Riasmo Lifesciences Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD)Range-5, Ahmedabad

ITA 1275/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6868 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: VINIT MOONDRAAR
• Keywords: Bad and doubtful debts
• Section: 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO1275/AHD/2009 (ASSESSMENT YEARS:-2005-06) RIASMO LIFESEIENCES PVT. LTD., 69,GREEN PARK, BOPAL ROAD, AMBLI VILLAGE,AHMEDABAD. (APPELLANT) V/S ASSISTANT COMMISSIONER OF INCOME TAX (OSD), RANGE-5, AHMEDABAD. (RESPONDENT) PAN: AACCR 4654A [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI VINIT MOONDRA,AR RESPONDENTS BY:- SHRI R.K. DHANESTA, D.R. O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 3- 3-2009 OF THE LD. C.I.T. (A)-XI, AHMEDABAD, RAISES AN ELABORATE GROUND RELATING TO CLAIM FOR DEDUCTION OF AN AMOUNT OF RS.11,81,505/- ON ACCOUNT OF BAD DEBTS. 2. FACTS, IN BRIEF, AS PER THE RELEVANT OR DERS ARE THAT RETURN DECLARING INCOME OF RS.10,46,635/- FILED ON 30-10-2005 BY TH E ASSESSEE, TRADING IN MEDICINES AND PHARMACEUTICAL DRUGS, AFTER BEING PRO CESSED ON 13-7-2007 U/S. 143(1) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFE RRED TO AS THE ACT), WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF A NOTICE U/ S. 143(2) OF THE ACT ON 26-10- 2006. DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE CLAI MED DEDUCTION OF RS. 11,81,505/- ON ACCOUNT OF BAD DEBTS WRITTEN OFF. SI NCE THESE AMOUNTS WERE ATTRIBUTABLE TO ACCOUNTS ACTIVE DURING THE YEAR UN DER CONSIDERATION WHILE THE ASSESSEE DID NOT ESTABLISH THAT THE DEBTS HAD BECO ME BAD, RELYING ON THE DECISIONS IN THE CASE OF C.I.T. VS. AHMEDABAD ELECT RICITY CO. LTD., 262 ITR 97 ITA .NO.1275/AHD/2009 . 2 (GUJ.) AND SOUTH INDIA SURGICAL COMPANY VS. ACIT 2 87 ITR 62 (MAD.), THE AO DISALLOWED THE CLAIM FOR DEDUCTION OF BAD DEBTS. 3. ON APPEAL, THE LD. C.I.T.(A) UPHELD TH E FINDINGS OF THE AO IN THE FOLLOWING TERMS:- 2.2.2. IT IS SEEN THAT EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF APPEAL PROCEEDI NGS, THE APPELLANT HAS NOT FURNISHED ANY COGENT PROOF/EVIDENCE WITH RE GARD TO ITS CLAIM OF BAD DEBT. THE APPELLANT STILL MAINTAINS CONTACTS WI TH THE CLIENTS BY HAVING USUAL BUSINESS TRANSACTIONS. THEREFORE, IT C ANNOT BE SAID THAT THE DEBTS AS SUCH HAVE BECOME BAD. THEREFORE, HAVIN G CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE FACTS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, I AM OF THE OPINION THAT THE A.O. IS JUSTIFIED IN DISALLOWING THE APPEL LANTS CLAIM OF BAD DEBTS. THEREFORE, THE ADDITION MADE BY THE A.O. AT RS.11,81,505/- IS HEREBY CONFIRMED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD. CIT(A).BOTH THE PARTIES AGREED THAT THE IS SUE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TR F LTD. VS. CIT 323 ITR 397 (SC). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISION RELIED UPON. WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT 32 3 ITR 397 (SC) WHILE ADJUDICATING A SIMILAR CLAIM CONCLUDED AS UND ER: THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1ST A PRIL,1989 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FAC T, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOV ERABLE IN THE ACCOUNTS OF THE ASSESSEE... 5.1. IN THE LIGHT OF VIEW TAKEN BY THE HONBLE APE X COURT IN THEIR AFORESAID DECISION IN TRF LTD.(SUPRA) AND INDISPUTA BLY DEBTS HAVING BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS IN THE YE AR UNDER CONSIDERATION, APPARENTLY THE AMOUNT OF RS.11,81,5 05/- IS ADMISSIBLE ITA .NO.1275/AHD/2009 . 3 DEDUCTION IN TERMS OF PROVISIONS OF SEC. 36(1)(VII) R.W.S. 36(2) OF THE ACT. THEREFORE, GROUND RAISED BY THE ASSESSEE IS ALLOWE D . 6. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 7 IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 8-4-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 8 -4-2011 COPY OF THE ORDER FORWARDED TO: 1. RIASMO LIFESEIENCES PVT. LTD.,69,GREEN PARK, BOP AL ROAD, AMMBLI VILLAGE, AHMEDABAD. 2. ASSISTANT COMMISSIONER OF INCOME TAX (OSD), RAN GE-5, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XI, BARODA 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD .