DCIT, New Delhi V. M/s Indian Railway Catering & Tourism Corporation Ltd., New Delhi

ITA 1675/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6592 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: P N SHASTRY
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO. 1675/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1675/DEL/2011 A.Y. : 2005-06 DCIT, CIRCLE 11(1), NEW DELHI ROOM NO. 312, CR. BUILDING, NEW DELHI VS. M/S INDIAN RAILWAY CATERING & TOURISM CORPORATION LIMITED, 9 TH FLOOR, BANK OF BARODA BUILDING PARLIAMENT STREET, NEW DELHI 110 001 (PAN/GIR NO. : AAACI7074F) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. M.P. RASTOGI, ADV. & SH. PN SHASTRY, CA DEPARTMENT BY : SMT. MONA MOHANTY, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.1.2 011 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 11,00 ,954/- ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AND ADVANCES. 3. IN THIS CASE ASSESSING OFFICER OBSERVED THAT A SSESSEE HAD MADE PROVISION FOR BAD AND DOUBTFUL DEBTS AND ADVANCES TO THE EXTENT OF ` 27,69,000/-. FURTHER, ASSESSING OFFICER FOUND THAT ASSESSEE HAD ADDED BACK PROVISIONS FOR DOUBTFUL DEBTS TO THE EX TENT OF ` ITA NO. 1675/DEL/2011 2 12,25,772/- AND PROVISIONS FOR DOUBTFUL ADVANCES O F ` 4,42,274/-. ASSESSING OFFICER WANTED THE DETAILS TO THE EXTENT OF ` 11,00,954/- BEING THE REMAINING BALANCE. ASSESSING OFFICER FUR THER OBSERVED THAT THIS AMOUNT WAS NOT ALLOWABLE AND ASSESSEE HAD MADE PROVISIONS AND THE SAID AMOUNTS HAVE NOT BECOME BAD. HENCE, ASSESS ING OFFICER HELD THAT THE A SUM OF ` 11,00,954/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME. 4. UPON ASSESSEES APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS AND HELD AS UND ER:- I HAVE GONE THROUGH THE SUBMISSION FILED BY THE AP PELLANT AND AGREE WITH HIM THAT THE APPELLANT HAS DEBITED AN AMOUNT OF ` 22,28,505/- ONLY AND NOT ` 27,69,000/- UNDER THE H EAD PROVISION FOR DOUBTFUL ADVANCES, DOUBTFUL DEBTS AND BAD DEBT S WRITTEN OFF. OUT OF THIS HE HAS ADDED BACK AN AMOUNT OF ` 16,68 ,046/- IN THE COMPUTATION OF INCOME. THUS, THE ONLY AMOUNT WHICH R EMAINS IN QUESTION IS ` 5,60,459/- ON ACCOUNT OF BAD DEBTS WR ITTEN OFF. TO THIS APPELLANT HAS STATED THAT BAD DEBTS AMOUN TING TO ` 5,60,459/- HAVE ACTUAL BEEN WRITTEN OFF, HENCE, THE QUESTION OF DISALLOWING THE SAME DOES NOT ARISE. SINCE THIS AMOUN T HAS BEEN WRITTEN OFF IN THE BOOKS OF THE ASSESSEE HENCE THE DISALLOWANCE OF THIS AMOUNT CANNOT BE MADE. RELIANCE IS PLACED O N THE DECISION OF THE SUPREME COURT IN CIVIL APPEAL NO. 5 293 OF 2003 IN CIVIL APPEAL NO. 5294 OF 2003 IN THE CASE OF TRF LTD. V. C.I.T. WHEREIN THE APEX COURT OBSERVED THAT INCOME TAX SE C 36(1)(VII) DEDUCTION FOR BAD DEBTS HELD THE LEGAL POSITION PRIOR TO 1 ST APRIL, 1989 WAS THAT THE ASSESSEE HAD TO ESTABLISH THAT THE DEBT ADVANCE HAS BECOME IRRECOVERABLE. HOWEVER, THIS POS ITION OF LAW ITA NO. 1675/DEL/2011 3 WAS ALTERED BY DELETING THE WORD ESTABLISHED; AND POST APRIL 1 ST , 1989 THE ASSESSEE NEED NOT ESTABLISH SO IF BAD DE BTS ARE WRITTEN OFF IN BOOKS, IT IS ENOUGH TO BECOME ELIGIB LE FOR DEDUCTION. THUS, ONCE THE BAD DEBTS ARE WRITTEN OFF IN THE BOO KS OF ACCOUNT THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON THAT ACCOUNT. AS PER THE ABOVE DISCUSSION THE ASSESSEE IS ENTITLE D TO CLAIM THE BAD DEBTS AMOUNTING TO ` 5,60,459/- AS THE SAME HAS BEEN WRITTEN OFF IN THE BOOKS AND THE REMAINING AMOUNT HAVE NEVER BEEN CLAIMED AS A DEDUCTION BY THE APPELLANT. AS S UCH THE ADDITION OF ` 11,00,954/- IS HEREBY DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT A SSESSING OFFICER HAS TOTALLY ERRED IN HOLDING THAT ASSESSEE HAS DEB ITED ` 27,69,000/- UNDER THE HEAD PROVISION FOR DOUBTFUL ADVANCE AND BAD DEBTS. THE ACTUAL AMOUNT IS ONLY ` 22,28,505/- OUT OF WHICH ASS ESSEE HAS HIMSELF ADDED BACK ` 16,68,046/- AND ONLY BALANCE REMAININ G AMOUNT IS ` 560459/-. IT IS ACTUALLY BEEN WRITTEN OFF AND HENCE, THE SAME IS ALLOWABLE. THE CASE LAW AND PROVISION OF LAW AS R EFERRED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO SUPPORT TH E CASE OF ASSESSEE. 6.1 LD. DEPARTMENTAL REPRESENTATIVE IN THIS REGARD, COULD NOT CONTROVERT THE FINDINGS OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS). ACCORDINGLY, WE DO NOT FIND ANY INFIR MITY OR ILLEGALITY IN THE ITA NO. 1675/DEL/2011 4 ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/6/2011 UPO N CONCLUSION OF HEARING. SD/- SD/- [I.P. BANSAL] [I.P. BANSAL] [I.P. BANSAL] [I.P. BANSAL] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES