The DCIT, Circle-5, Ahmedabad V. M/s. Rajni Combustion Pvt.Ltd., Ahmedabad

ITA 1849/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6693 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TUSHAR J SHAH
• Keywords: Bad and doubtful debts
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.1779/AHD/2009 [ASSTT. YEAR : 2005-2006] RAJNI COMBUSTION PVT. LTD. 505/506, SHAPATH-II, OPP: RAJPATH CLUB SARKHEJ GANDHINAGAR HIGHWAY BODAKDEV, AHMEDABAD. PAN : AABCR 7736 C VS. DCIT, CIR.5 AHMEDABAD. ITA NO.1849/AHD/2009 [ASSTT. YEAR : 2005-2006] DCIT, CIR.5 AHMEDABAD. VS. RAJNI COMBUSTION PVT. LTD. 505/506, SHAPATH-II, OPP: RAJPATH CLUB SARKHEJ GANDHINAGAR HIGHWAY BODAKDEV, AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TUSHAR J. SHAH REVENUE BY : SHRI K. MADHUSUDAN O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THESE TWO APPEALS ONE EACH BY THE ASSESSEE AND THE REVENUE ARE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI, AHMEDABAD DATED 24.03.2009 ARISING OUT OF THE ORDER OF THE ASSESSIN G OFFICER PASSED UNDER SECTION 143(3) THE INCOME TAX ACT, 1961. FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF BOTH THESE APPEALS BY THIS COMMON ORD ER. 2. FIRST WE SHALL TAKE UP THE ITA NO.1779/AHD/2009 (ASSESSEES APPEAL). GROUND NO.1 OF THE ASSESSEES APPEAL READ S AS UNDER: ITA NO.1779 AND 1849/AHD/2009 -2- 1. THE LD.AO HAD DISALLOWED A SUM OF RS.10,58,327/ - ON ACCOUNT OF WARRANTY COSTS. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE IS DERIVING INCOME FROM TRADING I N INDUSTRIAL BURNERS AND SPARE PARTS. THAT ON SUCH INDUSTRIAL BURNERS ONE Y EAR WARRANTY IS ALLOWED. THAT THE ENTIRE SALE PROCEEDS IS TAKEN AS THE INCOM E OF THE ASSESSEE, THEREFORE, THE ASSESSEE MADE PROVISION FOR EXPENDIT URE LIKELY TO BE INCURRED IN FULFILLING THE WARRANTY IN THE SUBSEQUE NT YEAR. THAT THE PROVISION IS MADE AT THE RATE OF 1.5% OF THE SALES. CONSIDERING THE FACTS OF THE CASE, SUCH PROVISION FOR THE EXPENDITURE TO BE INCURRED BY THE ASSESSEE IN FULFILLING THE WARRANTY OF ONE YEAR IS QUITE FAIR AND REASONABLE, THE SAME SHOULD BE ALLOWED. HE ALTERNATIVELY SUB MITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE MADE PROVISIO N OF RS.10,58,327/- AND AT THE SAME TIME WRITTEN BACK THE PROVISION OF RS.9,19,458/- MADE IN THE LAST YEAR. THUS, THE NET AMOUNT CLAIMED AGAINS T THE WARRANTY PROVISION IN THE YEAR UNDER CONSIDERATION WAS ONLY RS.1,38,869/-. THEREFORE, IF THE ASSESSEES CLAIM IS NOT ACCEPTED ON MERIT, THEN THE DISALLOWANCE CAN BE ONLY RS.1,38,869/- AND NOT RS.1 0,58,327/- DISALLOWED BY THE AO. 4. THE LEARNED DR, ON THE OTHER HAND, STATED THAT T HE ASSESSEE IS ONLY A TRADER NOT THE MANUFACTURE OF INDUSTRIAL BURNER. THE WARRANTY OF ANY PRODUCT IS PROVIDED BY THE MANUFACTURER AND NOT TRA DER. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS SPECIF ICALLY ASKED ASSESSEE TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CONTENTIO N THAT FULFILLING WARRANTY IS RESPONSIBILITY OF THE ASSESSEE AND NOT MANUFACTURER. HE ALSO DIRECTED THE ASSESSEE TO PRODUCE EVIDENCE OF THE EX PENDITURE ACTUALLY ITA NO.1779 AND 1849/AHD/2009 -3- INCURRED IN FULFILLING THE WARRANTY. THE ASSESSEE WAS UNABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM AND THEREFORE THE AO RIGHTLY HELD THAT THE PROVISION IS ONLY A CONTINGENT LIABILITY. HE F URTHER RELIED UPON THE ORDER OF THE AO AS WELL AS THE CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE AO HAS RECORDED THE FOLLOWING FINDINGS: 4.1 THE CONTENTIONS RAISED BY THE ASSESSEE HAVE DU LY BEEN CONSIDERED. THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNT, THE EXPENSES INCURRED EITHER ACTUALLY OR ON THE BASIS O F APPROVAL ARE TO BE DEDUCTIBLE. THE ASSESSEE, WAS THEREFORE REQUESTE D, TO FURNISH THE DETAILS OF EXPENDITURES ACTUALLY INCURRED BY IT TOW ARDS THE WARRANTY. SINCE THE EXPENSES PROVIDED ON ESTIMATED BASIS CAN NOT BE ALLOWED, IN ANTICIPATION THAT IT WOULD ACTUALLY BE INCURRED. TH E EXPENDITURE MUST BE TOWARDS ACTUALLY EXISTING LIABILITY WHICH IS DED UCTIBLE FOR INCOME- TAX PURPOSE. SIMPLY FOOTING OF MONEY ASIDE, WHICH M AY BECOME EXPENDITURE IN FUTURE ON THE HAPPENING OF AN EVENT, IS NOT EXPENDITURE. THE PROVISION FOR FUTURE WARRANTY EXPE NSES IS DEFINITELY CONTINGENT LIABILITY AND THE SAME CANNOT BE ALLOWED U/S.37 OF THE ACT. THE FACT OF THE DECISION RELIED BY THE ASSESSEE IS NOT SIMILAR TO THE ASSESSEE'S CASE AND THEREFORE, NOT APPLICABLE. 4.2 THE ASSESSEE IS IN SIMILAR BUSINESS FOR THE YEA RS AND THIS IS NOT A FIRST YEAR. THE ASSESSEE HAS NOT FURNISHED ANY DE TAILS OF THE EXPENDITURE, IF ANY INCURRED ACTUALLY IN PRECEDING YEAR OR IN PAST YEARS SO AS TO SUPPORT ITS CLAIM AND ASCERTAINMENT OF QUANTIFICATION OF EXPENDITURE. BESIDES, THE ASSESSEE IS AN AUTHORISED DEALER OF THE PRODUCER AND WARRANTY/ GUARANTEE IS USUALLY THE RES PONSIBILITY OF THE MANUFACTURER. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE BEING A DISTRIBUTOR / DEALER, PROVIDING SERVICES CONNECTED WITH SALES TO ITS CUSTOMERS, THE EXPENSES CONNECTED WITH THE SALES AN D SERVICES, WARRANTY, IF ANY, ETC HAVE ALREADY BEEN DEBITED UND ER THE VARIOUS OVERHEADS THE ASSESSEE HAS ALL INFRASTRUCTURES FOR ITS BUSINESS FOR PROVIDING SALES SERVICES. THE ASSESSEE HAS ALSO NOT BROUGHT ON RECORD ANY DETAILS OR EVIDENCES IN CONNECTION WITH THE WAR RANTIES PROVIDED AND EXPENSES BORNE BY IT FOR THE WARRANTIES EITHER DURING THE YEAR OR IN PAST YEARS SINCE THE ASSESSEE IS INCURRING VARIO US EXPENSES IN ITA NO.1779 AND 1849/AHD/2009 -4- CONNECTION WITH SALES SERVICES UNDER THE VARIOUS OV ERHEADS, NO SEPARATE DEDUCTION FOR THE PROVISIONS CAN BE ALLOWE D ON THIS GROUND ALSO, THE PROVISIONS MADE FOR WARRANTY IS NOT ADMIS SIBLE THE CLAIM OF THE ASSESSEE IS THEREFORE, REJECTED. THE DISALLOWAN CE OF RS.10,58,327/- IS MADE TO THE TOTAL INCOME. 6. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT THE FACTUALLY FIN DINGS RECORDED BY THE AO. THE LEARNED DR HAS RIGHTLY STATED THAT WHEN A WARRANTY IS PROVIDED BY THE MANUFACTURER FOR ANY PRODUCT IT IS THE LIABI LITY OF THE MANUFACTURER TO FULFILL SUCH WARRANTY. DURING THE COURSE OF HEA RING BEFORE US, WE HAD SPECIFICALLY ASKED THE ASSESSEES COUNSEL WHETHER T HERE IS ANY AGREEMENT BETWEEN THE ASSESSEE AND THE MANUFACTURER WHICH MAK ES THE ASSESSEE LIABLE FOR FULFILLING THE WARRANTY. THE ASSESSEE D ENIED THE EXISTENCE OF SUCH WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE MANUFACTURER. THE ASSESSEE WAS ALSO UNABLE TO POINT OUT THE EXPENDITU RE INCURRED BY IT IN FULFILLING THE WARRANTY EITHER IN THE YEAR UNDER CO NSIDERATION OR IN THE PRECEDING YEAR. IN FACT, WHATEVER IS THE PROVISION MADE BY THE ASSESSEE ON 31 ST MARCH OF ONE YEAR, THE SAME IS REVERSED ON THE 1 ST APRIL OF THE NEXT YEAR. IT WOULD BE EVIDENT FROM WARRANTY ACCOUNT OF ASSESSEE PRODUCED BEFORE US FOR THE YEAR UNDER CONSIDERATION AS WELL AS PRECEDING AND SUBSEQUENT YEAR. THE SAME IS REPRODUCED BELOW: WARRANTIES ON SALES LEDGER ACCOUNT 1-APRI-2003 TO 31-MAR-2004 DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1-4-2003 DR. WARRANTIES ON SALES PAYABLE JOURNAL 7 8,07,527.00 31-3-2004 CR WARRANTIES ON SALES PAYABLE JOURNAL 999 9,19,458.00 9,19,458.00 8,07,527.00 DR. CLOSING BALANCE 1,11,931.00 9,19,458.00 9,19,458.00 WARRANTIES ON SALES LEDGER ACCOUNT 1-APRI-2004 TO 31-MAR-2005 DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1-4-2004 DR. WARRANTIES ON SALES PAYABLE JOURNAL 45 9,19,458.00 31-3-2005 CR WARRANTIES ON SALES PAYABLE JOURNAL 1597 10,58,327.01 10,58,327.01 9,19,458.00 DR. CLOSING BALANCE 1,38,869.01 ITA NO.1779 AND 1849/AHD/2009 -5- 10,58,327.01 10,58,327.01 WARRANTIES ON SALES LEDGER ACCOUNT 1-APRI-2005 TO 31-MAR-2006 DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 1-4-2005 DR. WARRANTIES ON SALES PAYABLE JOURNAL 23 10,58,327.01 31-3-20056CR WARRANTIES ON SALES PAYABLE JOURNAL 2028 15,81,922.00 10,58,327.01 10,58,327.01 DR. CLOSING BALANCE 5,23,594.99 15,81,922.00 15,81,922.00 FROM THE ABOVE, IT IS EVIDENT THAT THE PROVISION OF RS.9,19,458/- MADE ON 31-3-2004 WAS REVERSED ON 1 ST APRIL, 2004. SIMILARLY, THE PROVISION OF RS.10,58,327/- MADE ON 31-3-2005 WAS REVERSED ON 1- 4-2005. IN VIEW OF THE ABOVE, WE AGREE WITH THE FINDINGS OF THE LOWER AUTHORITIES THAT ON THE FACTS OF THE CASE OF THE ASSESSEE, THE DEDUCTION FO R THE PROVISION OF WARRANTY CANNOT BE ALLOWED. HOWEVER, WE FIND FORCE IN THE ALTERNATE CONTENTION OF THE ASSESSEES COUNSEL. THE AO CAN D ISALLOW ONLY THE ACTUAL DEDUCTION CLAIMED BY THE ASSESSEE BY WAY OF DEBIT TO THE PROFIT AND LOSS ACCOUNT. IT IS NOT IN DISPUTE THAT DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, DEBIT T O THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF WARRANTY WAS ONLY RS.1,38,869 /-, THEREFORE, THE DISALLOWANCE ON ACCOUNT OF WARRANTY PROVISION IS SU STAINED AT RS.1,38,869/-. ACCORDINGLY, THE ASSESSEE WILL GET RELIEF OF RS.9,19,458/-. 7. THE GROUND NO.2 OF THE ASSESSEES APPEAL IS AGAI NST DISALLOWANCE OF RS.30,000/- OUT OF TELEPHONE EXPENSES, WHILE GRO UND NO.2 OF THE REVENUES APPEAL IS AGAINST THE RELIEF OF RS.26,102 /- ALLOWED BY THE CIT(A) AGAINST THE DISALLOWANCE OF RS.56,102/- MADE BY THE AO. