The ACIT, Circle-4, Surat V. M/s. Span Diagnostics Pvt.Ltd., Surat

ITA 1521/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2072 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAVANSHID R

Judgement Text

IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD BEFORE SHRI MAHAVIR SINGH,JM AND SHRI A.N. PA HUJA,AM ITA NO.1521/AHD/2008 (ASSESSMENT YEAR:2005-06) ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-4 ROOM NO.223, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) VS. M/S. SPAN DIAGNOSTICS PVT. LTD., 173-B, NEW INDUSTRIAL ESTATE UDHANA,SURAT. (RESPONDENT) PAN: AADCS3977Q REVENUE BY : SHRI G.S. SOURYAVANSHI,D.R. ASSESSEE BY : MS URVASHI SHODHAN. ( )/ ORDER A.N, PAHUJA : THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 12- 3-2008 OF THE LD. C.I. T.(A)-III, SURAT, RAISES TH E FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C.I.T. (A) III, SURAT HAS ERRED IN DELETING THE AD DITION MADE ON ACCOUNT OF DISALLOWANCE OF BAD DEBT AMOUNTING TO RS.10,13,935/ - MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A)-III,SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A)-III,SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1,73,87,360/- FILED ON 29-10-2005 BY THE ASSESS EE, MANUFACTURING DIAGNOSTICS PRODUCTS, AFTER BEING PROCESSED U/S 143 (1) OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] WAS SELECTED FOR SCRUTINY WITH THE ITA.NO.1521/AHD/2008 2 ISSUE OF THE NOTICE ISSUED U/S. 143(2) OF THE ACT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE HAD WRITTEN OFF THE FOLLOWING DEBTS:- NAME AMOUNT (RS.) MP BIOMEDICALS INC., USA. 9,09,713/- EQUITECH BIO. 1,04,222/- 2.1 TO A QUERY BY THE AO, THE ASSESSEE EXPLAINE D THAT SINCE MP BIOMEDICALS USA HAD AGREED TO REIMBURSE SALARY & TR AVELLING EXPENSES TO THE FIELD STAFF FOR PROMOTION AND DISTRIBUTION OF THEIR PRODUCTS, A DEBIT NOTE WAS RAISED SHOWING THE AMOUNT OF RS.9,09,713/-AS INCOME UNDER THE HEAD MISCELLANEOUS/OTHER INCOME IN THE EARLIER YEARS. H OWEVER, THE SAID COMPANY DID NOT PAY THE AMOUNT AND THEREFORE, THE AMOUNT WAS WR ITTEN OFF FOR IN THE YEAR UNDER CONSIDERATION. SIMILARLY, AMOUNT OF RS.1,04, 222 ON ACCOUNT OF COMMISSION DUE TO M/S. EQUITECH BIO FOR THE AY 2002-03 WAS AL SO WRITTEN OFF, THE BUSINESS WITH THIS PARTY HAVING BEEN DISCONTINUED. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH WITH SUFFICIENT EVIDENCE THAT REASONABLE STEPS BAS ED ON SOUND COMMERCIAL CONSIDERATIONS FOR RECOVERY OF THE AMOUNT WERE TAKE N. SINCE MP BIOMEDICALS HAD REIMBURSED HALF OF THE AMOUNT IN THE SUBSEQUENT YEAR WHILE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF STEPS TAKEN FOR RECOVERY, THE AO DISALLOWED THE CLAIM. 3. ON APPEAL, THE LD. C.I.T.(APPEALS) ALLOWED T HE CLAIM IN THE LIGHT OF CIRCULAR NO.551 DATED 23-1-1990 ISSUED BY THE CBDT WHILE HOL DING THAT THE ONLY REQUIREMENT U/S. 36(1)(VII) WAS TO WRITE OFF THE IR RECOVERABLE AMOUNT IN THE BOOKS OF ACCOUNTS. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT(A).BOTH THE PARTIES AGREED THAT THE ISSUE IS SQUARELY COVERED BY THE ITA.NO.1521/AHD/2008 3 DECISION OF HONBLE SUPREME COURT IN THE CASE OF TR F LTD. VS. CIT 323 ITR 397 (SC). 4. 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... 4.1. 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, APPAREN TLY THE AMOUNT OF RS.10,13,935/- IS ADMISSIBLE DEDUCTION IN TERMS OF PROVISIONS OF SEC. 36(1)(VII) R.W.S. 36(2) OF THE ACT. THEREFORE, GROUND NO.1 I S DISMISSED. . 5. GROUND NOS.2 AND 3 IN THIS APPEAL BEING MERELY PRAYER NOR ANY SUBMISSIONS HAVING BEEN MADE, DO NOT REQUIRE ANY SE PARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED. 6. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17/2 /2011. SD/- SD/- (MAHAVIR SINGH) (A. N. PAHUJA) JUDICIAL MEMBER. ACCOUNTANT MEMBER. AHMEDABAD. DATED: 17 /02/2011. ITA.NO.1521/AHD/2008 4 S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. M /S. SPAN DIAGNOSTICS PVT. LTD., 173-B, NEW INDUSTRI AL ESTATE, UDHANA,SURAT 2. ACIT,CIRCLE-4, ROOM NO.223,AAYAKAR BHAVAN,MAJURA GATE, SURAT. 3. THE CIT(APPEALS)-III,SURAT. 4. THE CIT CONCERNED. 5. THE DR.,ITAT,D BENCH, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD.