M/s Narayan Niryat (I) Pvt. Ltd., V. The ACIT- Circle 5(1),

ITA 129/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0021 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 27-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: P D NAGAR
• Keywords: Depreciation; Opportunity of being heard
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI M.L. GUSIA, ACCOUNTANT MEMBER PAN NO. : AABCN4887E I.T.A.NO. 129/IND/2008 A.Y. : 2004-05 M/S. NARAYAN NIRYAT (I) PRIVATE LIMITED, ACIT, C/O P. D. NAGAR & CO. ( C.A.), CIRCLE 5(1), 403, CITY PLAZA, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P. D. NAGAR, C.A. RESPONDENT BY : SMT. APARNA KARAN, DR O R D E R PER SAINI, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) II, INDORE, DATED 3 RD DECEMBER, 2007, FOR ASSESSMENT YEAR 2004- 05. 2. LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROU ND NO.2 WITH REGARD TO DISALLOWANCE OF DEPRECIATION ON AIR CONDI TIONERS. THE SAME IS, THEREFORE, DISMISSED. -: 2: - 2 3. ON GROUND NO. 1, THE ASSESSEE CHALLENGED THE DISALL OWANCE OF RS. 3,69,789/-. 4. THE LEARNED COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSION AND SUBMITTED THAT THE ASSESSEE CLAIMED DELETION OF THE ABOVE ADDITION CLAIMING IT TO BE BAD DEBT BEFORE THE AUTHORITIES B ELOW. HE HAS, HOWEVER, SUBMITTED THAT ALTERNATE CONTENTION WAS ALSO RAISED BEFORE THE LD. CIT(A) THAT IT IS A BUSINESS LOSS. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAS GIVEN ADVANCES TO TWO PARTIES , NAMELY, KOLON AGROIL LIMITED AND SAM INDUSTRIES LIMITED AGAINST SUPPLY T O SOLVENT PLANT BEING MANUFACTURER OF SOYA DEOILED CAKE. HOWEVER, KOLON A GROIL LIMITED OPERATED THE SOLVENT PLANT ON LEASE AND THE M. D. E XPIRED DURING THE FINANCIAL YEAR 2003-04. THEREFORE, THERE WERE NO PO SSIBILITY OF RECOVERY OF THE AMOUNT DUE TO CLOSURE OF THE BUSINESS HAVING NO ASSETS. M/S. SAM INDUSTRIES LIMITED BECOME SICK INDUSTRIES REGISTERE D WITH B.I.F.R. THEREFORE, AMOUNTS COULD NOT BE RECOVERED. THEREFOR E, THESE WERE BUSINESS LOSSES SUFFERED BY THE ASSESSEE IN THE ORD INARY COURSE OF BUSINESS AND IS ALLOWABLE DEDUCTION U/S 28 OF THE ACT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBM ITTED THAT DESPITE THE SPECIFIC SUBMISSION MADE BEFORE THE LD. CIT(A), THE ISSUE IS -: 3: - 3 NOT DECIDED SPECIFICALLY WITH REGARD TO CLAIM OF BU SINESS LOSS. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE CLAIM OF BUSINESS LOSS WAS NEVER RAISED BEFORE THE A.O. A ND ASSESSEE MERELY CLAIMED IT TO BE A BAD DEBT AND EVEN THE SUBSTANTIA L SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS WITH REGARD TO C LAIM OF BAD DEBT ON THIS ISSUE. THEREFORE, IT BEING A NEW SUBSTANTIAL S UBMISSION, THE MATTER MAY BE RESTORED TO THE FILE OF A.O. FOR RECONSIDERA TION. 6. ON CONSIDERATION OF THE ABOVE SUBMISSION AND FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSI DERATION. THE ASSESSEE NOW SUBSTANTIALLY CLAIMED IT TO BE A CASE OF BUSINE SS LOSS ON THE BASIS OF THE FACTS EXPLAINED ABOVE. SINCE THIS ISSUE IS NEVE R RAISED BEFORE THE A.O. CLAIMING IT TO BE BUSINESS LOSS, THEREFORE, IN OUR VIEW, THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE A.O. THE ASSESS EE THOUGH RAISED THIS PLEA BEFORE THE LD. CIT(A) BUT THE MAIN CLAIM OF TH E ASSESSEE REMAINED THAT IT WAS A BAD DEBT. ON FURTHER CONSIDERATION OF THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE, WE FIND THAT THE ADVANCES WERE GIVEN FOR BUSINESS PURPOSES AND IF ANY LOSS IS SUFFERED O N ACCOUNT OF THE BUSINESS TRANSACTION, THE SAME COULD HAVE BEEN TAKE N INTO CONSIDERATION FOR THE PURPOSE OF GIVING DEDUCTION ON ACCOUNT OF B USINESS LOSS. -: 4: - 4 HOWEVER, SUCH A SUBMISSION IS NOT EXAMINED BY THE A SSESSING OFFICER AT ANY POINT OF TIME AND EVEN THE LD. CIT(A) HAS NOT G IVEN ANY DETAIL FINDINGS ON THIS ISSUE. IT IS A LEGAL ISSUE ARISIN G OUT OF THE FACTS AVAILABLE ON RECORD, THEREFORE, IT WOULD BE REASONABLE AND AP PROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF A.O. WE, ACCORDINGLY, SET-ASID E THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE SAM E TO THE FILE OF A.O. WITH DIRECTION TO RE-DECIDE THIS ISSUE IN THE LIGHT OF THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT IS A BUSIN ESS LOSS SUFFERED IN THE ORDINARY COURSE OF BUSINESS. THE A.O. SHALL GIVE RE ASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSEE MAY ADDUCE ANY FURTHER EVIDENCE IN SUPPORT OF THIS CLAIM BEFORE TH E A.O. 7. AS A RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. AS A RESULT, THE APPEAL IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2009. SD/- SD/- M. L. GUSIA BHAVNESH SAINI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH AUGUST, 2009. CPU* 268