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE AO DISALLOWED THE SUM OF RS.56,102 /- OUT OF TELEPHONE EXPENSES ON THE GROUND THAT CERTAIN TELEPHONE/MOBIL E PHONE WERE AT THE PREMISES BELONGING TO THE SISTER CONCERN. THE CIT( A) REDUCED THE ITA NO.1779 AND 1849/AHD/2009 -6- DISALLOWANCE OF RS.56,102/- TO RS.30,000/-. THE AO HAS NOT SPECIFIED AGAINST THE TOTAL BILL OF RS.56,102/-, HOW MUCH AMO UNT WAS TOWARDS LAND LINE PHONE AND HOW MUCH OF THE MOBILE PHONE. SO FA R AS LAND LINE IS CONCERNED, IF IT IS INSTALLED IN THE BUSINESS PREMI SES OF THE ASSESSEES ASSOCIATE CONCERN AND NOT THE ASSESSEES PREMISES, CERTAINLY THE EXPENDITURE CANNOT BE ALLOWED IN THE CASE OF THE AS SESSEE. HOWEVER, MOBILE PHONE BEING USED BY THE DIRECTOR OR THE EMPL OYEES OF THE ASSESSEE, EVEN IF IT HAS ADDRESS OTHER THAN THE ASS ESSEES BUSINESS PREMISES, IT CAN BE USED FOR THE PURPOSE OF THE ASS ESSEES BUSINESS. IN VIEW OF THE ABOVE FACTS, IN OUR OPINION, THE CIT(A) RIGHTLY SUSTAINED PART ADDITION. WE THEREFORE UPHOLD THE ORDER OF THE CIT (A) ON THIS ISSUE AND REJECT GROUND NO.2 OF THE ASSESSEE AS WELL AS THE R EVENUES APPEAL. 9. GROUND NO.3 OF THE ASSESSEES APPEAL IS AGAINST DISALLOWANCE OF RS.2,00,000/- ON ACCOUNT OF TRAVELING EXPENSES. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE DISALLOWANCE IS MADE BY THE AO ON LUMPSUM BASIS WIT HOUT POINTING OUT ANY SPECIFIC ITEM OF DISALLOWABLE NATURE. THE ASSE SSEE HAS FURNISHED COMPLETE DETAILS OF THE TRAVELING EXPENDITURE BEFOR E US AND HAS ALSO STATED THAT SUCH DETAILS WERE FURNISHED BEFORE THE AO. WE FIND THAT THE ASSESSEE IS DERIVING INCOME FROM TRADING IN INDUSTRIAL BURNE R AND SPARE PARTS AND IT IS HAVING ELEVEN BRANCHES IN VARIOUS CITIES. THE T URNOVER OF THE ASSESSEE IS MORE THAN SEVEN CRORES. CONSIDERING THESE FACTS , INCURRING OF TRAVELING EXPENDITURE IS INEVITABLE. IN VIEW OF THE ABOVE, W E DO NOT FIND ANY JUSTIFICATION IN SUSTAINING THE DISALLOWANCE OF RS. 2,00,000/- OUT OF TRAVELING EXPENSES ON AD HOC BASIS. THE SAME IS DELETED. 10. GROUND NO.4 OF THE ASSESSEES APPEAL READS AS U NDER: ITA NO.1779 AND 1849/AHD/2009 -7- 4. THE LD.CIT(A) HAD DISALLOWED A SUM OF RS.29K490 /- ON ACCOUNT OF STAMP DUTY PAID IN CASH U/S.40A(3). THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM. 11. WE FIND THAT THE AO MADE DISALLOWANCE OF RS.29, 045/- UNDER SECTION 40A(3) WITH THE FOLLOWING FINDINGS: 5. ON VERIFICATION OF THE LEGAL EXP. ACCOUNT, IT I S NOTICED THAT THE ASSESSEE HAD DEBITED RS.24,770/- AND RS.1,20,45 0/- IN CASH ON 25.01.2005. THE PAYMENTS ARE CLEARLY IN CONTRAVENT ION OF THE PROVISIONS OF SEC. 40A(3) OF THE IT ACT, 1961. THE REFORE, 20% OF THESE EXPENSES IS NOT ALLOWED AS DEDUCTION. ACCORD INGLY, DISALLOWANCE OF RS.29,045/- AND ADDED TO THE TOTAL INCOME. 12. AT THE TIME OF HEARING BEFORE US, THE ONLY EXPL ANATION GIVEN BY THE ASSESSEE WAS THAT THE EXPENDITURE WAS INCURRED FOR PURCHASE OF STAMP DUTY IN RESPECT OF LOAN AGREEMENT. NO SUCH EXPLAN ATION APPEARS TO HAVE BEEN GIVEN BEFORE THE AO. THEREFORE, IN OUR OPINION , THIS ISSUE NEEDS RE- EXAMINATION AT THE END OF THE AO. WE THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES ON THIS POINT AND RESTORE THE MATTER BA CK TO THE FILE OF THE AO FOR RE-ADJUDICATION IN ACCORDANCE WITH LAW. 13. LAST GROUND OF THE ASSESSEES APPEAL READS AS U NDER: 5. THE LD.AO HAD DISALLOWED A SUM OF RS.7,236/- AS A PRIOR PERIOD EXPENSES. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING THE SAME IN HIS ORDER AND THEREBY UPHOL DING THE SAID DISALLOWANCE. 14. IT IS A SETTLED LAW THAT FOR CLAIMING PRIOR PER IOD EXPENDITURE, IT IS THE DUTY OF THE ASSESSEE TO ESTABLISH THAT THE LIABILIT Y FOR SUCH EXPENDITURE IS ACCRUED OR CRYSTALLIZED DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. WE FIND THAT BEFORE THE AO THE ASSESSEE DID NOT FURNISH ANY EVIDENCE SO AS TO SATI SFY THAT THE LIABILITY ACCRUED DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER ITA NO.1779 AND 1849/AHD/2009 -8- CONSIDERATION. IN VIEW OF THE ABOVE, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE AO IN THIS REGARD. THE SAME IS SUSTAI NED AND THE GROUND NO.5 OF THE ASSESSEES APPEAL IS REJECTED. ITA NO.1849/AHD/2009 15. THE FIRST GROUND OF THE REVENUES APPEAL READS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5,72,626/- ON ACCOUNT OF BAD DEBTS. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ISSUE UNDER CONSIDERAT ION IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE T.R.F. LTD. VS. CIT, 323 ITR 397 (SC) WHEREIN THEIR LORDSHIP HELD AS UNDER: AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE I NCOME TAX ACT, 1961 WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO OBTAIN A DED UCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH T HAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE; IT IS ENOUGH IF THE BAD DEBT IS WRIT TEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IN THE CASE UNDER APPEAL BEFORE US, THE AO MADE DIS ALLOWANCE ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO ESTABLISH TH AT THE DEBT IN QUESTION HAD BECOME BAD IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE CASE OF TRF LTD., (SUPR A) THE HONBLE APEX COURT HELD THAT AFTER 1-4-89 IN ORDER TO CLAIM DEDU CTION IN RELATION TO BAD DEBT IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABL ISH THAT THE DEBT HAS IN FACT BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE, IT IS NOT DISPUTED THAT THE DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. WE THEREFORE RESPECTFULL Y FOLLOWING THE ABOVE ITA NO.1779 AND 1849/AHD/2009 -9- DECISION OF THE HONBLE APEX COURT UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND REJECT THE GROUND NO.1 OF THE REVENU ES APPEAL. 17. GROUND NO.2 OF THE REVENUES APPEAL READS AS UN DER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION FROM RS.56,102/- TO RS.30,000/- ON ACCOUNT OF TELEPHONE EXPENSES. 18. WHILE DISCUSSING THE ASSESSEES APPEAL, WE HAVE ALREADY CONSIDERED THIS ISSUE. FOR THE DETAILED DISCUSSION THEREIN, G ROUND NO.2 OF THE REVENUES APPEAL IS REJECTED. 10. IN RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED WHILE THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH APRIL, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 29-04-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD