DCIT, Circle -3, Kolkata, Kolkata V. M/s. Indo Arya Central Transport Ltd., Kolkata

ITA 1257/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54641 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: S C BAID
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1257/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. INDO A RYA CENTRAL TRANSPORT LTD. CIRCLE-3, KOLKATA (PAN:AAACI 5611 G) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI D. J. MEHTA FOR THE RESPONDENT: SHRI S. C. BAID DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT: 15.11.2011 . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-I, KOLKATA IN APPEAL NO. 235/CIT(A)-I/CIR-3/08-09 DATED 26.03.2010. ASSESSM ENT WAS FRAMED BY ADDL.CIT, RANGE-3, KOLKATA U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 29.12. 2008. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF BAD DEBTS. FOR THIS, REVENUE RAISED FOLLOWING GROUND NO.1: 1. WHETHER THE CIT(A) IS JUSTIFIED ON FACTS AND IN LAW IN DIRECTING THE A.O. TO ALLOW THE CLAIM OF BAD DEBTS OF RS.22,84,000/- MERELY ON THE BASIS OF WRITING OFF OF THE BAD DEBTS MECHANICALLY AFTER ONE YEAR WITHOUT ANY MATERIAL TO FORM A BELIEF THAT THE DEBTS WERE IRRECOVERABLE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LOWER AUTHORITIES HAVE REACHED TO A CONCURRENT FINDING THAT THE ASSESSEE CLAIMED BAD DEBTS IN THE P & L ACCOUNT AMOUNTING TO RS.22.84 LACS AND ASSESSEE SUBMITTED COMPLETE DETAILS I.E. NAME OF PARTIES, AMOUNT WRITT EN OFF AGAINST EACH PARTY AND CLAIMED THIS AS BAD DEBTS FOR BEING ELIGIBLE FOR DEDUCTION U/S. 36( 1)(VII) OF THE ACT. ACCORDING TO ASSESSEE, THESE ARE BAD DEBTS, AND AS PER INDUSTRY NORM AND P RACTICE OF THE COMPANY, MAXIMUM CREDIT PERIOD ALLOWED IS 90 DAYS AND ONCE THESE PAYMENTS A RE NOT RECEIVED WITHIN SIX MONTHS, IT IS ALARMING CASE TO THE MANAGEMENT FOR RECOVERY. BUT IN THE PRESENT CASE, MANAGEMENT DID ITS BEST EFFORTS BUT COULD NOT RECOVER, HENCE WRITTEN O FF THE AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE BEFORE LOWER AUTHORITIES AND EVEN NOW BEFO RE US STATED THAT IN CASE THE AMOUNT IS 2 ITA 1257/K/2010 M/S. INDO ARYA CENTRAL TRANSPORT LTD..A.Y. 06-07 RECEIVED IN FUTURE YEARS SAME WILL BE OFFERED FOR T AXATION. WE FIND THAT THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 323 IT R 397 (SC), WHEREIN IT IS HELD THAT THE DISALLOWANCE OF BAD DEBTS ON THE GROUND THAT THE AS SESSEE HAS NOT PRODUCED SUFFICIENT EVIDENCE TO SHOW THAT REASONABLE STEPS WERE TAKEN TO RECOVER THE DEBT. HOWEVER, THERE IS NO DISPUTE THAT THE ABOVE AMOUNT WAS DULY WRITTEN OFF IN ASSESSEES BOOKS OF ACCOUNT. ON THE ABOVE FACTS, THE DECISION OF HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED (SUPRA), WOULD BE SQUARELY APPLICABLE WHEREIN, THEIR LORDSHIPS HELD AS UNDER: AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE IN COME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRR ECOVERABLE : IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. WE FIND THAT HONBLE APEX COURT HAS LAID DOWN THE P RINCIPLE THAT ONCE THE ASSESSEE WRITTEN OFF THE BAD DEBTS IN ITS BOOKS OF ACCOUNT THERE IS NO O THER REQUIREMENT TO PROVE THAT THE AMOUNT HAS ACTUALLY BEEN BAD. ONCE THIS IS THE POSITION AND A SSESSEE HAS MADE A WRITE OFF IN ITS BOOKS OF ACCOUNT, CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF TH E ASSESSEE. WE CONFIRM THE SAME. APPEAL OF REVENUE IS DISMISSED. 4. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED :15 TH NOVEMBER, 2011 /0 %12 3 JD.(SR.P.S.) . 4 , 5 '6- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT DCIT, CIRCLE-3, KOLKATA. 2 ,-*+ / RESPONDENT, M/S. INDO ARYA CENTRAL TRANSPORT LTD. , 1C, BALLYGUNGE CIRCULAR ROAD, KOLKATA-19. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . => ,% / DR, KOLKATA BENCHES, KOLKATA - ,/ TRUE COPY, .%?/ BY ORDER, 2 /ASSTT. REGISTRAR .