Arvind Anticor Ltd., Ahmedabad V. The Dy.CIT, Circle-1(1)(1), Ahmedabad

ITA 156/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3381 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: S N DIVATIA
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 156/AHD/2016 ( ASSESSMENT YEAR : 2012-13) ARVIND ANTICOR LTD. ARVIND JASODANAGAR CHAR RASTA, N.H. NO. 8, NAROL, VATVA, AHMEDABAD - 382445 / VS. DCIT CIRCLE 1(1)(1), AHMEDABAD. ./ ./ PAN/GIR NO. : AAB CA6 675 R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : S. N. DIVATIA & MEHUL, TALERA, A.RS. / RESPONDENT BY : L. P. JAIN, SR. DR DATE OF HEARING 20/02/2019 !'# / DATE OF PRONOUNCEMENT 26/02/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-01, AHMEDA BAD (CIT(A) IN SHORT), DATED 18.11.2015 ARISING IN THE ASSESSMENT ORDER DATED 30.01.2015 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING A.Y. 2012-13. ITA NO.156/AHD/2016 [ARVIND ANTICOR LTD. VS. DCIT] A.Y. 2012-13 - 2 - 2. THE SUBSTANTIVE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER:- 1.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERR ED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE APPELLANT IN RESPECT OF DISALLOWANCE OF RS. 8,69,195/- IN RESPECT OF BAD DEBTS THOUGH TH ERE IS NO RECOVERY OF SALES MADE DURING THE YEAR UNDER CONSIDERATION TO M /S. KEC INTERNATIONAL LTD. (JABALPUR) AFTER THE ENTRY OF BAD DEBT MADE ON 31-03-2012 AND ONWARDS UP TO TILL DATE. WE RELY ON THE ITAT AHMED ABAD IN CASE OF INCOME-TAX OFFICER, WARD 4(3), AHMEDABAD VS. ICENET NET LTD. (ITA NO. 1575/AHD/2008 DATED 17-08-2010). 2.THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT IN RESPECT OF ADDITION OF EMPLOYEES PF AMOUNT OF RS. 18,940/- AND ESI AMOUNT RS. 3564/- TOTALING TO RS. 22,504/- ON THE GROUND THAT THE APPELLANT HAS FAILED TO CREDIT THE ABOVE AMOUNT WITHIN THE CONFORMITY OF PROVISIONS OF SECTION 36(1)(V)(F) OF THE INCOME-TAX ACT. YOUR APPELLANT HAD PAID THE SAID AMOUNTS BEFORE THE DUE DATE FILING THE RETURN U/S. 139(1) OF THE INCOME TAX ACT. YOUR AP PELLANT RELY ON THE FOLLOWING DECISION IN FAVOUR OF THE APPELLANT THAT ESI/PF IF IT IS PAID ON OR BEFORE FILING INCOME TAX RETURN IS ALLOWABLE. A) M/S ESSAE TERAOKA PVT. LTD. VS DEPUTY COMMISSION ER OF INCOME TAX [2014 (3) TMI 386 KAR HC] DATED FEB 4, 2014 B) COMMISSIONER OF INCOME TAX VERSUS M/S. STATE BAN K OF BIKANER & JAIPUR AND JAIPUR VIDUYT VITARAN NIGAM LTD. [2014 ( 5) TMI 222 RAJ HC] DATED JAN 6, 2014 C) THE COMMISSIONER OF INCOME TAX VS M/S KICHHA SUG AR COMPANY LTD. [2013 (6) TMI 98 UTTARAKHAND HC] DATED MAY 20, 20 13 D) COMMISSIONER OF INCOME TAX, UDAIPUR VS M/S. UDAI PUR DUGDH UTPADAK SAHAKARI SANGH LTD., UDAIPUR [2014 (8) TMI 677 RA JASTHAN HC YOUR APPELLANT PRAYS TO LEAVE TO ADD, ALTER AND OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE FINAL HEARING OF TH E APPEAL. 