YAHOO INDIA P. LTD ( FORMERLY KNOWNA S YAHOO WEB SERVICES INIDA P.LTD), MUMBAI V. ADDL CIT RG 7(3), MUMBAI

ITA 2136/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8745 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R MURLIDHAR
• Keywords: Bad and doubtful debts
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 2136/M/2010 ASSESSMENT YEAR: 2005-06 YAHOO INDIA PVT. LTD.., APPELLANT (FORMERLY KNOWN AS YAHOO WEB SERVICES INDIA PVT. LTD.) 801, NICHOLAS PIRAMAL TOWER, PENINSULA CORP PARK, G.K. MARG, LOWER PAREL, MUMBAI 400 013. (PAN AAACY1252B) VS. ADDL. COMMISSIONER OF INCOME TAX, RESPONDENT RANGE 7(3), MUMBAI. APPELLANT BY : MR. R. MURLIDHAR RESPONDENT BY : MR. PAVAN VED . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 13, MUMBAI, PASSED ON 20/11/2009 FOR THE AS SESSMENT YEAR 2005-06 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF BAD DEBT WRITTEN OFF TO THE EXTENT OF RS. 2,66,546/-. 2. THE CIT(A) ERRED IN CONFIRMING THAT THE APPELLAN T IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80G OF THE ACT. 2. AS REGARDS GROUND NO. 1 RELATING TO DISALLOWANCE OF BAD DEBT OF RS. 2,66,546/-, THE ASSESSEE HAD WRITTEN OFF THIS A MOUNT IN ITS BOOKS OF ACCOUNT AS BAD DEBT ON THE GROUND THAT THE CLIEN T NOT SATISFIED WITH ITA NO. 2136/M/10 YAHOO INDIA P. LTD. 2 THE SERVICE AND NOT PAYING THE SAME. THE AO WAS OF THE VIEW THAT THE SAME IS A TRADING LOSS I.E. TAKEN FROM THE P&L A/C IN THE YEAR OF ITS OCCURRENCE, THEREFORE, IT CANNOT BE CLAIMED AS BAD DEBT. ACCORDINGLY, HE DISALLOWED THE CLAIM OF THE ASSESSEE. THE CIT(A) CONFIRMED THE ACTION OF THE AO. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THIS ISSUE IS SQUA RELY COVERED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F TRF LTD. V. CIT, [2010] 323 ITR 397 (SC) WHEREIN THE APEX COURT HELD AS UNDER:- AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE IN COME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE, I T IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT S OF THE ASSESSEE. THE SUPREME COURT ACCORDINGLY REMANDED THE MATTER T O THE AO TO EXAMINE, SOLELY TO THE EXTENT OF WRITE OFF, WHETHER THE DEBT OR PART THEREOF WAS WRITTEN OFF IN THE ACCOUNTS OF THE ASSE SSEE. 4. THE HONBLE SUPREME COURT HELD THAT IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, THE ASESSSEE HAS WRITTEN OFF THE AMO UNT IN ITS BOOKS OF ACCOUNT AS IRRECOVERABLE, THEREFORE, FOLLOWING THE RATIO LA ID DOWN BY THE HONBLE APEX COURT IN THE CASE OF TRF LTD. (SUPRA) WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT THE AO TO ALLOW THE BAD DEBT CLAIM OF RS. 2,66,546/- OF THE ASSESSEE. 5. GROUND NO. 2 REGARDING DEDUCTION U/S 80G IS NOT REQUIRED TO BE ADJUDICATED BY US. ITA NO. 2136/M/10 YAHOO INDIA P. LTD. 3 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JANUARY, 2011. SD/- SD/- (PRAMOD KUMAR) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 28 TH JANUARY, 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 20/01/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21/01/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER