Appeal details
Counselvise Citation
[2014] 120 COUNSELVISE.COM (IT) 5878 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-03-2014
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
J
Next Hearing Date
12-03-2014
Assessment Year
2006-2007
Appeal Filed On
07-03-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1853/MUM/2011 (ASSESSMENT YEAR: 2006-07) THE DY. COMMISSIONER OF INCOME TAX-8(1) ROOM NO.260A/210 2 ND FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. BISLERI INTERNATIONAL PVT. LTD. WESTERN EXPRESS HIGHWAY, CHAKALA, ANDHERI (E) MUMBAI-400 099. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. : AACCA 4355 K ASSESSEE BY : SHRI S.D. SRIVASTAVA REVENUE BY : SHRI VIJAY MEHTA DATE OF HEARING : 12/03/2014 DATE OF PRONOUNCEMENT : 26/03/2014 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30/12/2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-0 7. THE SOLITARY GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AS U NDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.5,34,32,15 2/- RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TR F LIMITED WITHOUT APPRECIATING THE FACT THAT IN ONE OF THE CA SES, THE ASSESSEE HAD WRITTEN OFF CURRENT YEARS DEBIT BALANCE AS BAD DEBT AS CAN BE SEEN FROM THE ANNEXURE ENCLOSED HEREWITH. ITA NO.1853/M/11 AY:06-07 2 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO N OTED THAT THE ASSESSEE HAD WRITTEN OFF A SUM OF RS.6,27,84,689/- TOWARDS BAD DEBTS AND IRRECOVERABLE ADVANCES OUT OF WHICH ADVANCES WR ITTEN OFF OF RS.93,52,537/- WERE DEDUCTED FROM TOTAL INCOME AND BALANCE AMOUNT OF RS.5,34,32,152/- WAS CLAIMED AS BAD DEBTS AND IRREC OVERABLE ADVANCES TO P/L ACCOUNT. THE AO ASKED THE ASSESSEE TO FURNIS H THE PARTY-WISE DETAILS OF BAD DEBTS AND IRRECOVERABLE ADVANCES. TH E ASSESSEE FURNISHED DETAILS OF BAD DEBTS. THE AO FOUND THAT THE DETAILS FURNISHED BY THE ASSESSEE ARE NOT COMPLETE AS THE ASSESSEE FURNISHED DETAILS ONLY REGARDING 5 UNITS OUT OF 14 UNITS AND FOR THE BALAN CE UNITS NO DETAILS OF BAD DEBTS/IRRECOVERABLE ADVANCES WERE FURNISHED. TH E AO ALSO NOTED THAT THE IRRECOVERABLE ADVANCES WRITTEN OFF BY THE ASSESSEE WERE NOT TAKEN AS INCOME IN THE P/L ACCOUNT IN THE EARLIER Y EARS AND FURTHER BAD DEBTS FOR THE YEAR UNDER CONSIDERATION WERE WRITTEN OFF BY THE ASSESSEE WITHOUT MAKING ANY EFFORT TO RECOVER THE SAME. ACCO RDINGLY, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL, CI T(A) HAS DELETED THE ADDITION MADE BY THE AO AND ALLOWED THE CLAIM OF AS SESSEE BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT (320 ITR 397) . 3. BEFORE US, THE LD. DR HAS REFERRED THE ASSESSMEN T ORDER AND SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE COM PLETE DETAILS OF THE PARTIES AND AMOUNT OF BAD DEBTS WRITTEN OFF BY THE ASSESSEE. FURTHER, THE ASSESSEE HAS CLAIMED BAD DEBTS WRITTEN OFF IN RESPE CT OF ADVANCES GIVEN TO THE PARTIES ARE NOT COVERED UNDER ALLOWABLE CLAI M U/S.36(1)(VII) AS THESE AMOUNTS WERE NOT TAKEN TO THE P&L ACCOUNT AS INCOME IN THE EARLIER YEARS. THE LD. DR HAS FORCEFULLY CONTENTED THAT THE ASSESSEE HAS NOT TAKEN ANY STEP TO RECOVER THE DEBTS IN QUESTION AND DECISION OF WRITING OFF THE AMOUNT IS NOT A BONAFIDE DECISION. THEREFORE, AO WAS JUSTIFIED IN DISALLOWING CLAIM OF THE ASSESSEE. ITA NO.1853/M/11 AY:06-07 3 4. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE HA S SUBMITTED THAT DURING THE YEAR THE ASSESSEE HAS CLOSED VARIOUS BRA NCHES AND THEREFORE, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO RECOVER THE OUTSTANDING RECEIVABLES FROM THE PARTIES. THE ASSESSEE TOOK A BONAFIDE DECI SION TO WRITE OFF THE AMOUNT INSTEAD OF WASTING GOOD MONEY FOR BAD MONEY. THE LD. AR HAS RELIED UPON THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF TRF LTD. AND SUBMITTED THAT THE ASSESSEE HAS WRITTEN OF F BAD DEBTS AS IRRECOVERABLE, THEN THE CLAIM OF THE ASSESSEE CANNO T BE DENIED. THE ADVANCES GIVEN TO THE PARTIES ARE IN CONNECTION WIT H THE ASSESSEES BUSINESS. HE HAS REFERRED THE IMPUGNED ORDER OF CI T(A) AND SUBMITTED THAT CIT(A) HAS CONSIDERED THE FACT THAT THE ADVANC ES WERE GIVEN IN THE COURSE OF BUSINESS OF THE ASSESSEE FOR PAYMENT OF T AX AT VARIOUS PLACES IN ORDER TO CLEAR THE GOODS FROM THE GODOWNS AND THERE FORE, THE NON- RECOVERY OF THE ADVANCES GIVEN IN THE COURSE OF BUS INESS IS ALLOWABLE BUSINESS LOSS. HE HAS SUPPORTED THE ORDER OF CIT(A) . 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO HAS RAISED SPECIFIC QUER Y AND ASKED THE ASSESSEE TO FURNISH THE PARTY-WISE DETAILS OF BAD D EBTS AND IRRECOVERABLE ADVANCES ALONG WITH NAME AND ADDRESSES OF CUSTOMERS , BILL NOS., DATES, AMOUNTS, PURPOSE ETC . THE AO HAS ALSO ASKED THE AS SESSEE TO SHOW BREAK-UP OF BAD DEBTS AND ADVANCES SEPARATELY ALONG WITH COPIES OF LEDGER ACCOUNT AND SALE BILLS. WE NOTE THAT THE ASS ESSEE HAS FURNISHED THE DETAIL OF THE IRRECOVERABLE ADVANCES IN COMPOSI TE AMOUNT WITHOUT SEGREGATION OF ADVANCES AND BAD DEBTS. FURTHER, ONL Y THE BRANCH/BRANCH UNITS NAME IS GIVEN AND NOT THE PARTY/CUSTOMERS NAM ES ARE FURNISHED BY THE ASSESSEE FOR VERIFICATION. THE AO NOTED THAT THE UNIT-WISE DETAILS FOR BAD DEBTS WITH NAME AND AMOUNTS WERE FURNISHED BY THE ASSESSEE ONLY WITH RESPECT TO 5 UNITS OUT OF 14 UNITS. THERE FORE, THE ASSESSEE DID NOT FURNISH THE COMPLETE DETAILS OF THE BAD DEBTS A ND ADVANCES WRITTEN OFF AS IRRECOVERABLE. THE CIT(A) HAS ALLOWED THE CL AIM MAINLY BY FOLLOWING ITA NO.1853/M/11 AY:06-07 4 THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. (SUPRA). WE FIND THAT THE CIT(A) HAS NOT DISCUSSED ABOUT THE NO T FURNISHING OF DETAILS BY THE ASSESSEE IN RESPECT OF 9 UNITS/BRANCHES. FUR THER, THE ASSESSEE HAS NOT FURNISHED THE DETAILS BY SEGREGATING THE BA D DEBTS AND ADVANCES TREATED AS IRRECOVERABLE AND WRITTEN OFF DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IF SUCH DETAILS WERE FURNISHED BEFORE CIT(A) THEN THE AO SHOULD HAVE BEEN GIVEN OPPORTUNITY TO CONSIDER THE SAME AND REBUT THE SAME IF SO DESIRED. THEREFORE, AS FAR AS THE CLAIM OF BAD DEBTS REGARDING TREATING THE SAME AS IRRECOVERABLE WE DO NOT FIND A NY ERROR IN THE ORDER OF CIT(A) WHILE ALLOWING THE CLAIM BY FOLLOWING THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF TRF (SUPRA). HOWEVER, IT IS NOT CLEAR FROM THE RECORD THAT HOW MUCH AMOUNT OUT OF THE TOTAL CL AIM OF THE ASSESSEE IS REGARDING THE ADVANCES GIVEN TO THE VARIOUS PART IES AND WHETHER THE ADVANCES WERE GIVEN DURING THE COURSE OF BUSINESS O F THE ASSESSEE AND CAN BE ALLOWED AS BUSINESS LOSS, WHICH HAS NOT BEEN PROPERLY EXAMINED, MAY BE FOR WANT OF NECESSARY DETAILS. THE CIT(A) HA S MADE A REFERENCE ONLY WITH REFERENCE TO ADVANCES GIVEN TO M/S. SAM S ALES PVT. LTD. BUT HAS NOT DISCUSSED THE ADVANCES GIVEN TO OTHER THAN THE M/S. SAM SALES PVT. LTD. THEREFORE, THE ISSUE REGARDING CLAIM OF W RITING OFF OF ADVANCES TREATING THEM AS IRRECOVERABLE IS SET ASIDE TO THE RECORD OF THE AO FOR PROPER VERIFICATION AND ADJUDICATION AS PER LAW. TH E ASSESSEE IS DIRECTED TO FURNISH THE RELEVANT DETAILS. 6. APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2014. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (VIJAY PAL RAO ) JUDICIAL MEMBER MUMBAI, DATED: 26/03/2014. JV. ITA NO.1853/M/11 AY:06-07 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.
