DCIT, New Delhi V. M/s Esconet Services Ltd., New Delhi

ITA 1797/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3673 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 13-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: A K BHATIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.1797/DEL/2011 ASSESSMENT YEAR : 2003-04 DY. C.I.T., VS. M/S ESCONET SERVICES LTD. CIRCLE 11(1), N-6, PRATAP BLG., CONNAUGHT NEW DELHI CIRCUS, NEW DELHI PAN NO.AAACE 7532 J (APPELLANT) (RESPONDENT) APPELLANT BY : MS. Y. KAKKAR, SR. DR RESPONDENT BY : SHRI A.K. BHATIA, CA ORDER PER K.G. BANSAL,AM: THE ONLY SUBSTANTIVE GROUND TAKEN BY THE REVENUE IN T HIS APPEAL IS THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF `1,52,28,630/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE AMOUNT WRITTEN OFF BY THE ASSESSEE. 2. BEFORE US, THE LEARNED DR REFERRED TO THE FINDING S OF THE ASSESSING OFFICER AND SUBMITTED THAT THE CONDITIONS PRESCR IBED IN SECTION (36)(1)(VII) AND SECTION 36(2) HAVE NOT BEEN SATISFIED. THE ASSESSEE HAS NOT TAKEN ANY STEP FOR THE RECOVERY OF THE D EBT. THE LEARNED CIT(A) IGNORED THESE PROVISIONS AND THE FACT W HILE ALLOWING THE CLAIM OF THE ASSESSEE REGARDING THE RIGHT OF. 3. IN REPLY, THE LEARNED COUNSEL FOR THE ASSESSEE REFERR ED TO PAGE NOS.21 TO 23 OF THE PAPER BOOK, WHICH CONTAIN THE LE DGER ACCOUNT OF ESCOLIFE FOR THE PERIOD 01.04.2001 TO 31.03.2003 AN D DETAILS OF VARIOUS AMOUNTS WRITTEN OFF, AGGREGATING TO `1,52,28, 630/-. IT IS SEEN 2 THAT THE ACCOUNT WAS DEBITED BY VARIOUS AMOUNTS IN RESP ECT OF EXPENSES INCURRED ON BEHALF OF ESCOLIFE. AS ON 31.03. 2003, THE TOTAL OF THE DEBITS AMOUNTED TO `2,48,87,291/-. THE TOTAL OF THE CREDITS AMOUNTED TO `2,13,06,630/- AND AN AMOUNT OF `35,80, 661/- WAS CARRIED FORWARDED TO THE NEXT YEAR. IN THE CREDITS THERE IS AN AMOUNT OF `92,27,630/- WITH THE NARRATION AMOUNTS WRITTEN OFF -BEING PRIOR PERIOD (FINANCIAL YEAR 2001-02) INCOME REVERSED AS PER DETAI LS ATTACHED. THE DETAILS HAVE BEEN TAKEN TO PAGE NO.21, WHICH SHOWS THE CORRESPONDING AMOUNT ON 27.01.2003. THESE DETAILS ALSO CONTAIN TWO MORE AMOUNTS OF `24.05 LACS AND `35.51 LACS ON 31.03.2003, HOWEVER , THE LEARNED COUNSEL WAS NOT ABLE TO SHOW WHERE THESE AMOUNTS HAVE BE EN CREDITED SO AS TO CONSTITUTE THE WRITING OF THESE AMOUNTS FROM TH E LEDGER ACCOUNT OF THE RESPECTIVE PARTIES. THUS, HE WAS ABLE T O SHOW THAT AN AMOUNT OF `92,27,630/- ONLY WAS WRITTEN OFF FROM THE ACCOUNT OF ESCOLIFE WHICH IS A PART OF THE AMOUNT CONSIDERED IN THIS AND EARLIER YEARS AS INCOME. HOWEVER, HE WAS NOT ABLE TO SHOW AS TO HOW THE BALANCE OF THE AMOUNT WOULD ALSO SAID TO HAVE BEEN WR ITTEN OFF FROM THE BOOKS OF ACCOUNT. IT IS ARGUED THAT THE ASSESSEE IS E NTITLED TO DEDUCT ANY AMOUNT OR PART THEREOF IN COMPUTING THE INCOME, WHICH HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT, PROVIDED T HAT THE SAME HAS BEEN TAKEN INTO ACCOUNT WHILE COMPUTING THE INCOME OF THE CURRENT OR ANY EARLIER PREVIOUS YEAR. IT IS ARGUED THAT AFTER T HE AMENDMENT OF SECTION 36(1)(VI), W.E.F. 01.04.1989, IT IS NOT NECESSA RY FOR THE ASSESSEE TO SHOW THAT THE AMOUNT HAS BECOME BAD IN THIS YEAR. FOR THIS PURPOSE, RELIANCE IS PLACED IN THE CASE OF CIT VS. GLOB AL CAPITAL LIMITED, (2008) 306 ITR 332, AND T.R.F. LIMITED VS. CIT, (201 0) 323 ITR 397. ACCORDINGLY, IT IS REQUESTED THAT THE DEDUCTION MAY B E GRANTED IN RESPECT OF THE AMOUNT OF `92,27,630/- WRITTEN OFF FR OM THE BOOKS OF ACCOUNT AND THE MATTER REGARDING THE BALANCE AMOUNT MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH A DJUDICATION IN ACCORDANCE WITH AFORESAID STATUTORY PROVISIONS AND THE JURISPRUDENCE. 3 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIO NS MADE BEFORE US. IN SO FAR AS THE AMOUNT OF `92,27,630/- IS CONCERNED, THE TWIN CONDITIONS NAMELY, - (I) IT WAS TAKEN INTO ACCOU NT IN COMPUTING THE INCOME OF THIS OR ANY EARLIER PREVIOUS YEAR- AND (II) THE AMOUNT HAS BEEN WRITTEN OFF FROM THE BOOKS OF ACCOUNT, STAND SATI SFIED. IN VIEW OF THE DECISIONS REFERRED BY THE LEARNED COUNSEL, IT IS NO T NECESSARY FOR THE ASSESSEE TO PROVE THAT THE DEBT HAS BECOME BAD IN TH IS YEAR. THEREFORE, IT IS HELD THAT THE LEARNED CIT(A) WAS RIG HT IN ALLOWING THE DEDUCTION OF `92,27,630/-. 4.1 COMING TO THE BALANCE AMOUNT OF `60,10,000/- (` 1,52,28,630 - `92,27,630), THE LEARNED COUNSEL HAS NOT BEEN ABLE TO PROVE THAT THE AMOUNT HAS BEEN ACTUALLY WRITTEN OFF IN THE BOOKS. T HE ACCOUNT OF PAGE NO.21 OF THE PAPER BOOK IS IN THE NATURE OF DET AILS, HOWEVER, CORRESPONDING LEDGER ACCOUNT TO SHOW THE WRITING OFF OF THE AMOUNT HAS NOT BEEN FILED. IT IS SUBMITTED THAT THIS MATTER M AY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICAT ION. THE LEARNED DR HAD NO OBJECTION TO THIS COURSE OF ACTION. ACCORD INGLY, THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE DEDUCTIBILIT Y OF `60,10,000/- IN COMPUTING THE TOTAL INCOME AS PER STATUTORY PROVISI ONS AND THE CASE LAW MENTIONED ABOVE. 5.IN RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED F OR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24.06. 2011. SD/- SD/- ( RAJPAL YADAV ) ( K.G. BA NSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 24.06.2011. NS 4 COPY FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).