M/s. Medi Nova Generics, CHENNAI V. ITO, CHENNAI

ITA 1596/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58067 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 21-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 29-09-2011
• Court: TRIBUNAL
• Department Lawyers: VARGESH KAMAT
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENN AI BEFORE SHRI ABARAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER .. ITA NO.1596/MDS./2011 ASSESSMENT YEA R:2006-07 M/S.MEDI NOVA GENERICS, NO.110,NYNIAPPA NAICKEN STREET, SOWCARPET, CHENNAI 600 079. VS. INCOME TAX OFFICER, BUSINESS WARD XII(2), CHENNAI. PAN AAJPM 6413 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.N.SEETHARAMAN, ADVOCATE DEPARTMENT BY : SHRI VARGESH KAMAT, JC.IT DR DATE OF HEARING : 21.03.12 DATE OF PRONOUNCEMENT : 21.03. 12 O R D E R PER ABARAHAM P GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVA NCE IS THAT THE COMMISSIONER OF INCOME TAX(A) CONFIRMED A DISAL LOWANCE OF ` 2,29,831/- CLAIMED AS BAD DEBTS. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD CLAIM ED AS BAD DEBTS OF ` 2,29,831/- BY EFFECTING A WRITE OFF SUCH AMOUNT, ITA.1596 /MDS/11 2 IN ITS BOOKS. ASSESSING OFFICER WAS OF THE OPINION THAT SUCH CLAIM OF BAD DEBTS WERE ON PARTIES, WHO WERE HAVING CONTINUING TRANSACTIONS WITH THE ASSESSEE AND THERE WAS NO NEED FOR SUCH A WRITE OFF. HE DISALLOWED THE CLAIM . IN ITS APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A), A RGUMENT OF THE ASSESSEE WAS THAT THERE WAS AN ACTUAL WRITE OFF OF BAD DEBTS AND THE CLAIM THEREFORE, HAD TO BE ALLOWED. HOWEVER, THE COMMISSIONER OF INCOME TAX(A) DID NOT ACCEPT TH E CONTENTION OF THE ASSESSEE FOR TWO REASONS. AS PER THE COMMISSIONER OF INCOME TAX(A), ASSESSING OFFICER HA D MENTIONED THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD AGREED FOR ALL ADDITIONS. SECONDLY, AS PER COM MISSIONER OF INCOME TAX(A) THE DEBTS WRITTEN OFF WERE NOT REA LLY BAD, SINCE THE ASSESSEE HAD CONTINUOUS TRANSACTIONS WITH THE SAME PARTIES. HE ,THEREFORE, REFUSED TO GIVE ANY RELIEF TO THE ASSESSEE. 3. NOW BEFORE US,,LD. A.R. STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW SUBMITTED THAT IN VIEW OF THE DEC ISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F. LTD. VS. COMMISSIONER OF INCOME TAX IN [2010] 323 ITR 397 (S C), IT WAS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THA T DEBT HAD ITA.1596 /MDS/11 3 BECOME BAD. ONCE THE WRITE OFF WAS EFFECTED, THE C LAIM HAD TO BE ALLOWED. PER CONTRA LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE PERUSED THE ORDERS OF LOWER AUTHORITIES AND RIVAL CONTENTIONS. NO DOUBT, IT IS MENTIONED BY THE COMM ISSIONER OF INCOME TAX(A) THAT THE AUTHORIZED REPRESENTATIVE OF ASSESSEE AGREED FOR ALL ABOVE ADDITIONS. BUT IN OUR OPINION, THE ASSESSING OFFICER COULD NOT HAVE DISALLOWED A CLAI M, WHICH WAS LEGALLY ALLOWABLE ON AN AGREEMENT BASIS, SINCE TO CLAIM SUCH AN EXPENSE WAS THE RIGHT OF THE ASSESSEE, BASE D ON LAW LAID DOWN OF HONBLE APEX COURT. IT COULD NOT BE CONSIDERED THAT SUCH A VALUABLE RIGHT WAS WAIVED JUST LIKE THA T. LEAVING THIS ASPECT, THERE IS NO CASE FOR THE REVENUE THAT THE DEBTS WERE NOT WRITTEN OFF. THERE IS ALSO NO DISPUTE TH AT SUCH DEBTS WERE TRADING DEBTS COMING INTO THE BOOKS OF THE ASS ESSEE IN THE COURSE OF ITS ORDINARY BUSINESS. IN SUCH A SIT UATION, THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F.LTD.(SUPRA) DEFINITELY COMES TO THE AID OF TH E ASSESSEE. IT HAS BEEN UNEQUIVOCALLY HELD THAT IT WAS NOT NECE SSARY FOR AN ASSESSEE TO ESTABLISH THE IR-RECOVERABILITY OF A D EBT, BUT WHAT ITA.1596 /MDS/11 4 WAS NECESSARY WAS ONLY AN ACTUAL WRITE OFF IN THE A CCOUNTS. ASSESSEE HAVING COMPLIED WITH SUCH CONDITIONS, WAS ELIGIBLE FOR THE CLAIM. WE, THEREFORE, DELETE THE DISALLOWA NCE OF BAD DEBTS. THE ORDERS OF LOWER AUTHORITIES ARE SET ASID E. 5. APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST MARCH, 2012. SD/- SD/- ( VIKAS AWASTHY ) (ABRAHAM P. GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST MARCH, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA.1596 /MDS/11 5