JCIT(OSD), Circle - 8, Kolkata, Kolkata V. M/s. Likhami Leasing Limited, Kolkata

ITA 234/KOL/2012

• Counselvise Citation: 23423514 RSA 2012
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SITAL CH DAS
• Assessee Lawyers: A K GUPTA
• Keywords: Bad and doubtful debts
• Section: 143(3); 115JB

Judgement Text

I.T.A. NO. 234/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 234/KOL/ 2012 ASSESSMENT YEAR : 2008-2009 JOINT COMMISSIONER OF INCOME TAX (OSD),............ ................APPELLANT CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-700 069 -VS.- M/S. LIKHAMI LEASING LIMITED,...................... .....................RESPONDENT 31, J.L. NEHRU ROAD, KOLKATA-700 016 [PAN : AAACL 2059 H] APPEARANCES BY: SHRI SITAL CH. DAS, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI A.K. GUPTA, FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 16, 2015 DATE OF PRONOUNCING THE ORDER : NOVEMBER 20, 2015 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 29.11.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL AS RAISED IN THE REVISED GROUND NO.1 RELATES TO THE DELETION BY THE LD. CIT( APPEALS) OF THE DISALLOWANCE OF RS.2,29,56,490/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF BAD DEBTS. I.T.A. NO. 234/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF FINANCING, INVESTMENT AND TRADING I N SHARES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 24.09.2008 DECLARING A LOSS OF RS.1,38,22,439/-. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A PROVISION FOR DOUBTFU L DEBTS AMOUNTING TO RS.2,29,56,490/- MADE IN THE EARLIER YEARS WAS WRIT TEN BACK AND CREDITED. AT THE SAME TIME, A SIMILAR AMOUNT WAS DEBITED BY T HE ASSESSEE TO THE PROFIT & LOSS A/C ON ACCOUNT OF BAD DEBTS AND THE S AME WAS DEDUCTED WHILE COMPUTING THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSESSING OFFICER, THIS TREATMENT GIVEN BY THE ASSESSEE RESULTED IN DOUBLE DEDUCTION OF THE SAME AMOUNT OF BAD DEBTS, INASMUCH AS THE PROVISION FOR DOUBTFUL DEBTS MADE IN THE EAR LIER YEARS WAS NOT OFFERED BY THE ASSESSEE THEREBY CLAIMING THE DEDUCT ION TWICE, FIRSTLY BY DEBITING THE AMOUNT OF BAD DEBTS TO THE PROFIT & LO SS ACCOUNT AND THEN AGAIN CLAIMING DEDUCTION FOR THE SAME IN THE COMPUT ATION OF TOTAL INCOME. HE, THEREFORE, MADE AN ADDITION OF RS.2,29,56,490/- AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.91,87,750/- IN T HE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 16.12.2010. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE LD. CIT(APPEALS) CHALLENGING THE ADDITION OF RS.2,29,56,490/- MADE B Y THE ASSESSING OFFICER. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THAT OUT OF THE TOTAL PROVISION MADE FOR BAD DEBTS IN THE EARLIER YEARS, A SUM OF RS.91,27,733/- WAS IN RESPECT OF ITS OWN DEBTS WHILE THE BALANCE A MOUNT OF RS.1,38,28,757/- WAS IN RESPECT OF DEBTS BELONGING ONE OF ITS AMALGAMATING COMPANIES, NAMELY BINDAL LEASING & FI SCAL SERVICES LIMITED. IT WAS SUBMITTED THAT ALTHOUGH THESE PROVI SIONS WERE MADE IN THE BOOKS OF ACCOUNT FOR THE EARLIER YEARS, NO DEDU CTION WAS CLAIMED EITHER BY THE ASSESSEE-COMPANY OR BY ITS AMALGAMATI NG COMPANY IN THE COMPUTATION OF TOTAL INCOME AND THERE WAS THUS NO Q UESTION OF MAKING I.T.A. NO. 234/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 THE CLAIM TWICE, AS ALLEGED BY THE ASSESSING OFFICE R. IN SUPPORT OF THIS CONTENTION, RELEVANT DOCUMENTARY EVIDENCE IN THE FO RM OF ANNUAL ACCOUNTS AND COMPUTATION OF TOTAL INCOME FOR THE RE LEVANT YEARS WERE FILED BY THE ASSESSEE AND AFTER VERIFYING THE SAME, THE LD. CIT(APPEALS) FOUND THAT NO DEDUCTION WAS CLAIMED BY THE ASSESSEE -COMPANY OR ITS AMALGAMATING COMPANY WHILE COMPUTING THE TOTAL INCO ME FOR THE YEARS IN WHICH THE PROVISION FOR DOUBTFUL DEBTS WAS MADE. HE FOUND THAT THE DEDUCTION ON ACCOUNT OF BAD DEBTS WAS CLAIMED BY TH E ASSESSEE FOR THE FIRST TIME IN THE YEAR UNDER CONSIDERATION AND THE FINDING OF THE ASSESSING OFFICER THAT THERE WAS DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE FOR THE SAME AMOUNT WAS WITHOUT ANY BASIS OR MATERIAL ON RE CORD. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER BY WAY O F DISALLOWANCE OF BAD DEBTS WAS DELETED BY THE LD. CIT(APPEALS). 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING HAS TAKEN US THROUGH THE RELEVANT D OCUMENTARY EVIDENCE IN THE FORM OF FINAL ACCOUNTS AND COMPUTATION OF TO TAL INCOME OF THE ASSESSEE-COMPANY AS WELL AS THE CONCERNED AMALGAMAT ING COMPANY FOR THE RELEVANT YEARS TO SHOW THAT THERE WAS NO DEDUCT ION CLAIMED BY THEM ON ACCOUNT OF BAD DEBTS WHEN THE PROVISION WAS MADE . HE HAS ALSO INVITED OUR ATTENTION TO THE PROFIT & LOSS ACCOUNT AND COMP UTATION OF TOTAL INCOME OF THE ASSESSEE-COMPANY FOR THE YEAR UNDER C ONSIDERATION TO SHOW THAT AFTER REVERSAL OF THE PROVISION MADE IN T HE EARLIER YEAR, THE AMOUNT OF BAD DEBTS WAS DEBITED TO THE PROFIT & LOS S ACCOUNT THEREBY NULLIFYING ITS EFFECT ON PROFIT AND THEN DEDUCTION WAS CLAIMED IN THE COMPUTATION OF TOTAL INCOME ON ACCOUNT OF BAD DEBTS . IT IS THUS CLEAR THAT NO DEDUCTION ON ACCOUNT OF RELEVANT BAD DEBTS WAS C LAIMED BY THE ASSESSEE-COMPANY OR EVEN BY ITS AMALGAMATING COMPAN Y IN THE EARLIER YEARS AND IT WAS ONLY IN THE YEAR UNDER CONSIDERATI ON THAT THE DEDUCTION ON ACCOUNT OF BAD DEBTS WAS CLAIMED BY THE ASSESSEE THAT TOO ONLY ONCE AND NOT TWICE, AS ALLEGED BY THE ASSESSING OFFICER. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPE ALS) DELETING THE I.T.A. NO. 234/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF ASSESSEES CLAIM FOR BAD DEBTS AND UPHOLDING THE SAME, WE DISMISS GR OUND NO. 1 OF THE ASSEESSEES APPEAL. 6. AS REGARDS THE OTHER ISSUE RAISED BY THE REVENUE IN GROUND NO. 2 OF ITS APPEAL THAT THE LD. CIT(APPEALS) HAS ERRED IN N OT CONSIDERING COMPUTATION OF TAX LIABILITY UNDER SECTION 115JB O F THE ACT, WE FIND THAT THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAVING BEEN COMPUTED BY THE ASSESSING OFFICER AS PER THE N ORMAL PROVISION OF THE ACT AT RS.91,87,750/-, THE WORKING OF BOOK PROF IT MADE BY THE ASSESSEE AS PER SECTION 115JB AT A LOSS OF RS.86,52 6/- WAS NOT VERIFIED BY THE ASSESSING OFFICER. NOW THAT WE HAVE UPHELD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE OF RS.2, 29,56,490/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS, THE TOTAL INCOME OF THE ASSESSEE AS FINALLY ASSESSED UNDER THE NORMAL PROVI SION OF THE ACT WOULD BE LOSS AND CONSEQUENTLY IT BECOMES RELEVANT TO VER IFY THE WORKING OF BOOK PROFIT UNDER SECTION 115JB AS MADE BY THE ASSE SESE AT A LOSS OF RS.86,526/-. WE, THEREFORE, ALLOW GROUND NO. 2 OF T HE REVENUES APPEAL AND DIRECT THE ASSESSING OFFICER TO VERIFY THE WORK ING OF BOOK PROFIT AS MADE BY THE ASSESSEE UNDER SECTION 115JB. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 20, 2015. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 20 TH DAY OF NOVEMBER, 2015 I.T.A. NO. 234/KOL./2012 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 COPIES TO : (1) JOINT COMMISSIONER OF INCOME TAX (OSD), CIRCLE-8, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-700 069 (2) M/S. LIKHAMI LEASING LIMITED, 31, J.L. NEHRU ROAD, KOLKATA-700 016 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, KO LKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.