Global Tech (India) Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward- 4(1), Ahmedabad

ITA 1857/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0769 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA HEARING CONCLUDED ON
• Assessee Lawyers: S N DIVETIA
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

I.T.A. NO.: 1857/AHD/2013 ASSESSMENT YEARS: 2008 - 09 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM ] I.T.A. NO. : 1857/AHD/2013 ASSESSMENT YEAR S: 2008 - 09 GLOBAL TECH INDIA PVT LTD ............APPELLANT [AABCG3726G ] VS INCOME TAX OFFICER WARD 4 ( 1), AHMEDABAD ...........RESPONDENT APPEARANCES BY S N DIVETIA FOR THE APPELLANT O P MEENA FOR THE RESPONDENT HEARING CONCLUDED ON: 18/07/16 ORDER PRONOUNCED ON : 16 /08/16 O R D E R 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAIN ST THE ORDER DATED 15 TH MARCH 2013 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2008 - 09. 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS THAT THE CIT(A) ERRED IN UPHOLDING THE AC TION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM FOR BAD DEBTS AMOUNTING TO RS 5,00,000. 3. THE ISSUE IN APPEAL LIES IN A VERY NARROW COMPASS OF MATERIAL FACTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAS CLAIMED DEDUCTION IN RESPECT OF WRITE OFF OF RS 5,00,000 WHICH WAS LYING IN HIS ACCOUNTS AS SHARE APPLICATION MONEY BY WAY OF SQUARING UP THE ACCOUT OF GLOBAL CYBERNET LIMITED. THE CLAIM OF THE ASSESSEE THAT SINCE THE AMOUNT WAS IN RESPECT OF TRAD ING DEBT, IT SHOULD BE ALLOWED AS DEDUCTION. THE AO, HOWEVER, DECLINED THE DEDUCTION AND HELD IT TO BE A CAPITAL LOSS IN NATURE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN I.T.A. NO.: 1857/AHD/2013 ASSESSMENT YEARS: 2008 - 09 PAGE 2 OF 2 APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND I S IN FURTHER APPEAL BEFORE ME. 4. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL, IT IS A CASE IN WH ICH PART OF THE OUTSTANDING DUES ON THE DEBTOR, I.E. GLOBAL CYBERNET LTD, WERE REALIZED BY CHEQUES, AND THE REMAINING PART OF THE AMOUNT, I.E. RS 5,00,000, BECOMING DUE AS A RESULT OF BUSINESS DEALINGS, WHICH COULD NOT BE REALIZED, WAS TRANSFERRED TO THE S HARE APPLICATION MONEY. THERE IS NO DISPUTE THAT THERE WAS NO PAYMENT AND THAT THE AMOUNT DEBITED TO SHARE APPLICATION MONEY DID NOT ARISE OUT OF BUSINESS TRANSACTIONS. EVEN THIS EFFORT, HOWEVER, DID NOT YIELD ANY RESULTS AS SHARES WERE NEVER ALLOTTED BY G LOBAL CYBERNET IN LIEU OF TRADE DUES. THE WRITE OFF OF THIS AMOUNT, ON THE GIVEN FACTS, CONTINUES TO BE IN THE NATURE OF WRITE OFF OF THE DEBTOR AS SHARE APPLICATION MONEY TRANSACTION DID NOT EVEN FRUCTIFY AND WAS NOT A STANDALONE TRANSACTION ANYWAY. WHAT HAS BEEN WRITTEN OFF IS, IN SUBSTANCE AND IN REALITY, WRITE OFF OF AN AMOUNT WHICH HAD BECOME DUE IN THE COURSE OF BUSINESS. IT CANNOT, THEREFORE, TREATED AS A CAPITAL LOSS. 6. IN VIEW OF THE ABOVE DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE - PA RTICULARLY THE PECULIAR FACTUAL ASPECTS OF THE TRANSACTION, I UPHOLD THE GRIEVANCE OF THE ASSESSEE AND , ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED DISALLOWANCE OF RS 5,00,000. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN TH E OPEN COURT TODAY ON 16 TH AUGUST, 2016. SD/ PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: 16 TH DAY OF AUGUST ,2016 . COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD