SAP India Pvt Ltd , Bangalore V. Assistant Commissioner of Income TAx Circle-6(1)(1), Bangalore

ITA 1909/BANG/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6733 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 25-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERA MALHOTRA CIT BENGALURU
• Assessee Lawyers: KEERTHINARAYAN IYENGAR
• Keywords: Depreciation; Opportunity of being heard; Bad and doubtful debts
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER ITA NO. 1909 /BAN G/201 7 ASSESSMENT YEAR : 2012-13 M/S. SAP INDIA PVT. LTD., WING A, 2 ND FLOOR, TOWER-B, SALARPURIA SOFTZONE, SARJAPUR OUTER RING ROAD, BELLANDUR POST, BENGALURU 560 103. PAN : A A C CS 7493 E VS. COMMISSIONER OF INCOME TAX (APPEALS), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. KEERTHI NARAYAN IYENGAR , CA REVENUE BY : MS. NEERA MALHOTRA , CIT (DR)(ITAT), BENGALURU DATE OF HEARING : 1 6 . 1 2 .201 9 DATE OF PRONOUNCEMENT : 07 . 0 2 .20 20 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-6, BENGALURU, DATED 14.07.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. AS PER THE GROUNDS RAISED BY THE ASSESSEE, THE FIRST ISSUE IS REGARDING DISALLOWANCE OF ASSSESSEES CLAIM IN RESPECT OF BAD DEBTS WRITTEN OF AMOUNTING TO RS.38,51,30,000/- AND THE SECOND ISSUE IS REGARDING DISALLOWANCE OF DEPRECIATION OF RS.4,35,598/-. 3. IN THE COURSE OF HEARING, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT GROUND NO.2 REGARDING DISALLOWANCE OF DEPRECIATION IS NOT PRESSED AND ACCORDINGLY, THIS GROUND IS REJECTED AS NOT PRESSED. ITA NO.1909 /BANG/2017 PAGE 2 OF 3 4. IT WAS SUBMITTED BEFORE US IN RESPECT OF GROUND NO. 1 I.E. ABOUT ISSUE OF BAD DEBTS WRITTEN OFF, LEARNED AR OF THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF T.R.F. LTD. AS REPORTED IN 323 ITR 397. HE ALSO SUBMITTED THAT ON PAGES 280 AND 281 OF THE PAPER BOOK IS CBDTS CIRCULAR NO.12/2016 DATED 30.05.2016 IN WHICH IT IS CLARIFIED THAT THE CLAIM OF THE ASSESSEE REGARDING WRITING OFF OF BAD DEBTS IS ALLOWABLE IF IT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF THE ASSESSEE AND IT FULFILLS THE CONDITIONS STIPULATED IN SUB SECTION (2) OF SECTION36 OF THE INCOME TAX ACT, 1961. REGARDING THE DETAILS OF BAD DEBTS WRITTEN OFF BY ASSESSEE, HE SUBMITTED THAT PARTY WISE DETAILS ARE AVAILABLE ON PAGES 223 TO 226 OF THE PAPER BOOK AND IT CONTAINS LIST OF 201 PARTIES FROM WHOM THIS AMOUNT OF RS.38,51,27,803/- WAS RECEIVABLE. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE ALSO SUBMITTED THAT IT IS NOTED BY THE LEARNED CIT(A) IN PARA 7 OF HIS ORDER THAT THE AO REQUESTED THE ASSESSEE TO FURNISH TWO DETAILS (I) EXACT NATURE OF TRANSACTION WITH THE PARTIES AND (II) EXACT REASON FOR TREATING THE DEBT AS BAD AND IRRECOVERABLE. HE FURTHER SUBMITTED THAT IN PARA 8 OF HIS ORDER, IT IS NOTED BY LEARNED CIT(A) THAT IT IS OBSERVED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS FAILED TO FURNISH THESE DETAILS CALLED FOR BY THE AO. HE SUBMITTED THAT IN THE ABSENCE OF ANY DETAILS REGARDING EXACT NATURE OF TRANSACTION WITH THE PARTIES, IT CANNOT BE ASCERTAINED AS TO WHETHER THE ASSESSEE IS COMPLYING WITH THE REQUIREMENTS OF SUB SECTION (2) OF SECTION 36 OF THE INCOME TAX ACT, 1961AND THEREFORE, THE ORDER OF CIT(A) SHOULD BE CONFIRMED. HE ALSO PLACED RELIANCE ON THE TRIBUNAL ORDER FOLLOWED BY LEARNED CIT(A) RENDERED IN THE CASE OF EMBASSY CLASSIC (P) LTD., VS. DCIT 2010 TIOL 591. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT APART FROM WRITING OFF OF BAD DEBTS IN THE BOOKS OF ACCOUNTS, THE ASSESSEE HAS TO FULFILL THIS REQUIREMENT OF SECTION 36(2) OF THE IT ACT ALSO THAT THE AMOUNT IN QUESTION HAS BEEN CONSIDERED AS INCOME IN THE RELEVANT YEAR OR IN AN EARLIER YEAR. AS ITA NO.1909 /BANG/2017 PAGE 3 OF 3 PER THE ASSESSMENT ORDER AND AS PER THE ORDER OF CIT(A), THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION OR DETAILS REGARDING EXACT NATURE OF TRANSACTIONS WITH THE PARTIES IN QUESTION. IN THE ABSENCE OF THAT, IT CANNOT BE ASCERTAINED AS TO WHETHER THE ASSESSEE IS COMPLYING WITH THE REQUIREMENTS OF SECTION 36(2) OF INCOME TAX ACT, 1961 OR NOT. UNDER THESE FACTS AND IN THE INTEREST OF JUSTICE, WE FEEL IT PROPER TO RESTORE THIS MATTER TO THE FILE OF CIT(A) FOR A FRESH DECISION. THE ASSESSEE IS DIRECTED TO FURNISH COMPLETE DETAILS BEFORE CIT(A) REGARDING THE NATURE OF TRANSACTION WITH EACH PARTY AND THE ASSESSEE HAS TO ESTABLISH THAT THE ASSESSEE IS COMPLYING WITH THE REQUIREMENTS OF SECTION 36 (1) (VII) AND 36(2) OF THE INCOME TAX ACT, 1961 AND AFTER GRANTING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES, LEARNED CIT(A) SHOULD DECIDE THIS ISSUE AFRESH. ACCORDINGLY, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (BEENA PILLAI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 07 TH FEBRUARY, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.