IT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT PROVIDED THE OTHER CONDITION LAID DOWN IN SEC. 36(1)(VII) ARE FULFILLED. LD. CIT(A) HAS ALSO REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LIMITED VS. CIT 190 TAXMAN 391 (SC), WHEREIN THE VIEW OF HONBLE DELHI HIGH COURT WAS CONFIRMED AND ITA NOS. 117 & 118/D/2011 3 REFERRING TO AMENDMENT BROUGHT IN SEC. 36(1)(VII) W .E.F. 1.4.1989, IT WAS HELD THAT IT WAS NOT NECESSARY FOR ASSESSEE TO ESTA BLISH THAT DEBT, IN FACT, HAD BECOME IRRECOVERABLE; IT IS ENOUGH IF BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 3. THE REVENUE IS AGGRIEVED BY SUCH FINDING RECORDE D BY LD. CIT(A) AND HENCE HAS FILED THE AFOREMENTIONED APPEALS. 4. AFTER NARRATING THE FACTS RELYING UPON THE ORDER OF AO, IT WAS SUBMITTED BY LD. DR THAT THE DISALLOWANCE WAS RIGHT LY MADE BY THE AO AS ASSESSEE DID NOT PROVE THAT THE DEBTS WHICH HAVE BE EN WRITTEN OFF IN THE BOOKS OF ACCOUNT WERE ACTUALLY BECAME BAD. THEREFO RE, SHE PLEADED THAT DISALLOWANCE HAS WRONGLY BEEN DELETED. 5. ON THE OTHER HAND, RELYING UPON THE ORDER OF CIT (A) AND EARLIER ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR A.Y. 2003-04, THE RELEVANT PORTION OF WHICH HAS BEEN REPRODUCED IN TH E ORDER OF CIT(A), IT WAS SUBMITTED BY LD. AR THAT CIT(A) HAS RIGHTLY GIV EN THE RELIEF TO THE ASSESSEE AND HIS ORDER SHOULD BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. NOW IT HAS BECOME A SET TLED LAW THAT AFTER 1.4.1989 THE ONLY REQUIREMENT TO CLAIM BAD DEBT U/S 36(1)(VII) IS TO WRITE OFF THE SAID DEBT IN THE BOOKS OF ACCOUNT AND IF TH E OTHER CONDITION LAID ITA NOS. 117 & 118/D/2011 4 DOWN IN SEC. 36(1)(VII) ARE FULFILLED THEN DEPARTME NT CANNOT REQUIRE THE ASSESSEE TO ESTABLISH THAT DEBT HAD ACTUALLY BECOME BAD. THIS POSITION OF LAW HAS BEEN MADE CLEAR BY THE AFOREMENTIONED DE CISION OF HONBLE SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT (S UPRA). MOREOVER, WHAT CIT(A) HAS DONE IS THAT HE HAS FOLLOWED THE OR DER OF THE TRIBUNAL ON THIS ISSUE FOR A.Y. 2003-04 AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT(SUPRA). T HERE IS NO DISPUTE ON THE ISSUE THAT AMOUNTS WERE WRITTEN OFF BY THE ASSE SSE AND IT IS CLEAR FROM THE ASSESSMENT ORDER ALSO THAT AO HAS RESTRICT ED THE DISALLOWANCE ONLY TO THE 25% OF THE DEBTS WRITTEN OFF. THE DISA LLOWANCE MADE BY THE AO IS ALSO NOT RESTED ON THE GROUND THAT ASSESSEE D ID NOT FULFILL OTHER CONDITIONS LAID DOWN IN SECTION 36(1)(VII). THEREFO RE, WE ARE OF THE OPINION THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH THE IMPUGNED DISALLOWANCE HAS BEEN DELETED. WE DECLINE TO INTERFERE IN THE ORDERS PASSED BY CIT(A). DEPARTMENTAL APPEALS ARE DISMISSED. 7. IN THE RESULT, THE DEPARTMENTAL APPEALS ARE DISM ISSED IN THE MANNER AFORESAID. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16.3.11 SD/- SD/- (A.K. GARODIA) (I.P. BANSAL) ACCOUNTANT MEMBE R JUDICIAL MEMBER * KAVITA DATED: 16.3.11 ITA NOS. 117 & 118/D/2011 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT