U.P.Coperative Processing & Cold Storage Ltd, Lucknow V. Additional CIT, Lucknow

ITA 227/LKW/2011

• Counselvise Citation: 22723714 RSA 2011
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V SINGH LD
• Keywords: Question of law; Bad and doubtful debts
• Section: 43B; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.227(LKW.)/2011 A.Y.: 2005-06 U.P.CO-OPERATIVE PROCESSING VS. THE ADDL.CIT, RANGE-2, & COLD STORAGE FEDERATION LTD. LUCKNOW. 19-A,VIDHAN SABHA MARG, LUCKNOW. PAN AAACU3507F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT SHUKLA, ADVOCATE RESPONDENT BY : SHRI V.V.SINGH, LD.SR.D.R. O R D E R PER H.L.KARWA, VICE PRESIDENT THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-I, LUCKNOW DATED 18.2.2011 RELATING TO THE ASSESSMENT YEAR 2005-06. 2. GROUND NO. OF THE APPEAL READS AS UNDER : 1) BECAUSE THE LEARNED CIT(A)-I, LUCKNOW ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE ADDITION OF RS.1,99,343/- AS MADE BY THE ASSESSING ON ACCOUNT OF NOT DEPOSITING THE EPF AMOUNT WITHIN PRESCRIBED TIME, WHEREAS ONLY A SUM OF RS.83,153 WAS UNPAID TILL 31/03/2005 AND THAT WAS ADVANCE OF RS.83,500 AMOUNT TO THREE EMPLOYEES OF THE INSTITUTION AS IT HAS BEEN STATED IN THE STATEMENT OF FACTS SUBMITTED BEFORE THE HON'BLE CIT(A)-I, LUCKNOW. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY AND HAS FILED IS RETURN DECLARING TOTAL INCOME OF RS.2,72,56,440. THE AO OBSERVED THAT WHEN THE BOOKS OF ACCOUNT WERE EXAMINED, IT WAS FOUND THAT EPF HAD BEEN COLLECTED FROM THE VARIOUS EMPLOYEES AND NOT PAID INTO EPF ACCOUNT AS MANDATED. HE FURTHER OBSERVED THAT LUMPSUM ADVANCES ARE MADE TO SOME EMPLOYEES FROM THE EPF ACCOUNT AND NET RESULT IS THAT EPF DOES NOT SHOW UP AS PAYABLE. THE AO HAS QUOTED AN EXAMPLE WHICH READS AS UNDER : RECEIVED FROM FOUR EMPLOYEES ADVANCE GIVEN TO ONE EMPLOYEE 1,000 1,000 1,000 1,000 4,000 THE AO DISALLOWED A SUM OF RS.1,99,343 AND TREATED THE SAID AMOUNT AS INCOME OF THE ASSESSEE UNDER SECTION 2(24)(X) OF THE INCOME-TAX ACT,1961 (IN SHORT THE ACT). 4. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TOTAL DEDUCTIONS IN EPF ACCOUNT TO THE TUNE OF RS.29,38,029.50 WAS MADE AFTER TAKING INTO CONSIDERATION ADVANCE UNDER EPF A/C MADE WITHIN FIFTEEN DAYS OF 31ST MARCH,2005, NO LIABILITY UNDER THE EPF A/C REMAINED THERE I.E. RS.83,153.91 WERE NOT DEPOSITED AS DETAILS GIVEN BELOW AND RS.83,500 WERE ADVANCED AGAINST EPF ACCOUNT, AGAINST WHICH RS.28,54,875.59 HAS BEEN PAID. HENCE, ONLY RS.83,159.91 HAS NOT BEEN PAID TILL MARCH,2005. THE DETAILS OF WHICH ARE GIVEN BELOW : 3 MONTH OF DEDUCTION AMOUNT OF DEDUCTION DATE OF DEPOSIT AMOUNT DEPOSITED APRIL, 2004 198307 13.5.2004 177397 MAY,2004 185707 29.5.2004 185825 JUNE,2004 266418 29.7.2004 230126 JULY,2004 249656 29.7.2004 233972 AUGUST, 2004 261662 26.8.2004 227495.94 SEPTEMBER,2004 240901 1.10.2004 246636.20 OCTOBDER,2004 264160 9.11.2004 343431.48 NOVEMBER, 2004 248862 3.12.2004 245962 DECEMBER,2004 294129.50 4.1.2005 265678 JANUARY, 2005 221156 28.1.2005 202858.97 FEBRUARY, 2005 2364441 1.3.2005 210501 MARCH,2005 270630 23.3.2005 284994 TOTAL 2938029.50 2854875.59 SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO WITHOUT TAKING INTO CONSIDERATION THE FACTS OF THE CASE, HAS DISALLOWED A SUM OF RS.1,99,343 AND HAS ARBITRARILY ALLEGED THAT THE AMOUNT OF EPF RECEIVED FROM THE EMPLOYEES HAD BEEN ADVANCED. HE FURTHER SUBMITTED THAT OVER AND ABOVE A SUM OF RS.83,500 WAS GIVEN AS LOAN AGAINST EPF. THE DETAILS OF WHICH ARE AS UNDER: DATE NAME OF EMPLOYEE AMOUNT 8.4.2005 SRI HARDWARI LAL RS.8,500 12.4.2005 SRI R.B.KUREEL RS.45,000 12.4.2005 SRI M.P.MISRA RS.30,000 TOTAL RS.83,500 SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, IN FACT, EPF IS PAID OUT OF EPF ACCOUNT AND THEREFORE, THE ADVANCES MADE TO THE EMPLOYEES FROM EPF ACCOUNT AMOUNTING TO RS.83,500 ARE ALLOWABLE DEDUCTION UNDER THIS HEAD. IN OUR VIEW, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE DELHI COURT IN THE CASE OF CIT V. P.M. ELECTRONICS LTD. (2009) 177 TAXMAN 1 4 (DELHI). IN THE SAID CASE, EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO PROVIDENT FUND PAYMENT MADE BOTH ON ACCOUNT OF EMPLOYER AND EMPLOYEES SHARE REVEALED THAT PAYMENTS IN A SUM OF RS.17,94,042 WERE MADE AS PER PROVISIONS OF SECTION 36(1)(VA) READ WITH SEE. 2(24)(X) AND SEC. 43B OF THE INCOME-TAX ACT, 1961. CONSEQUENTLY, THE A.O. DISALLOWED DEDUCTION AND ADDED THE SUM OF RS.17,94,042/- TOWARDS EPF CONTRIBUTION. ON APPEAL, THE CIT(A) ALLOWED PARTIAL RELIEF TO THE ASSESSEE. IN SECOND APPEAL, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. THE REVENUE PREFERRED AN APPEAL U/S 260A OF THE ACT BEFORE THE HON'BLE DELHI HIGH COURT AND THE HON'BLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL OBSERVING AS UNDER : '7. HAVING HEARD THE LEARNED COUNSEL FOR THE REVENUE, AS WELL AS THE ASSESSEE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INTEGRA IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [S.L. A. NO. 1934 OF 2007, DATED 7-3-2007] WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. DHARMENDRA SHARMA [2008] 297 ITR 320. 8. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COUNSEL FOR THE TRIBUNAL HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. SYNERGY INANCIAL EXCHANGE LID. [2007] 288 ITR 366' AND THAT OF THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. PAMWI TISSUES LLD.[IT APPEAL NO. 1034 OF 2004, DATED 4-2-2008] THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US, IN VIEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEMENT LTD.(SUPRA) BY THE SUPREME COURT BY A SPEAKING ORDER, THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE HAS TO BE REJECTED AT THE VERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS:- 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GEORGE WILLIAMSON (ASSAM) LTD. (2006) 284 ITR 619 DEALT WITH THE VERY 5 SAME ISSUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HIGH COURT NOTED A CONTRARY VIEW TAKEN BY THE KERALA HIGH COURT THE CASE OF CIT V. SOUTH INDIA CORPN. LTD. [2000 ] 242 ITR 114. AFTER NOTING THE SAID JUDGMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVISIONS OF SECTION 43B OF THE ACT BY VIRTUE OF FINANCE ACT, 2003 WITH EFFECT FROM 1-4-2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BY VIRTUE OF THE OMISSION OF THE SECOND PROVISO AND THE OMISSION OF CLAUSES (A), (C), (D), (E) AND (F) WITHOUT ANY SAVING CLAUSE WOULD MEAN THAT THE PROVISIONS WERE NEVER IN EXISTENCE. FOR THIS PURPOSE, IN THE SAID CASE THE ASSESSEE HAD PLACED RELIANCE ON THE JUDGMENT OF A CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD. V UNION OF INDIA [2000] 2 SCC 536 AND RAYALA CORPN. (P) LID. V. DIRECTOR OF ENFORCEMENT [1969] 2 SCC 412 AND GENERAL FINANCE CO. V. ASSN. CIT [2002] 257 ITR 338 (SC). THE SAID SUBMISSIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GAUHATI HIGH COURT AND RELYING ON EARLIER DECISIONS OF ITS OWN COURT IN CIT V. ASSAM TRIBUNE [2002] 253 ITR 932 AND CIT V. BHARAT BAMBOO & TIMBER SUPPLIERS [1996] 219 ITR 212 (GAU.) THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORESAID MATTER WAS TAKEN UP IN APPEAL ALONGWITH OTHER MATTERS INCLUDING VINAY CEMENT LTD. 'S CASE (SUPRA). THE ORDER IN VINAY CEMENT LTD.S CASE (SUPRA) WAS PASSED BY THE SUPREME COURT ON 7-3-2007 WHEREIN IT OBSERVED AS FOLLOWS:- 'DELAY CONDONED. IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE CIRCUMSTANCES, THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTION 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDENT FUND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED. ' 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHILE DOING SO THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE IT PERTAIN TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORESAID POSITION AS REGARDS 6 THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER (P.) LTD. BY A JUDGMENT DATED 18-8-2008 PASSED IN TAX-CASE (A) NO. 1192 OF 2008 DISCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. 'S CASE (SUPRA) AND VINAY CEMENT LTD. 'S CASE (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGES CASE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON TH6 JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED V. STATE OF KERALA [2000] 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AND NOTED THE FOLLOWING OBSERVATIONS: 'IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKING ORDER, IE., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLARATION OF LAW, WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RECORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT, TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF THE COURT, TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES. ' 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COURT IN KUNHAYAMMED 'S CASE (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P.) LTD. (SUPRA) CAME 7 TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT LTD.'S CASE (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS NON-DECLARED BY THE SUPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONING OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD. 'S CASE (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT LTD. 'S CASE (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA'S CASE (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGREE WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COURT IN PAMWI TISSUES LTD. 'S CASE (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED.' 5.1 IN OUR OPINION, THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF P.M. ELECTRONICS (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THEREFORE, WE DISALLOW RS.83,153.91, WHICH WAS NOT PAID BEFORE FILING OF THE RETURN. THUS, THE ASSESSEE GETS A RELIEF OF RS.1,99,343 RS.83,153.91= RS.1,16,189. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED PARTLY. 6. GROUND NO.2 OF THE APPEAL READ AS UNDER : 2) BECAUSE THE LEARNED CIT(A)-I, LUCKNOW ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE ADDITION OF RS.5,88,705.90 AS MADE BY THE LEARNED ASSESSING OFFICER, WHEREAS THE APPELLANT PROVIDED THE DETAILS BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A) THAT THE CLAIM OF THE ASSESSSE IS IN ORDER AS OUT 8 OF TOTAL RECEIVABLE AMOUNT AT RS.9,85,162.65 WHICH PERTAINS TO EARLIER YEARS A SUM OF RS.5,88,705.90 WAS DEDUCTED BY THE APPELLANT ASSESSSEE AND REST AMOUNT OF RS.4,26,456/- HAS BEEN OFFERED FOR TAX. THUS THE DEDUCTION OF RS.5,88,705.90 HAS RIGHTLY BEEN CLAIMED BY THE ASSESSSEE. 7. THE AO HAS DISCUSSED THIS ISSUE IN PARA 6 OF THE ORDER, WHICH READS AS UNDER : 6. PRIOR PERIOD EXPENSES ASSESSEE HAS CLAIMED PRIOR PERIOD EXPENSES AS FOLLOWS- (I) FREIGHT RECOVERABLE RS.38,221.00 (II) SALARY SAVING SCHEME RS.1,210.30 (III) REGIONAL OFFICE, VARANASI RS.86,435.00 (IV) LOSS RECOVERABLE RS.3,38,142.74 (V) SUPERVISION CHARGES RS.17,500.00 (VI) REGIONAL OFFICE BANK A/C BECOME DEAD (A) R.O. VARANASI 1712.39 (B) HAYAT NAGAR 100.00 (C) SAID PUR NIRMAR A/C 388.00 RS. 2200.39 (VII) VARIOUS PETTY EXPENSES RS.72.986.47 TOTAL RS. 5,58,705.90 ASSESSEE COULD NOT PROVE WHAT THE NATURE WAS OF THESE EXPENSES AND HOW THESE AMOUNTS CRYSTALLIZED DURING THE YEAR. IN HIS SUBMISSION DATED 20.12.2007, THE ASSESSEE HAS CONTENDED THAT THESE EXPENSES ARE VERY OLD, PRIOR TO 1998-99, THESE ARE NOT RECOVERABLE. IT IS NOT UNDERSTANDABLE HOW EXPENSES CAN BE WRITTEN OFF. THE FACT THAT THESE ARE EXPENSES MEANS THAT THE ASSESSEE HAS, AT SOME TIME, DEBITED HIS P & L ACCOUNT. IF THESE ARE NOT RECOVERABLE FOR WHATEVER REASON, HOW CAN THEY BE AGAIN WRITTEN OFF ? SINCE THESE EXPENSES ANYWAY RELATE TO PRIOR PERIOD, THEY ARE DISALLOWED. DISALLOW: RS.5,58,705.90 9 8. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION AND, HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI AMIT SHUKLA, ADVOCATE,LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE EXPENSES WERE RECEIVABLE FROM THE PARTIES, BUT WERE NOT REALIZED AND BECAME BAD DEBTS UNRELIZABLE BEING VERY OLD AND NO LEGAL ACTION CAN BE TAKEN, AND THERE WERE BALANCES IN REGIONAL OFFICE BANK ACCOUNT AMOUNTING TO RS.2200.39. BEING A LAPSE OF LONG PERIOD, THE BANK HAS CHARGED BANK CHARGES AND ACCOUNT BECAME NIL. THESE EXPENSES HAVE ALSO BEEN SHOWN AS BAD DEBTS. SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HONESTLY HAS DEBITED RS.558705.90 AND CREDITED RS.985162.65 BEING BAD DEBTS RECEIVED. HENCE, IN NUTSHELL, A SUM OF RS.426456.75 HAS BEEN SHOWN AS EXTRA INCOME. SHRI AMIT SHUKLA, LEARNED COUNSEL FOR THE ASSESSEE POINTED THAT IF PRIOR YEAR'S EXPENSES ARE DISALLOWED, THEN PRIOR YEAR'S INCOME RS.985162.65 BE NOT TAKEN AS INCOME. THE ASSESSEE HAS NEVER DEBITED PRIOR YEAR'S EXPENSES IN THE PROFIT & LOSS ACCOUNT. IT IS ONLY DUE TO THE FACT THAT THESE AMOUNTS ARE UNREALIZABLE AND BECAME BAD DEBTS, HENCE, THE ADDITION UNDER THE HEAD PRIOR PERIOD EXPENSES OF RS.558705.90 IS NOTHING BUT BAD IN LAW. IN OUR VIEW, THERE IS MERIT IN THE ABOVE SUBMISSIONS OF SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE. IN OUR OPINION, THE AO HAS WRONGLY DISALLOWED CLAIM OF PRIOR PERIOD EXPENSES OF RS.5,58,705.90 AND FURTHER ERRED IN NOT CONSIDERING THAT A SUM OF RS.9,85,162.65 HAS BEEN SHOWN AS INCOME BEING BAD DEBTS RECEIVABLE. SHRI AMIT SHUKLA, ADVOCATE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE PROVIDED THE DETAILS BEFORE THE LOWER AUTHORITIES IN SUPPORT OF ITS CLAIM. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE CLAIM OF THE 10 ASSESSEE IS IN ORDER AS OUT OF RECEIVABLE AMOUNT AT RS.9,85,162.65,WHICH PERTAINS TO EARLIER YEARS, A SUM OF RS.5,88,705.90 WAS DEDUCTED BY THE ASSESSEE AND BALANCE AMOUNT OF RS.4,26,456.75 HAS BEEN OFFERED FOR TAX. IN OUR VIEW, THE CLAIM OF THE ASSESSEE IS CORRECT AND THEREFORE, THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF RS.5,58,705.90. IN THAT VIEW OF THE MATTER, WE ALLOW GROUND NO.2 OF THE APPEAL AND DELETE THE ADDITION OF RS.5,58,705.90. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.7.2011. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JULY 14TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.