Sri.Kamlesh Jain, Bangalore V. Additional Commissioner of Income tax, Bangalore

ITA 1857/BANG/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0772 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDAPPAJI ACIT
• Assessee Lawyers: NAGINCHAND KHINCHA
• Keywords: Depreciation; Opportunity of being heard; Bad and doubtful debts; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 1857 /BANG/201 6 ASSESSMENT YEAR : 20 1 1 - 1 2 SHRI. KAMLESH JAIN, PROP: M/S. PREMIER COMPUTERS, NO. 12, SUNKALPET MAIN ROAD, GANIGAR LANE, BENGALURU. PAN : AABCA 7045 H VS. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE-9, BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NAGIN CHAND KHINCHA, CA REVENUE BY : SHRI. SIDDAPPAJI, ACIT DATE OF HEARING : 10 . 0 9 .201 8 DATE OF PRONOUNCEMENT : 05 . 10 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), INTER ALIA , ON FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND LAW APPLICABLE, THE LEARNED ASSESSING OFFICER HAD ERRED IN DISALLOWING A SUM OF RS. 17,11,518/- OUT OF INTEREST PAID AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE INTEREST PAID BY THE APPELLANT FOR BUSINESS PURPOSE AND COMMERCIAL EXPEDIENCY IS TO BE FULLY ALLOWED AS CLAIMED AND THE DISALLOWANCE OF INTEREST AS MADE IS TO BE DELETED. ITA NO. 1857/BANG/2016 PAGE 2 OF 4 2. THE LEARNED ASSESSING OFFICER HAD ERRED IN NOT ALLOWING THE CLAIM OF BAD DEBTS OF RS. 5,25,000/- AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, THE CLAIM OF BAD DEBTS AS MADE BY THE APPELLANT IS FULLY ALLOWABLE AND THE SAME IS TO BE SO ALLOWED BY DELETING THE DISALLOWANCE MADE. 3. THE LEARNED ASSESSING OFFICER HAD ERRED IN DISALLOWING THE CLAIM OF DEPRECIATION OF RS. 6,93,536/- AND THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN CONFIRMING THE SAME. ON THE FACTS OF THE CASE, THE APPELLANT IS ENTITLED TO DEPRECIATION AS CLAIMED AND THE SAME IS TO BE ALLOWED TO HIM. 4. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE DISALLOWANCES MADE OUT OF INTEREST, BAD DEBTS AND OF DEPRECIATION BE DELETED AND CLAIMS MADE BY APPELLANT BE ALLOWED. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION THAT THE REVENUE HAS DISALLOWED THE INTEREST PAID ON LOANS ON THE GROUND THAT ASSESSEE CLOSED THE BUSINESS W.E.F. 31.05.2010 WHEREAS THE ASSESSEE CONTINUED WITH HIS BUSINESS. IN SUPPORT OF HIS CONTENTION, HE HAS FILED THE LEDGER ACCOUNT OF M/S. PREMIER IT SOLUTIONS INDIA PVT. LTD., IN WHICH THE SALES WERE EFFECTED UPTO OCTOBER 2010 AND PAYMENTS WERE RECEIVED THEREAFTER. THEREFORE, IT IS NOT PROPER TO SAY THAT ASSESSEE HAS CLOSED THE BUSINESS W.E.F. 31.05.2010. THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE REVENUE HAS DISALLOWED THE PAYMENT OF INTEREST ON THE GROUND THAT ASSESSEE HAS CLOSED HIS BUSINESS WHEREAS FROM THE EVIDENCE FILED BY THE ASSESSEE IT APPEARS THAT BUSINESS WAS CONTINUED THEREAFTER. THEREFORE, THERE IS DISPUTE OF FACTUAL ASPECT WHICH REQUIRES VERIFICATION. ACCORDINGLY, WE SET ASIDE THE ITA NO. 1857/BANG/2016 PAGE 3 OF 4 ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE AO WITH THE DIRECTION TO READJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE EVIDENCE FILED BY THE ASSESSEE AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. APROPOS GROUND NO. 2, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT AO HAS MADE THE DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT ON THE GROUND THAT THE APPELLANT HAD TREATED THE SAME AS PROVISION IN THE BOOKS OF ACCOUNTS WHEREAS THE ASSESSEE HAS WRITTEN OFF THE BAD DEBTS. THE CIT(A) HAS ALSO WITHOUT LOOKING INTO THE FACTS CONFIRMED THE DISALLOWANCE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT HE HAS NOT MADE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS. IN FACT IT WAS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. THEREFORE, IT SHOULD NOT HAVE BEEN DISALLOWED. THE LEARNED DR, ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING CAREFULLY EXAMINED, WE ARE OF THE VIEW THAT THERE IS A FACTUAL DISPUTE RAISED BY THE ASSESSEE. IT IS NOT CLEAR WHETHER IT IS A PROVISION FOR BAD AND DOUBTFUL DEBTS OR THE ASSESSEE HAS WRITTEN OFF THE BAD DEBTS IN ITS BOOKS OF ACCOUNTS. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) IN THIS REGARD AND RESTORE THE MATTER TO THE AO FOR VERIFICATION OF THE FACTS. IF IT IS A CASE OF WRITTEN OFF OF BAD DEBTS, IT SHOULD BE ALLOWED. 6. APROPOS GROUND NO. 3, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS GROUND OF DEPRECIATION WAS DISALLOWED ON THE GROUND THAT ASSESSEE HAS CLOSED ITS BUSINESS WHEREAS THE BUSINESS OF THE ASSESSEE CONTINUED THEREAFTER ALSO. THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF THE CIT(A). 7. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES AND WE FIND THAT DEPRECIATION IS TO BE ALLOWED UPTO THE DATE OF CLOSURE OF BUSINESS. SINCE, WE HAVE ITA NO. 1857/BANG/2016 PAGE 4 OF 4 RESTORED THE MATTER TO THE AO TO FIND OUT THE ACTUAL DATE OF CLOSURE OF BUSINESS, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO READJUDICATE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2018. SD/- SD/- BANGALORE. DATED: 5 TH OCTOBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. DR (ITAT) 4. CIT 5. CIT(A) 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. (JASON P BOAZ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER