M/s. M.D.Industries., Nashik V. CIT-I, Nashik

ITA 1182/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7571 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 30-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Bad and doubtful debts; Set aside
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI G.S. PANNU, AM I.T.A. NO. 1182/PN/2009: A.Y. 2004-05 M/S. M.D. INDUSTRIES F-82 MIDC AMBAD, NASIK PAN AAEFM 7391 J APPELLANT VS. ADDL. CIT RANGE 1, NASIK RESPONDENT APPELLANT BY : SHRI DEVENDRA JAIN RESPONDENT BY: SHRI HARESHWAR SHARMA ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CITI NASIK DATED 18-3-2009 PASSED U/S 263 OF THE ACT FOR A.Y. 2004-05 ON THE POINT OF DISALLOWAN CE OF BAD DEBTS OF RS. 4,01,621/- U/S 36(1)(VII) OF THE ACT. 2. THE ASSESSEE HAS CLAIMED BAD DEBTS OF RS. 4,01,6 21/- WHICH WAS ALLOWED BY THE ASSESSING OFFICER WHILE CO MPLETING THE ASSESSMENT ON 20-6-2006 ON A TOTAL INCOME OF RS. 1,02,63,731/-. HOWEVER, DURING THE SCRUTINY, T HE CIT NOTICED THAT THE ASSESSMENT ORDER WAS RENDERED ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE G ROUND THAT THE BAD DEBTS OF RS. 4,01,621/- WAS ALLOWED WITHOUT EXAMINING THE DETAILS THEREOF. ACCORDINGLY, THE CI T ENHANCED ITA NO. 1182/PN/09 M.D. INDUSTRIES A.Y. 2004-05 2 THE ASSESSMENT BY RS. 4,01,621/- AND DIRECTED THE A SSESSING OFFICER TO RAISE THE DEMAND. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE CIT WAS NOT JUSTIFIED IN DIRECTING THE DISALLOWANCE OF BAD DEBTS OF RS. 4,01,621/- U/S 36(1)(VII) OF THE ACT. 4. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. WE FIND THAT THE ISSUE RAISED IN THIS APPEAL STANDS COVERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE O F T.R.F. LTD. VS. CIT (2010) 230 CTR (SC) 14 WHEREIN IT HAS BEEN HELD AS UNDER: AFTER 1 ST APRIL 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRI TTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE, HOWEVER, IN THE PRESENT CASE, THE A.O HAS NOT EXAMI NED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEE N UNDERTAKEN BY THE A.O. HENCE, THE MATTER IS REMITT ED TO THE A.O FOR DE NOVO CONSIDERATION OF THE ABOVE MENT IONED ASPECT ONLY AND THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. 6. SO, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD (SU PRA), WE FIND THAT THE CIT WAS NOT JUSTIFIED IN DIRECTING TH E ASSESSING OFFICER TO MAKE DISALLOWANCE OF BAD DEBTS CLAIMED B Y THE ITA NO. 1182/PN/09 M.D. INDUSTRIES A.Y. 2004-05 3 ASSESSEE. KEEPING IN VIEW THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. (SUPRA), WE HOLD T HAT THE ASSESSING OFFICER WAS JUSTIFIED IN ALLOWING THE CLA IM OF THE ASSESSEE. THE ORDER OF CIT IS ACCORDINGLY SET ASIDE AND QUASHED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2011. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 31 ST JANUARY 2011 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT I NASIK (5) THE D.R. A BENCH, PUNE TRUE COPY BY ORDER ASSTT. REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE