M/s. Klassic Apartments Private Ltd., , Kolkata V. ITO, Ward - 7(3), Kolkata , Kolkata

ITA 2242/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1295 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NICOLAS MURMU
• Assessee Lawyers: S JHAJHARIA
• Keywords: Bad and doubtful debts; Provision of bad debts
• Section: 115JB

Judgement Text

ITA NO.2242/KOL/2017 M/S. KLASSIC APARTMENTS PRIVAT E LTD. A.Y.2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] ITA NO.2242/KOL/2017 ASSESSMENT YEAR : 2013-14 M/S.KLASSIC APARTMENTS PRIVATE LTD. -VERSUS- I.T.O., WARD-7 (3) KOLKATA KOLKATA (PAN: AABCK 3456 E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.JHAJHARIA, FCA FOR THE RESPONDENT: SHRI NICOLAS MURMU, ADDL. CIT DATE OF HEARING : 08.03.2018. DATE OF PRONOUNCEMENT : 21.03.2018. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-2, KOLKATA RELATING TO A.Y. 2013-14 WHEREIN THE CIT(A) HAS UPHELD THE ADJUSTMENT MADE BY CPC WHILE PROCESSING THE INTIMATION U/S 143(1) OF THE ACT. 2.. THE FACTS ARE THAT THE INCOME OF THE ASSESSEE WAS ASSESSED UNDER NORMAL PROVISION OF THE ACT AT RS.30,40,315 AS AGAINST THE RETURNED INCOME OF RS.7,15,982/- AND SIMILARLY THE BOOK PROFIT U/S 115JB WAS ALSO CO MPUTED BY THE AO AT RS.41,21,047 AS AGAINST OF RS.17,96,718 RETURNED B Y THE ASSESSEE. THE DIFFERENCE IN BOTH THE CASE IS OF RS.23,24,329 WHICH WAS THE RESU LT OF NOT ALLOWING ADJUSTMENT OF THE LOSS OF CURRENT YEAR WHICH PERTAINS TO BAD DEBT WRITTEN OFF DURING THE YEAR. THE ORDER IN THE CASE WAS PASSED BY THE CPC U/S 143(1) OF THE ACT. THE LD. CIT(A) SET ASIDE THE ISSUE TO THE FILE OF THE AO, WITH A DIREC TION TO PASS A SPEAKING ORDER. 3. AFTER HEARING THE RIVAL CONTENTIONS, I FIND THA T THE HONBLE MUMBAI HIGH COURT IN THE CASE OF BAJAJ AUTO FINANCE LTD VS CIT PUNE 2 018 2TAXMAN 1716 (BOM) ORDER DATED 23.02.2018 HAD HELD AS FOLLOWS :- PROVISION FOR DOUBTFUL OVERDUE INSTALMENTS UNDER H IRE PURCHASE FINANCE AGREEMENTS - ADJUSTMENT U/S 143(1) (A) RELATING TO DISALLOWANCE OF THE CLAIM FOR BAD DEBTS UNDER SECTION 36(1 )(VIII) - HELD THAT:- WHILE MERE MAKING OF PROVISION FOR BAD DEBTS WILL NOT BY ITSELF (ON APPLICATION OF AMENDED LAW) ENTITLE THE PARTY ITA NO.2242/KOL/2017 M/S. KLASSIC APARTMENTS PRIVAT E LTD. A.Y.2013-14 2 TO DEDUCTION, YET IT WOULD BE A MATTER WHERE THE AS SESSEE SHOULD BE GIVEN AN OPPORTUNITY TO ESTABLISH ITS CLAIM. THIS BY PRODUCI NG ITS EVIDENCE OF THE MANNER IN WHICH IT TREATED THE PROVISION OF BAD DEBTS WRITTEN OFF IN ACCOUNTS AS WELL AS IN ITS BALANCE SHEET. THE DISALLOWANCE CANNOT BE MADE BY INTIMATION UNDER SECTION 143(1 )(A) AS IT REQUIRES THAT A PARTY BE GIVEN AN OPPORTUNITY TO ES TABLISH ITS CLAIM BEFORE DISALLOWING IT. IT WOULD HAVE BEEN A COMPLETELY DIF FERENT MATTER IF THE APEX COURT HAD RULED THAT IN NO CASE CAN PROVISION FOR BAD DEB TS BE ALLOWED AS A BAD DEBT UNDER SECTION 36(1 )(VII). THE ALLOWANCE OF THE CLA IM OF PROVISION FOR BAD DEBT IS ENTIRELY DEPENDENT UPON HOW IT IS REFLECTED IN THE BALANCE SHEET AND ITS ACCOUNTS. THEREFORE, FOR THE ABOVE PURPOSE IT IS NECESSARY TH AT THE PARTY TO BE GIVEN AN OPPORTUNITY TO ESTABLISH ITS CLAIM. THEREFORE, IN T HE PRESENT FACTS, ADJUSTMENT BY WAY OF DISALLOWING DEDUCTION BY INTIMATION UNDER SE CTION 143(1 )(A) OF THE ACT IS NOT PROPER. - DECIDED IN FAVOUR OF ASSESSEE . 4. IN MY VIEW THE PROPOSITION OF LAW LAID DOWN IN T HIS JUDGMENT APPLIES TO THE FACTS OF THIS CASE. THE ISSUE IS A DEBATABLE ISSUE. EVEN OTHERWISE THE LD. CIT(A) IS WRONG AS HE HAS NO POWER TO REMAND THE MATTER TO TH E AO. HENCE WE DELETE THE IMPUGNED ADDITION AND ALLOW THE APPEAL OF THE ASSES SEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. O RDER PRONOUNCED IN THE COURT ON 21.03.2018. SD/- [ J.SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 21.03.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S KLASSIC APARTMENTS PRIVATE LIMITED, C/O SALAR PURIA JAJODIA & CO., 7, C.R.AVENUE, KOLKATA-700072. 2. I.T.O., WARD-7 (3), KOLKATA. 3. C.I.T.(A)- 2, KOLKATA 4. C.I.T-2, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.2242/KOL/2017 M/S. KLASSIC APARTMENTS PRIVAT E LTD. A.Y.2013-14 3