Aditya Chharia, Kolkata V. I.T.O Wd - 42(2),kolkata, Kolkata

ITA 2293/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4596 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN A
• Assessee Lawyers: SURENDRA JOSHI
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2293/KOL/2013 ASSESSMENT YEAR:2006-07 ADITYA CHHARIA 98, B.K.PAUL, AVENUE, KOLKATA-700 005 [ PAN NO.AFNPC5939 E ] / V/S . ITO WARD-42(2), 8, RABINDRA SARANI, PODDAR COURT, KOLKATA-700 001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SURENDRA JOSHI, FCA /BY RESPONDENT SHRI SALLONG YADEN, ACIT-DR /DATE OF HEARING 20-06-2016 /DATE OF PRONOUNCEMENT 30-06-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXVI, KOLKATA DATED 12.08.201 3. ASSESSMENT WAS FRAMED BY ITO WARD-54(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 31.12.2009 FOR ASSESSMENT YEAR 2007-08. SHRI SURENDRA JOSHI, LD AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE AND SHRI SALLONG YADEN, LD DEPARTMENTAL R EPRESENTATIVE APPEARED ON BEHALF OF REVENUE. ITA NO.2293/KOL/2013 A.Y.2006-07 ADITYA CHHARIA VS. ITO WD-42(2) KOL. PAGE 2 2. AT THE TIME OF HEARING GROUND NO.1 RAISED BY ASS ESSEE IN HIS APPEAL HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSE E BEFORE US. THE SAME IS, THEREFORE, DISMISSED AS NOT PRESSED. 3. SOLE ISSUE RAISED IN GROUND NO.2 IN THIS APPEAL OF ASSESSEE IS THAT LD CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY SUSTAINING DISALLOWANCE OF 18,42,868/- ON ACCOUNT OF BAD DEBT WRITTEN OFF U/S 36(1)(VII) OF THE ACT. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIVIDUA L AND ENGAGED IN CONSTRUCTION BUSINESS. DURING THE YEAR UNDER CONSID ERATION, ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING ITS INCOME AT 9,67,630/- WHICH WAS ASSESSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE ACT AT 28,10,498/-. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS CLAIM ED BAD DEBT OF 18,42,868/- BY WAY OF DEBITING ITS PROFIT AND LOSS A/C. HOWEVER , AO DISALLOWED BAD DEBT WRITTEN OFF BY ASSESSEE ON THE GROUND THAT IT IS TH E FIRST ASSESSMENT YEAR FOR THE BUSINESS OF THE ASSESSEE AND THEREFORE, IT IS NOT A LLOWABLE AS DEDUCTION U/S. 36(1)(VII) OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. MATTER WAS CARRIED TO LD. CIT(A) WHO AFTER HEARI NG THE CONTENTION OF ASSESSEE HAS UPHELD THE ACTION OF AO. 6. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSESS EE CAME IN SECOND APPEAL BEFORE US. 7. BEFORE US LD. AR FILED A PAPER BOOK WHICH IS RUN NING PAGES FROM 1 TO 59 AND STATED THAT THE ASSESSEE FOR THE YEAR UNDER CO NSIDERATION HAS RAISED BILL OF 99,94,870/- TO M/S TANTIA CONSTRUCTION LTD. AND OF 1,18,40,609/- TO SIMPLEX INFRASTRUCTURE LTD. WHICH WAS DULY OFFERED TO TAX. IN SUPPORT OF ITS CLAIM, ASSESSEE HAS SUBMITTED ITS SALES SUMMARY, INVOICES ISSUED TO THE AFORESAID ITA NO.2293/KOL/2013 A.Y.2006-07 ADITYA CHHARIA VS. ITO WD-42(2) KOL. PAGE 3 PARTIES WHICH ARE PLACED ON PAGE 39 AND 46 TO 53 OF ITS PAPER BOOK. THE AR ALSO SUBMITTED THE COPIES OF TDS CERTIFICATES FROM BOTH THE AFORESAID PARTIES WHICH ARE PLACED PAGES 40 TO 45 OF THE PAPER BOOK. ON THE OTHER HAND, LD DR VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELO W. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING D ISCUSSION, WE FIND THAT LOWER AUTHORITIES HAVE DISALLOWED THE CLAIM OF ASSESSEE F OR 18,42,868/ ON ACCOUNT OF BAD DEBT WRITTEN OFF ON THE GROUND THAT IT IS THE F IRST ASSESSMENT YEAR OF ASSESSEE AND THEREFORE DEBTORS WRITTEN OFF ARE NOT ELIGIBLE FOR DEDUCTION. NOW THE QUESTION BEFORE US ARISE SO AS TO WHETHER DEBTS WRI TTEN OFF IN THE FIRST ASSESSMENT YEAR OF ASSESSEE IS INELIGIBLE FOR DEDUCTION U/S. 3 6(1)(VII) OF THE ACT. IN THIS POINT OF VIEW, VARIOUS COURTS HAVE DECIDED THIS ISS UE IN FAVOUR OF ASSESSEE AND ONE THEM IS BY THE COORDINATE BENCH OF MUMBAI ITAT IN THE CASE OF DCIT V. REDIFF.COM INDIA LTD. THE RELEVANT EXTRACT OF THE ORDER REPRODUCED BELOW :- A.O DISALLOWED THE CLAIM OF BAD DEBTS ON THE GROUN D THAT THE TRANSACTIONS PERTAIN TO THE CURRENT YEAR AND THE SAME WAS WRITTEN OFF BY TH E ASSESSEE IN THE SAME YEAR ITSELF. ACCORDING TO THE AO THE BAD DEBT CLAIMED BY THE ASS ESSEE HAS IN FACT NOT YET MATURED TO CLAIM IT AS BAD AND IRRECOVERABLE. WE FIND THE C IT(A)A ALLOWED THE CLAIM OF BAD DEBTS ON THE GROUND THAT THE ASSESSEE FULFILLED THE CONDITIONS OF SECTION 36(10(VII) R.W.S 36(2) OF THE ACT. WE FIND THIS ISSUE HAS NOW BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF TRF LTD. VS. CIT 323 ITR 397 WHREIN IT HAS BEEN HELD THAT AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE IT ACT, 1961 W.E.F. APRIL 1, 1989, IN ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTA BLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. SINCE THE ASSESSEE HAS WRITTE N OFF THE AMOUNT OF BAD DEBTS IN THE BOOKS OF ACCOUNT, THEREFORE, IN VIEW OF THE DEC ISION CITED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING TH E CLAIM BAD DEBTS WRITTEN OFF. 9. WE FURTHER FIND THAT CBDT CIRCULAR NO.12/2016 DA TED 30.05.2016 HAS CLARIFIED THE ADMISSIBILITY OF CLAIM FOR DEDUCTION OF BAD DEBT U/S. 36(1)(VII) R.W.S SEC.36(2) OF THE ACT AND RELEVANT EXTRACT REPRODUCE D BELOW FOR THE SAKE OF CLARITY:- 4. IN VIEW OF THE ABOVE, CLAIM FOR ANY DEBT OR PART THEREOF IN ANY PREVIOUS YEAR, SHALL BE ADMISSIBLE UNDER SECTION36()(VII) OF THE ACT, IF IT IS WRITTEN OFF AN IRRECOVERABLE IN ITA NO.2293/KOL/2013 A.Y.2006-07 ADITYA CHHARIA VS. ITO WD-42(2) KOL. PAGE 4 THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THAT PREVI OUS YEAR AND IT FULFILLS THE CONDITIONS STIPULATED IN SUB SECTION (2) OF SUB-SECTION 36(2) OF THE ACT. 5. ACCORDINGLY, NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND AND APPEALS ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESSED UPON. 10. RESPECTFULLY, FOLLOWING THE ORDER OF COORDINATE BENCH OF ITAT MUMBAI IN THE CASE OF REDIFF.COM INDIA LTD. (SUPRA) AND CIRCULAR ISSUED BY CBDT AND AFTER CONSIDERING THE FACTS OF THE PRESENT CASE, WE REVERSE THE ORDERS OF AUTHORITIES BELOW AND ALLOW GROUND RAISED BY ASSESS EE. AO IS DIRECTED ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/06/2016 SD/- S D/- ( ! ) ( ! ) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ' #$ - 30/06/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ADITYA CHHARIA, 90 BKPAUL AVENUE, KOLKAT A-005 2. /RESPONDENT-ITO WD-42(2) 8, RABINDRA SARANI, PODDAR COURT, KOL-01 3. ##%& ( / CONCERNED CIT 4. ( - / CIT (A) 5. )*+ %& , %& / DR, ITAT, KOLKATA 6. +,- / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / # %&,