Navjivan Roller Flour & Pulse Mills Pvt.Ltd., Dahod V. The ACIT., Panchmahal Circle, Godhra

ITA 2108/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8858 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-03-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 05-10-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: KARTIK CHOKSHI
• Keywords: Bad and doubtful debts
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA.NO.2108/AHD/2006 ASSTT.YEAR : 2002-2003 NAVJIVAN ROLLER FLOUR & PULSE MILLS PVT. LTD. AT KUMBHARWADA OPP: MARKET YARD DAHOD 389 151. VS. ACIT, PANCHMAHAL CIRCLE GODHRA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KARTIK CHOKSHI REVENUE BY : SHRI C.K. MISHRA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST ORDER OF THE CIT(A)-VI, BARODA DATED 25-08- 2006. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND IN THE MEMO OF APPEAL. 1. THE LD.CIT(A) ERRED IN UPHOLDING DISALLOWANCE MA DE IN ASSESSMENT MADE UNDER SECTION 147 OF DEDUCTION IN R ESPECT OF BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS.10,63,538/- HOLDING THE CLAIMED TO BE NON- GENUINE. 2. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITE D VS. CIT, IN CIVIL APPEAL NO.5293 OF 2003 DATED 9-2-2010. HE HAS STATED THAT THE ASSESSEE HAS ACTUALLY WRITTEN OFF THE AMOUNT IN THE ACCOUNTS. THE AO HAS ALSO NOT DISPUTED THE FACT OF WRITE OFF OF THE AMOUNT IN THE BOOKS OF ACCOUNTS . HE DISALLOWED THE BAD DEBTS ON THE GROUND THAT THE ASSESSEE COULD NOT PRO VE THAT THE DEBT HAD REALLY BECOME BAD. THE HONBLE APEX COURT IN THE ABOVE ME NTIONED CASE HAS HELD THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABL ISH THAT THE DEBT IN FACT HAS ITA.NO.2108/AHD/2006 -2- BECOME BAD. HE THEREFORE SUBMITTED THAT THE ABOVE DECISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE TO THE FACT S OF THE CASE. THE LEARNED DR ON THE OTHER HAND HAS RELIED UPON THE ORDER OF T HE AUTHORITIES BELOW AND STATED THAT AS PER THE PROVISIONS OF SECTION 36(1)( VII) OF THE ACT, THE ASSESSEE CAN CLAIM DEDUCTION ONLY FOR THE BAD DEBTS AND NOT ANY OTHER DEBTS. THEREFORE, THE ASSESSEE HAS TO ESTABLISH THAT THE AMOUNT WRITT EN OFF IN THE BOOKS OF ACCOUNTS WAS THE BAD DEBT AND NOT ANY OTHER DEBT. 3. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSE E HAS CLAIMED THE DEDUCTION FOR AN AMOUNT RS.22,96,848/- AS BAD DEBT UNDER SECT ION 36(1)(VII) OF THE ACT. THE AO HAS EXAMINED THE ASSESSEES CLAIM IN DETAIL AND WAS OF THE OPINION THAT THE DEBT AMOUNTING TO RS.11,29,803/- HAS NOT BEEN E STABLISHED TO HAVE BECOME BAD. HE THEREFORE DISALLOWED THE SAME WHICH IS UPH ELD BY THE CIT(A), HENCE THIS APPEAL BY THE ASSESSEE. 4. WE FIND THAT THIS ISSUE IS NOW ADJUDICATED BY TH E HONBLE APEX COURT IN THE CASE OF T.R.F. LIMITED (SUPRA) WHEREIN THEIR LO RDSHIPS HELD AS UNDER: THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1 ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRI TTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE APEX COURT HAS HELD THAT AFTER 1 ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE T O ESTABLISH THAT THE DEBT HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS WRITTEN OFF THE DEBT IN ITS BOOKS OF A CCOUNTS. THEREFORE, IN OUR OPINION, THE DISALLOWANCE OF CLAIM OF BAD DEBTS, ON THE GROUND THAT THE ASSESSEE COULD NOT ESTABLISH WHETHER THE DEBT HAS BECOME BAD OR NOT IS NOT TENABLE. IN VIEW OF THE ABOVE, WE RESPECTFULLY FOLLOWING THE AB OVE DECISION OF THE HONBLE ITA.NO.2108/AHD/2006 -3- APEX COURT IN THE CASE OF T.R.F. LIMITED DIRECT THE AO TO ALLOW THE ASSESSEES CLAIM OF BAD DEBT. 5 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 5 TH MARCH, 2010. SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 05-03-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD