ITO, Ward- 17(1), New Delhi V. Monnet Industries Ltd., New Delhi

ITA 1731/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6717 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.1731/DEL/2018 Assessment Year 2008-09 ITO, Ward-17(1), New Delhi. v. Monnet Industries Ltd., 3 rd Floor, Mohta Building, 4-Bhikaji Cama Place, New Delhi. TAN/PAN: AAACM0437E (Appellant) (Respondent) Appellant by: None Respondent by: Shri Bhopal Singh, Sr.D.R. Date of hearing: 15 03 2022 Date of pronouncement: 17 03 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The c apt io ne d ap p eal ha s be en f i le d at th e i ns ta nc e o f the Re ven ue a gai ns t t he or der of t he Co mmi s si on er of Inc o me Ta x (Ap pe al s) -X XV II I, Ne w De lh i [ ‘C IT (A )’ i n s hor t] , d ate d 06. 12 .2 01 7 ari si ng f ro m t he a sse ss me nt or der da ted 31 .1 2. 20 15 p as sed b y th e As ses si ng Of f ic er, un de r Se cti on 1 4 3(3 ) r. w Se cti on 24 5 of th e Inc o me T ax Ac t, 19 61 (th e Act ) c onc er ni ng AY 2 0 08- 09 . T he gro un ds of ap pea l r ais ed b y t he a ss es s ee re ad s a s un de r: “ 1 . Wh e t h e r o n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e , t h e L d . C I T ( A ) i s l e g a l l y j u s t i f i e d i n d e l e t i n g d i s a l l o w a n ce o f R s . 2 , 1 6 , 1 7 , 1 5 0 / - o n a c c o u n t o f ‘ b a d - w r i t t e n o f f ” e v e n w h e n t h e a s s e s s e e h a d f a i l e d t o p r o v e t h a t a m o u n t w a s a c t u a ll y l i a b i l i t y a n d t h e c o r r e s p o n d i n g a m o u n t w a s a c t u a l l y o f f e r e d a s i nc o m e i n e a r l i e r y e a r s a n d w i t h o u t c o n s i d e r i n g t h e p r o v i s i o ns o f s e c t i o n I.T.A. No.1731/DEL/2018 2 3 6 ( 1 ) ( v i i ) a n d S e c t i o n 3 6 ( 2 ) o f t h e I n c o m e T a x A c t ( t h e A c t ) ? 2 . Wh e t h e r o n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c as e , t h e L d . C I T ( A ) i s l e g a l l y j u s t i f i e d i n d e l e t i n g t h e a d d i t i on o f R s . 2 , 1 6 , 1 7 , 1 5 0 / - u / s 3 6 ( 1 ) ( v i i ) o f t h e A c t b y i g n o r i n g t h e p r o c e d u r e p r e s c r i b e d b y H o n ’ b l e A p e x C o u r t f o r w r i t e o f f a n am o u n t a s i r r e c o v e r a b l e i n t h e c a s e o f T R F L t d . V s . C I T ( 2 0 1 0 )1 9 0 T a x m a n 3 9 1 ( S C ) . ” 2. W h en the matt er was ca ll ed f o r h e ari ng , n on e a ppea r ed on beh alf of the a ss es see . Ac co rd in gl y, t he matt er was pr o cee de d ex - par te . 3. Ld. D R f or the R eve nu e r ev er sed th e as se ss me nt or de r and su b mitt ed in f ur th e ran ce t ha t it wa s i n cu mbe nt up on t he ass es se e to pro ve th at a mo un t wri tt en of f as bad deb t w as a ct ual li a bil it y a nd cor re sp on di ng a mo unt wa s a ct ua ll y of f ered as in co me in the ea rl ier ye a rs on t he to uc h sto ne of S ec ti on 3 6(1 )( vi i) r. w. Se ct i on 36 (2 ) of the A ct . 4. W e hav e c ar ef ull y con si de re d t he s ub mi ssi on on be ha lf of the Re ven ue a nd pe ru s ed th e a ss es s men t ord er an d th e f ir st ap pe lla te ord er . L d. C IT (A) has d eal t wi th th e i ssu e in f a vo ur of t he as ses se e in f o ll ow in g ter ms . “ 6 . I h a v e c o n s i d e r e d t h e f a c t s o f t h e c a s e , b a s i s o f d i s a l l o w a n c e m a d e b y A O a n d t h e d i r e c t i o n s o f t h e H o n ' b l e I T A T as w e i i a s H o n ' b l e H i g h C o u r t . A s c a n b e s e e n f r o m t h e o r d e r of H o n ' b l e I T A T , s p e c i f i c d i r e c t i o n s w e r e g i v e n t o A O b y r e m a n d i n g th e m a t t