3. GROUND NO. 1 CONCERNS DISALLOWANCE OF BAD DEBT C LAIM RS. 8,69,195/-. WHEN THE MATTER WAS CALLED FOR HEARING , THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE AFORESAID AMOUNT RE PRESENTS NON- RECOVERY OF A PORTION OF SALES MADE TO M/S KEC INTE RNATIONAL LTD. (JABALPUR) DURING THE YEAR. THE LD. AR CONTENDED T HAT THE DISALLOWANCE HAS BEEN CARRIED OUT BY THE LOWER AUTH ORITIES MAINLY ON THE GROUND THAT THE BAD DEBT HAS BEEN CLAIMED FROM TRANSACTIONS EXECUTED IN THE SAME YEAR AND THUS DEDUCTION IS NOT AVAILABLE FOR ALLEGED BAD DEBT UNDER SECTION 36(1)(VII) READ WITH SECTION 36(2) OF ITA NO.156/AHD/2016 [ARVIND ANTICOR LTD. VS. DCIT] A.Y. 2012-13 - 3 - THE ACT. THE LD. AR SUBMITTED THAT SUCH ACTION OF THE REVENUE IS NOT SUSTAINABLE IN LAW. 4. A PERUSAL OF THE ORDER OF THE AO OF THE CIT(A ) AS RELIED UPON ON BEHALF OF THE REVENUE GIVES AN IMPRESSION THAT THE DEDUCTION HAS BEEN DENIED UNDER 36(1)(VII) MAINLY ON THE GROUND THAT T HE TRANSACTIONS GIVING RISE TO BAD DEBT PERTAINS TO THE FINANCIAL Y EAR 2011-12 (A.Y. 2012-13) ITSELF AND THUS PREMATURE AND SECONDLY THE BONA FIDES OF DEBT BECOMING BAD IS NOT BROUGHT ON RECORD BY THE ASSESS EE. WE ARE NOT IMPRESSED BY EITHER OF THE TWO GROUNDS BROADLY SUMM ARIZED ABOVE. A BARE READING OF SECOND PROVISO TO SECTION 36(1)(VII ) SHOWS THAT NO SUCH FETTERS TOWARDS ALLOWABILITY OF BAD DEBT IN TH E SAME YEAR OF TRANSACTION IS PLACED BY THE STATUTE. ON THE CONTR ARY, THE PROVISO MAKE EXPLICIT THAT ONCE THE AMOUNT OF SUCH DEBT OR A PAR T THEREOF HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE A SSESSEE OF THE PREVIOUS YEAR IN WHICH THE DEBT BECOMES IRREVOCABLE OR OF AN EARLIER PREVIOUS YEAR ., THE DEBT STRUCK OFF AS IRREVOCABLE IS ALLOWABLE AS DEDUCTION. THEREFORE, THE ACT DOES NOT MAKE ANY DISTINCTION BETWEEN THE BAD DEBT ARISING IN THE SAME FINANCIAL YEAR OR ARISING FROM TRANSACTIONS EXECUTED IN EARLIER FINANCIAL YEARS. THUS, WE DO NOT FIND ANY FORCE ON THIS LINE OF REASONING ADOPTED BY THE REVENUE IN THIS REGARD. WE NOW TURN TO THE SECOND REASONING OF THE REVENUE AUTHORITIES THAT IT IS INCUMBENT UPON THE ASSESSEE TO DEMONSTRATE THAT THE DEBT HAS ACTUALLY BECOME BAD BY FACTUAL EVIDENC ES. WE DO NOT FIND MERIT IN THIS LINE OF ARGUMENT EITHER HAVING R EGARD TO THE DECISION ITA NO.156/AHD/2016 [ARVIND ANTICOR LTD. VS. DCIT] A.Y. 2012-13 - 4 - OF THE HONBLE HIGH COURT IN THE CASE OF TRF VS CIT (2010) 323 ITR 397 (SC). THUS, THE WRITING OFF THE BAD DEBT IN TH E BOOKS OF GROUNDS IS SUFFICIENT COMPLIANCE FOR THE PURPOSES OF DEDUCT ION WHERE THE TRANSACTIONS GIVING RISE TO THE DEBTS WERE DULY TAK EN INTO ACCOUNT FOR THE PURPOSES OF DETERMINATION OF TAXABLE INCOME OF THE ASSESSEE. THUS, WE FIND GOOD DEAL OF FORCE IN THE CLAIM OF TH E ASSESSEE. ACCORDINGLY, GROUND NO. 1 CONCERNING BAD DEBT IS AL LOWED IN FAVOUR OF THE ASSESSEE. 5. GROUND NO. 2 TOWARDS CONCERNING DEDUCTION UNDE R SECTION 36(1)(VA) IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 26/02/2019 TANMAY TRUE COPY !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 26/02/ 2019