Deputy Commissioner of Income-Tax, Bangalore V. M/s.Snowman Logistics Pvt. Ltd., Bangalore

ITA 1920/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7580 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: SRINIVAS K P
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1920/BANG/2016 ASSESSMENT YEAR : 2010-11 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -6[1][2], ROOM NO.238, 2 ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU. VS. M/S. SNOWMAN LOGISTICS PVT. LTD., NO.54, OLD MADRAS ROAD, VIRGO NAGAR, BENGALURU-560049. PAN : AAFCS3514H APPELLANT RESPONDENT REVENUE BY : SHRI. M. K. BIJU, JCIT ASSESSEE BY : SHRI. SRINIVAS. K. P, CA DATE OF HEARING : 16.08.2017 DATE OF PRONOUNCEMENT : 06.10.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN HOLDING TH AT BAD DEBTS ARE WRITTEN OFF AS IRRECOVERABLE EVEN WHEN THE ASSESSEE FAILED TO SUB MIT THE RELEVANT EVIDENCES IN THE FORM OF CLOSED LEDGERS OF THE PARTIES AND FURTH ER THERE WERE NO INTIMATION TO THE PARTIES CONCERNED. THE FACTS BORNE OUT FROM TH E RECORD ARE THAT THE AO HAS DISALLOWED THE BAD DEBTS WRITTEN OFF AMOUNTING TO R S.2,73,34,870/- ON THE GROUND THAT A FEW OF THE CLIENTELE ARE CONTINUING TO HAVE BUSINESS WITH THE ASSESSEE COMPANY. THEREFORE, THE ASSESSEE HAS NO GENUINE IN TEREST TO CLAIM DEBTS. THE ITA NO.1920/BANG/2016 PAGE 2 OF 3 CIT(A) HAS ALLOWED THE SAME HAVING OBSERVED THAT TH E BAD DEBTS HAVE BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS WHICH IS A REQ UIREMENT OF LAW. NOW THE REVENUE IS BEFORE US AND HAS PLACED RELIANC E UPON THE ORDER OF THE AO. 2. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT FOR CLAIMING BAD DEBTS UNDER SECTION 36(1)(VII) OF THE ACT, ONLY WRITING OFF OF BAD DEBTS IS SUFFICIENT AND THE ASSESSEE IS NOT REQUIRE D TO ESTABLISH THAT DEBT HAS BECOME IRRECOVERABLE. THE CIT(A) HAS DECIDED THE I SSUE FOLLOWING THE JUDGMENT OF APEX COURT IN THE CASE OF TRF LTD. THE RELEVANT OBSERVATION OF THE CIT(A) IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 8. IN GROUND NO.2, THE APPELLANT IS AGGRIEVED THAT AO DID NOT ALLOW BAD DEBTS WRITTEN OFF AMOUNTING TO RS.2,73,34 ,870/-. IT IS SEEN THAT THE MAIN REASON FOR DISALLOWANCE BY AO WAS THAT A FEW OF THE CLIENTELE ARE CONTINUING TO HAVE BUSINESS WITH THE ASSESSEE COMPA NY INDICATING THAT ASSESSEE HAS NO GENUINE INTEREST TO CLAIM DEBTS. I T IS ALSO SEEN THAT SOME OF THE CLIENTS APPEAR IN THE SUNDRY CREDITORS LIST. BEFORE THE AO, NO EVIDENCE WAS PRODUCED TO SHOW THAT STEPS FOR RECOVERY OF THE SE DEBTS HAD FAILED. HOWEVER, IT IS TO BE NOTED THAT THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD IN CA NOS 5292 TO 5294 OF 2003 VIDE JUDGMENT DA TED 9/2/2010 HELD THAT AFTER 1/4/1989, FOR ALLOWING DEDUCTION FOR THE AMO UNT OF ANY BAD OR PART THEREOF UNDER SECTION 36(1)(VII) OF THE ACT, IT IS NOT NECESSARY FOR ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT HAS BECOME IRRECOV ERABLE; IT IS ENOUGH IF BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS O F ACCOUNTS OF ASSESSEE. THEREFORE IN THE LIGHT OF THE APEX COURTS JUDGMENT WHICH IS BINDING, THE AO IS DIRECTED TO ALLOW BAD DEBTS CLAIMED BY THE APPEL LANT. THE GROUND IS ALLOWED. 3. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A), WE CONFIRM HIS ORDER. ACCORDING, APPEAL OF THE REVENUE IS DIS MISSED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ITA NO.1920/BANG/2016 PAGE 3 OF 3 PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER, 2017. SD/- SD/- BANGALORE. DATED: 6 TH OCTOBER, 2017. /NSHYLU/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. DR 4. CIT 5. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. (JASON P BOAZ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER