The DCIT(OSD)Circle-8, Ahmedabad V. SCI International Securities Ltd, Ahmedabad

ITA 1847/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9818 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Keywords: Bad and doubtful debts
• Section: 43B

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M DY. CIT (OSD), CIRCLE-8, AHMEDABAD. VS. M/S SCI INTERNATIONAL (P) LTD., 206, SHITAL PLAZA MANINAGAR, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI K. M. MAHESH, SR. DR RESPONDENT BY:- SHRI JAIMIN GANDHI, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS AN APPEAL FILED BY THE REVENUE RAISING FOLLOW ING GROUNDS:- (1) THE LD. CIT(A)XIV, AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN DIRECTING THE AO TO GIVE RELIEF OF RS.842072/- U /S 43B OF THE ACT IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF & ES I AS THE SAME FALLS U/S 36(1)(VA) OF THE ACT. (2) THE LD. CIT(A) XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING BAD DEBTS OF RS.190990/- TREATING IT AS KASAR. 2. THE FIRST ISSUE RELATES TO DISALLOWANCE UNDER SE CTION 43B FOR A SUM OF RS.8,42,072/- RELATING TO EMPLOYEES CONTRIBUTION TO PF & ESI. THE ASSESSEE IS DEALING IN THE BUSINESS OF PROVIDING TO TAL SECURITY SYSTEM. THE AO FOUND THAT ASSESSEE HAS MADE THE BELATED PAY MENT IN RESPECT OF CONTRIBUTION OF EMPLOYEES TO PF & ESI. ACCORDINGLY HE DISALLOWED THE CLAIM INVOKING PROVISIONS OF SECTION 2(24)(X) READ WITH SECTION 36(1)(VA) ITA NO.1847/AHD/2010 ASST. YEAR :2007-08 ITA NO.1847/AHD/2010 ASST. YEAR 2007-08 2 AS ACCORDING TO HIM THE CLAIM CANNOT BE ALLOWED UND ER SECTION 43B. THE LD. CIT(A) ALLOWED THE CLAIM FOLLOWING THE DECISION OF HON. DELHI HIGH COURT IN CIT VS. P.M. ELECTRONICS 220 CTR (DEL) 635 AND THE TRIBUNALS DECISION IN ITA NO.4175/AHD/2007 FOR ASST. YEAR 200 5-06 IN THE CASE OF M/S J.M.C. PROJECTS (INDIA) LTD. VS. DCIT PRONOUNCE D ON 28.3.2008, WHEREIN IT IS HELD THAT IF PAYMENT IS MADE BEFORE F ILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION THEN THE CL AIM CANNOT BE DISALLOWED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE IS SUE IS NOW COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HO N. SUPREME COURT IN CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC ) WHEREIN IT IS HELD THAT CONTRIBUTION TO PF MADE BEFORE DUE DATE OF FIL ING OF RETURN IS ALLOWABLE AS DEDUCTION. THE DELETION OF THE SECOND PROVISO TO SECTION 43B AND THE AMENDMENT TO THE FIRST PROVISO BY THE FINAN CE ACT 2002 WAS TO OVERCOME IMPLEMENTATION OF THE PROVISION AND, THERE FORE, ITS AMENDMENTS ARE CURATIVE IN NATURE AND WOULD APPLY RETROSPECTIV ELY WITH EFFECT FROM 1.4.1988. SIMILAR VIEW WAS FURTHER TAKEN BY HON. DE LHI HIGH COURT IN CIT VS. AIMIL LTD. & SONS (2010) 229 CTR (DEL) 418. ACCORDINGLY THIS GROUND OF REVENUE IS REJECTED. 4. THE SECOND GROUND RELATES TO CLAIM OF BAD DEBT. THE AO FOUND THAT ASSESSEE HAS CLAIMED BAD DEBT AMOUNTING TO RS.1,90, 990/-. THE ASSESSEE FURNISHED THE DETAILS OF THE PARTIES AND THE RELEVA NT AMOUNTS WHICH WERE WRITTEN OFF DURING THE YEAR. THE AO, HOWEVER, DISAL LOWED THE CLAIM ON THE GROUND THAT ASSESSEE HAS NOT PROVED THAT DEBT H AS BECOME BAD. 5. THE LD. CIT(A) ALLOWED THE CLAIM BY HOLDING THAT ONCE AMOUNTS ARE WRITTEN OFF THE CLAIM OF THE ASSESSEE IS ALLOWABLE. LD. CIT(A) FURTHER OBSERVED THAT ASSESSEE IS PROVIDING SERVICES OF GUA RDS TO VARIOUS CLIENTS ITA NO.1847/AHD/2010 ASST. YEAR 2007-08 3 AND BILLS ARE RAISED AGAINST THEM AS PER TERMS AND CONDITIONS OF PROVIDING SERVICES. DEDUCTION OF TAX AT SOURCE IS MADE. THE A SSESSEE CREDITED ITS PROFIT AND LOSS ACCOUNT WITH FULL VALUE OF BILLS BU T THE ASSESSEE RECEIVED THE PAYMENT FROM THE CLIENTS AFTER DEDUCTION OF TDS AND OTHER DEDUCTIONS. THE SAME IS TREATED AS AMOUNT NOT RECOV ERABLE FROM THESE PARTIES AND WERE WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT. ONCE AMOUNT IS NOT FOUND RECOVERABLE AND WRITTEN OFF THEY ARE ALLO WABLE DEDUCTION. 6. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIE W THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). ONCE B AD DEBTS ARE WRITTEN OFF THEN THEY ARE ALLOWABLE AS DEDUCTION IN VIEW OF THE DECISION OF HON. SUPREME COURT IN THE CASE OF CIT VS.M/S HCL COMNET SYSTEM & SERVICES LTD. IN CIVIL APPEAL NO.5800 OF 2008 [ARIS ING OUT OF SLP(C) NO.4575 OF 2008]. THE AO, HOWEVER, MAY LOOK WHETHER TDS ETC. DEDUCTED BY THE CLIENTS HAVE BEEN FURTHER RECOVERED BY THE ASSESSEE FROM THE IT DEPARTMENT. IF IT IS SO THEN SUCH RECOVERY W OULD BE TAXABLE AS SUCH AMOUNT HAS BEEN WRITTEN OFF IN THE CURRENT YEAR AS NOT RECOVERABLE. WITH THE ABOVE OBSERVATIONS WE DISMISS THIS GROUND OF RE VENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 24/9/10. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD, DATED : 24/9/10. MAHATA/- ITA NO.1847/AHD/2010 ASST. YEAR 2007-08 4 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 20 /9/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 22/9/2010 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..