e r b a c k t o h i s f i l e t o e x a m i n e t h e m a t t e r i n t h e l i g h t o f d e c is i o n o f H o n ’ b l e S u p r e m e C o u r t i n t h e c a s e o f T R F L t d . v s C I T 3 2 3 I TR 3 9 7 a f t e r p r o v i d i n g o p p o r t u n i t y o f h e a r i n g t o t h e a s s e s s e e . Si m i l a r d i r e c t i o n s w e r e g i v e n b y H o n ' b l e H i g h C o u r t t o e x a m i n e a n d v e ri f y w h e t h e r t h e I.T.A. No.1731/DEL/2018 3 a m o u n t s w r i t t e n o f f a c t u a l l y c r e d i t e d i n t e r m s o f se c t i o n 3 6 ( 2 ) o f t h e A c t . H o w e v e r , a s r e f l e c t e d f r o m t h e a s s e s s m e n t o r d er , A O h a s e x a m i n e d t h e i s s u e o n e a c h a n d e v e r y a s p e c t , e x c e p t a s d i r e c t e d b y H o n ' b i e I T A T a n d H o n ' b l e C o u r t . T h e s o l e b a s i s o f ma k i n g d i s a l l o w a n c e b y A O i s t h a t t h e c l a i m o f t h e a p p e l l an t i s n o t b o n a f i d e . C o n t r a r y t o t h i s , t h e d i r e c t i o n o f h i g h e r j u d i c i a l a u t h o r i t y w a s t o e x a m i n e t h e f a c t s i n t h e l i g h t o f p r o v i s i o n s o f s e ct i o n 3 6 ( 2 ) o f I T A c t a s p e r r u l i n g o f H o n ' b l e S u p r e m e C o u r t i n t h e c a s e o f T R F L t d v s C I T ( S u p r a ) . I n t h i s c a s e , H o n ' b l e S u p r e m e C o u r t h a s a lr e a d y d e c i d e d t h a t t o c l a i m t h e b a d d e b t a s a n e x p e n d i t u r e , i t i s n o t n e c e s s a r y f o r t h e a s s e s s e e t o e s t a b l i s h t h a t t h e d e b t i n f a c t h a s b e c o m e i r r e c o v e r a b l e . I t i s e n o u g h i f t h e b a d d e b t i s w r i tt e n o f f a s i r r e c o v e r a b l e i n t h e a c c o u n t s o f t h e a s s e s s e e . T h u s, t h e b o n a f i d e o f t h e c l a i m i s n o t a b a s i s f o r a l l o w i n g t h e e x p e n d i t ur e . T h i s p o s i t i o n h a s b e e n a c c e p t e d b y t h e d e p a r t m e n t a l s o v i d e C i r c ul a r N o . 1 2 / 2 0 1 6 , d a t e d 3 0 . 0 5 . 2 0 1 6 w h e r e i n , a c c e p t i n g t h e j u d g m e n t o f H o n ' b l e S u p r e m e C o u r t i n t h e a f o r e s a i d c a s e , i t h a s b e e n h el d t h a t c l a i m f o r a n y d e b t o r p a r t t h e r e o f i n a n y p r e v i o u s y e a r s h a l l b e a d m i s s i b l e u / ' s 3 6 (l ) ( v i ) o f t h e A c t ; i f i t i s w r i t t e n o f f a s i r r e co v e r a b l e i n t h e b o o k s o f a c c o u n t o f t h e a s s e s s e e f o r t h e p r e v i o u s y e a r a nd i t f u l f i l l s t h e c o n d i t i o n s s t i p u l a t e d i n s e c t i o n 3 6 ( 2 ) o f t h e A c t . H e r e i n t h e c a s e o f t h e a p p e l l a n t , a s p e r d e t a i l s g i v e n b y i t d u r i n g t he a s s e s s m e n t p r o c e e d i n g s a s w e l l a s a p p e l l a t e p r o c e e d i n g s , t h e en t r i e s o f s a l e / d e b t s a g a i n s t w h i c h t h e b a d d e b t s w r i t t e n o f f h a v e b e e n c l a i m e d , w e r e t a k e n i n t o t h e b o o k s o f a c c o u n t i n e a r l i e r y e ar s w h i c h w e r e b e i n g b r o u g h t f o r w a r d a s o u t s t a n d i n g i n t h e b o o k s of a c c o u n t . T h e l i s t o f s u c h d e b t o r s a n d t h e s a l e a m o u n t s o u t s t a n d in g i n t h o s e y e a r s , h a v e a l r e a d y b e e n f u r n i s h e d b y a p p e l l a n t t o s h o w t ha t t h e a m o u n t s , w h i c h h a v e b e e n c l a i m e d b a d d e b t s w e r e s h o w n a s i n co m e i n r e s p e c t i v e y e a r s . T h u s , t h e f i r s t c o n d i t i o n o f s e c ti o n 3 6 ( 2 ) o f t h e A c t t h a t t h e s a i d d e b t s s h o u l d h a v e r e f l e c t e d a s i n c o m e i n t h e e a r l i e r y e a r s i n t h e b o o k s o f a c c o u n t i s f u l f i l l e d b y a p p e ll a n t . I n r e s p e c t o f s e c o n d c o n d i t i o n t h a t o n l y t h e w r i t i n g o f f s u c h d e bt s i n t h e b o o k s o f I.T.A. No.1731/DEL/2018 4 a c c o u n t i s s u f f i c i e n t f o r c l a i m i n g i t a s a n e x p e n d it u r e i n t h e l i g h t o f t h e d e c i s i o n o f H o n ' b l e S u p r e m e C o u r t i n t h e c a s e of T R F v s C I T ( S u p r a ) i s a l s o f u l f i l l e d a s t h e a p p e l l a n t h a s a l r ea d y t a k e n i n t o c o n s i d e r a t i o n t h e s e d e b t s i n i t s b o o k s o f a c c o u n t an d w r i t t e n o f f a s b a d d e b t s . T h u s , b o t h t h e c o n d i t i o n s a s p e r s e c t i o n 3 6 ( 2 ) o f t h e A c t a r e f u l f i l l e d b y a p p e l l a n t f o r c l a i m i n g t h e a f o r e s ai d a m o u n t a s d e d u c t i o n . H o w e v e r , t h e A O h a s n o t c o m m e n t e d a n y t h in g o n t h e s e a s p e c t s , d e s p i t e o f c l e a r a n d s p e c i f i c d i r e c t i o n s o f H o n ' b e I T A T a n d H o n ' b l e H i g h C o u r t . H e h a s a l t o g e t h e r g o n e i n t o d i ff e r e n t d i r e c t i o n s o f e x a m i n i n g t h e b o n a f i d e o f c l a i m a n d r e p e a t e d t h e e a r l i e r v e r s i o n o f a s s e s s m e n t , w i t h o u t a p p l i c a t i o n o f m i n d a n d w i t ho u t g o i n g t o t h e s p e c i f i c d i r e c t i o n o f h i g h e r j u d i c i a l a u t h o r i t i e s . I n s u c h s i t u a t i o n , t h e d i s a l l o w a n c e m a d e b y A O i s n o t j u s t i f i e d a n d l i a b l e t o b e d e l e t e d . I , t h e r e f o r e , d e l e t e t h e a d d i t i o n m a d e b y h i m a n d a l l ow t h e g r o u n d s t a k e n b y a p p e l l a n t . ” 5. W e no ti ce th at t he as se ss ee ha s gi ve n d et ai ls of t he p art ie s wh ere t he ba d de bt s h av e be en cl ai me d. Th e Ho n’ bl e Su p re me Co ur t in th e ca se of T RF Ltd . vs . CI T, 3 23 IT R 39 7 (S C) h ol d s tha t af te r the a me nd me nt t o Sec ti on 3 6( 1) ( vii ) of t he IT Act , w. e.f . 01. 04 .1 98 9, in or de r to ob ta in de du ct i on in r el at ion t o b ad d eb ts , i t is no t nec es sa r y f o r t he as se ss ee to e sta bl is h tha t th e d e bt, i n f ac t, has bec o me ir re co ver ab le ; an d th at i t is e no ug h if the bad de bt i s wri tt en of f as irr ec ove ra bl e in th e ac c ou nts of th e as se ss ee. It i s n ot in d is pu te th at t he bad de bt is wr it t en of f in th e P rof i t an d L os s Acc ou nt of the as ses se e. On per us al of the s ub mi s sio n s ma de on beh alf of the a ss es s ee bef o re t he C IT ( A), i t is n otic ed t h at th e de bt s cla i med as ba d de b ts a re in t he na tu re of bad de bt s, a nd the ref o re, eli gi bl e f or de du ct i on un de r S ec ti on 3 6(1 )( vi i) r. w. Se ct i on 36 (2 ) of the A ct w it ho ut an y f ur th er i mpe di me nts i n th e lig ht of t he de ci si on of th e Ho n’ bl e Su p re me Co ur t in t he c ase of TR F Lt d. ( s up ra ). W e thu s se e n o err or in th e o rd er of t h e C IT (A ) a nd t hu s de cl ine t o I.T.A. No.1731/DEL/2018 5 int erf er e. 6. In th e res ul t, t he ap pea l of th e Re ve nu e is d is mi ss ed . Order pronounced in the open Court on 17/03/2022. Sd/- Sd/- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17/03/2022 Prabhat