ACIT 10(1), MUMBAI V. AMICO PESTICIDES LTD, MUMBAI

ITA 176/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75329 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL SURINDERJIT S
• Keywords: Bad and doubtful debts
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO.176/MUM/2012 ( ASSESSMENT YEAR: 2008-09) ASST. CIT 10(1), R.NO.455, 4 TH FLOOR AAYAKAR BHAVAN, M. K. RD, MUMBAI-400 020 VS. AIMCO PESTICIDES LTD. AKHAND JYOTI, 8 TH ROAD, P.B. NO.6822, SANTACRUZ (EAST), MUMBAI 400 051 ! ' ./PAN/GIR NO. AAACA 336K ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#& / APPELLANT BY : S/SHRI M.L. PERUMAL, SURINDERJIT S. $%!#'& / RESPONDENT BY : SHRI NISHIT GANDHI ( )*'+, DATE OF HEARING : 05.12.2013 & 17.01.2014 -./'+, / DATE OF PRONOUNCEMENT : 22.01.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI (CIT(A) FOR SH ORT) DATED 10.10.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09 VIDE ORDER DATED 26.10.2010. 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS THE VAL IDITY OF THE DEDUCTION U/S. 36(1)(VII) OF THE ACT IN THE SUM OF RS.85,92,188/- ALLOWED TO THE ASSESSEE BY THE LEARNED CIT(A) VIDE THE IMPUGNED ORDER IN THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF F ACTS OF THE CASE 2 ITA NO.176/MUM/2012 (A.Y. 2008-09) ASST. CIT V. AIMCO PESTICIDES LTD. ARE THAT THE ASSESSING OFFICER (AO) DISALLOWED THE ASSESSEES CLAIM IN THE ABSENCE OF THE REQUISITE DETAILS, CALLED FOR FROM THE ASSESSEE. IN APPEAL, IT WAS EXPLAINED BY THE ASSESSEE THAT THE AO, AFTER REQUIRING THE DETAILS OF THE BAD DEBTS WRITTEN OFF, HAD NOT ASKED FOR ANYTHING MORE, SO THAT THERE WAS NO OCCASION TO FUR NISH ANY MATERIAL TO ESTABLISH THE SATISFACTION OF SECTION 36(2), THE NON-SATISFACTION OF WHICH STANDS STATED BY HIM AS A PRINCIPAL REASON FOR THE DISALLOWANCE. FURTHER, AS TO THE NATURE OF THE DEBTS WRITTEN OFF, THE SAME WERE ONLY ON ACCOUNT OF SALES EFFECTED, EVIDEN CING THE SAME THROUGH SALE INVOICES, SO THAT THERE WAS NO QUESTION OF NON-SATISFACTION O F THE CONDITION OF SECTION 36(2). THE ASSESSEE STOOD ALLOWED RELIEF BY THE LD. CIT(A) ON THAT BASIS. 3. LIKE SUBMISSIONS WERE RAISED BEFORE US; EACH PAR TY RELYING ON THE ORDER OF THE AUTHORITY BELOW AS FAVORABLE TO IT. IN ADDITION, TH E LD. AR WOULD, WITH REFERENCE TO THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF LORDS DAIRY FARM LTD. VS. CIT [1955] 27 ITR 700 (BOM), CONTEND THAT IT HAS BEEN CLARIFIED BY THE HONBLE COURT THAT WHEN A BUSINESSMAN WRITES OFF AN AMOUNT, THERE IS A PRIMA FACIE EVIDENCE THAT THE SAME IS NOT RECOVERABLE (AT PAGE 708). 4. WE HAVE DULY CONSIDERED THE CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. WITHOUT DOUBT, HAVING BEEN SINCE SETTLED BY THE APE X COURT IN THE CASE OF TRF LTD. VS. CIT [2010] 323 ITR 397 (SC), IT IS NO LONGER NECESSARY FOR THE ASSESSEE TO ESTABLISH THE IRRECOVERABILITY OF THE DEBT WRITTEN OFF TO VAL IDATE ITS CLAIM QUA THE SAME U/S.36(1)(VII) OF THE ACT. THE WRITE OFF OF THE IMPUGNED SUM AS IR RECOVERABLE BY THE ASSESSEE IN ITS ACCOUNTS, OR THE BONA FIDES THEREOF, IS NOT IN DOUBT OR DISPUTE (ALSO REFER SC HEDULE 16 OF THE BALANCE SHEET AT PB PAGE 32). THE RELIANCE BY T HE ASSESSEE ON THE DECISION IN THE CASE OF LORDS DAIRY FARM LTD . (SUPRA) IS THEREFORE NOT CLEAR. THE ONLY ISSUE, THEREFORE, THAT OBTAINS IS AS TO TH E SATISFACTION OF SECTION 36(2), TOWARD WHICH THE ASSESSEE HAS FURNISHED SALE INVOIC ES TO EVIDENCE THE NATURE OF THE DEBTS WRITTEN OFF AS WELL AS OF THE SAME AS HAVING BEEN T AKEN INTO ACCOUNT IN COMPUTING ITS INCOME FOR AN EARLIER YEAR/S (REFER PARA 2.3 OF THE IMPUGNED ORDER). A PERUSAL OF THE RELEVANT DETAILS, AS THE FURNISHED BEFORE THE AUTH ORITIES BELOW, HOWEVER, REVEAL THAT OF THE 3 ITA NO.176/MUM/2012 (A.Y. 2008-09) ASST. CIT V. AIMCO PESTICIDES LTD. TOTAL AMOUNT UNDER REFERENCE, ONLY A SUM OF RS.78.1 4 LAKHS RELATES TO DEBTORS, AND THE BALANCE AMOUNT OF RS.7,78,318/- PERTAINS TO MISCELL ANEOUS BALANCES WRITTEN OFF (PB PAGE 57). THERE IS, THEREFORE, NO QUESTION OF THE SATIS FACTION OF THE CONDITION OF SECTION 36(2), SUBJECT TO WHICH THE DEDUCTION U/S. 36(1)(VII) IS A LLOWABLE, IN RESPECT OF THE SAID SUM. THE FINDING BY THE LD. CIT(A) AS TO THE SATISFACTION OF THE CONDITION OF S. 36(2) QUA THIS PART OF THE ASSESSEES CLAIM U/S. 36(1)(VII) IS CLEARLY ERR ONEOUS AND WITHOUT BASIS IN FACTS. WE ACCORDINGLY CONFIRM THE IMPUGNED ORDER FOR OTHER TH AN THE SUM OF RS.7,78,318/-. THERE BEING NO SEPARATE FINDING BY EITHER OF THE AU THORITIES BELOW WITH REGARD TO THE SUM OF RS.7.78 LACS REPRESENTING MISCELLANEOUS BALANCES WRITTEN OFF, NOR IN FACT ANY REPRESENTATION IN ITS RESPECT BEFORE US BY THE PART IES, WHO IN FACT FAILED TO EVEN DRAW OUR ATTENTION THERETO DURING HEARING, MUCH LESS ARGUE T HEREON, EVEN AS THE TRIBUNAL IS OBLIGED TO DECIDE AN ISSUE BEFORE IT ON THE BASIS OF FINDIN GS OF FACT WITH REFERENCE TO THE MATERIAL ON RECORD, THE MATTER WAS POSTED FOR CLARIFICATION IN THE MATTER. IT WAS EXPLAINED BY THE LD. AR THEREAT THAT THE REFERENCE BY HIM TO THE DECISIO N IN THE CASE OF LORDS DAIRY FARM LTD . (SUPRA) EARLIER WAS ONLY QUA THE SAME. WE HAVE ALREADY NOTED ABSENCE OF ANY EXAMINATION OF THE ASSESSEES CLAIM IN RESPECT OF T HE SAID SUM, WHICH WOULD FALL FOR CONSIDERATION U/S. 37(1) (REFER PARA 3 OF SOF); HAV ING IN FACT NOT BEEN RAISED BEFORE THE A.O., WHILE THERE IS NO FINDING IN ITS RESPECT BY T HE LD. CIT(A). WE ACCORDINGLY ONLY CONSIDER IT FIT AND PROPER UNDER THE CIRCUMSTANCES TO RESTORE THE MATTER QUA THIS PART OF THE ASSESSEES CLAIM BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR NECESSARY EXAMINATION AND ADJUDICATION IN ACCORDANCE WITH LAW, AND AFTER ALLO WING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE IN THE MATTER. WE DECI DE ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 22, 2 014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 1* MUMBAI; 2 DATED : 22.01.2014 4 ITA NO.176/MUM/2012 (A.Y. 2008-09) ASST. CIT V. AIMCO PESTICIDES LTD. 3 . ./A.K.PATEL, PS ! ' #$%& '&$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 4+ ( ) / THE CIT(A) 4. ( 4+ / CIT CONCERNED 5. 5)67 $3+389 , , 89/ , ( 1* / DR, ITAT, MUMBAI 6. 7: ;* / GUARD FILE ! ( / BY ORDER, ) / (* + (DY./ASSTT. REGISTRAR) , ( 1* / ITAT, MUMBAI