NAVDEEP CHEMICALS P. LTD, MUMBAI V. ACIT iOSD) CITY-2, MUMBAI

ITA 16/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7874 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVA N, JM ITA NO.16/MUM/2010 : ASST.YEAR 2005-2006 M/S.NAVDEEP CHEMICALS PRIVATE LIMITED 5 TH FLOOR, NEW EXCELSIOR BUILDING A.K.NAYAK MARG, FORT MUMBAI 400 001. PAN : AAACN0294L. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 2(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITESH JOSHI RESPONDENT BY : SHRI SURENDRA KUMAR O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 11.11.2009 IN RELATION TO ASSESSMENT YEAR 2005-2006 . 2. FIRST GROUND IS AGAINST THE CONFIRMATION OF ADDI TION OF RS.2,26,227 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBT. BRIEF LY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEDUCTION FOR THIS SUM WH ICH WAS NOT ALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE C OULD FURNISH ONLY NAMES AND ADDRESSES OF THE DEBTORS AND THE COPIES OF LEDGER A CCOUNTS WERE NOT FILED SHOWING THE ACTUAL WRITING OFF OF THE BAD DEBT. IN THE FIRS T APPEAL THE ASSESSEE FURNISHED CERTAIN DETAILS ABOUT THE DEBTORS TOTALING TO RS.1, 67,591.70 BY CLAIMING THAT THESE REPRESENTED DEBTS RECOVERABLE FROM VARIOUS PARTIES ON ACCOUNT OF SALES IN EARLIER YEARS. THE LEARNED CIT(A) DID NOT AGREE WITH THE AS SESSEES SUBMISSION AND CONFIRMED THE ENTIRE ADDITION MADE BY THE A.O. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS CLEAR THAT BY VIRTUE OF THE JUDGEMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT [(2010) 323 ITR 397 (SC)] THE ASSESSEE IS NOT ITA NO.16/MUM/2010 M/S.NAVDEEP CHEMICALS PRIVATE LIMITED. 2 REQUIRED TO ESTABLISH THAT THE DEBT BECOME BAD IN THE PREVIOUS YEAR, AFTER 1.4.1989. THE ONLY REQUIREMENT IS THAT OF WRITING OFF OF THE AMOUNT OF BAD DEBT IN THE BOOKS PROVIDED THE CONDITIONS OF SECTION 36(2) ARE SATISF IED. THE LEARNED A.R. ARGUED THAT MAJOR DETAILS OF BAD DEBTS WERE FURNISHED BY IT BEF ORE THE LEARNED CIT(A). AS REGARDS THE REMAINING AMOUNT IT WAS SUBMITTED THAT THOSE ALSO REPRESENTED SMALL TRADE DEBTORS WRITTEN OFF IN THIS YEAR. FROM THE FA CTS NOTED ABOVE IT IS SEEN THAT PROPER DETAILS WERE NOT FILED BEFORE THE ASSESSING OFFICER. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT I T WOULD BE JUST AND FAIR IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE M ATTER IS RESTORED TO THE FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING WHETHER THE AMOUNT IN QUESTION HAS BEEN ACTUALLY WRITTEN OFF AS BAD OR NOT AND FURTHER THE CONDITIONS U/S.36(2) ARE SATISF IED OR NOT. IF THESE TWO CONDITIONS ARE FULFILLED, THEN THE DEDUCTION HAS TO BE GRANTED AS PER THE ABOVE NOTED JUDGMENT OF THE HONBLE SUPREME COURT IN T.R.F. (SUPRA) . 4. SECOND GROUND IS AGAINST CONFIRMATION OF DISALLO WANCE OF CLUB SERVICE EXPENSES AMOUNTING TO RS.63,706. AS PER TAX AUDIT R EPORT THE ASSESSEE INCURRED CLUB SERVICE EXPENSES AMOUNTING TO RS.63,706. THE A SSESSING OFFICER HELD THIS AMOUNT AS NOT ALLOWABLE EXPENDITURE AS IT WAS NOT I NCURRED FOR THE PURPOSE OF BUSINESS. THE LEARNED CIT(A), FROM THE DETAILS SUBM ITTED BEFORE HIM, OBSERVED THAT IT INCLUDED PAYMENTS FOR HAIR CUTTING, MASSAG E, YOGA, HEALTH AND FITNESS EXPENSES ETC. INCURRED IN RELATION TO SHRI DEEPAK B HIMANI, SMT.SANDHYA BHIMANI AND SHRI AMIT BHIMANI. HE, THEREFORE, UPHELD THE EN TIRE DISALLOWANCE. 5. BEFORE US THE LEARNED COUNSEL FOR THE ASS ESSEE CONTENDED THAT THE TOTAL CLUB EXPENSES WERE NOT RECORDED BY THE ASSESSEE IN ITS B OOKS OF ACCOUNT. OUT OF CERTAIN DETAILS, HE SUBMITTED THAT PERSONAL EXPENSES WERE B ORNE BY THE DIRECTORS AND THEIR RELATIVES AND ONLY THE EXPENSES RELATING TO BUSINES S OF THE COMPANY WERE DEBITED IN ITA NO.16/MUM/2010 M/S.NAVDEEP CHEMICALS PRIVATE LIMITED. 3 THE BOOKS OF ACCOUNT. WE FIND THAT SUCH DETAILS WER E NOT FILED BEFORE THE ASSESSING OFFICER. UNDER SUCH CIRCUMSTANCES WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF A.O. FOR TAKING A FRESH DECIS ION ON THIS ISSUE AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 18 TH DAY OF MARCH, 2011 . SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 18 TH MARCH, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) V, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.