Shri Pankaj H.Patel,HUF, Ahmedabad V. The Income tax Officer,Ward-7(4), Ahmedabad

ITA 2353/AHD/2010

• Counselvise Citation: 235320514 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 19-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: J M TRIVEDI
• Keywords: Bad and doubtful debts

Judgement Text

, , , , A , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% $% % $% % $% % $%, , , , &' ( &' ( &' ( &' ( & ' & ' & ' & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER) ITA NO.2353/AHD/2010 [ASSTT. YEAR : 2006-2007] PANKAJ H. PATEL, HUF PROP: AKSHAT INDUSTRIES 5, GROUND FLOOR, AGARWAL CENTRE AHMEDABAD. PAN : AABHP 6370 B /VS. THE ITO, WARD-7(4) AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 &/ ASSESSEE BY : SHRI J.M. TRIVEDI ( 0 1 &/ REVENUE BY : SHRI RAHUL KUMAR 3 0 /4'/ DATE OF HEARING : 4 TH DECEMBER, 2012 5%6 0 /4'/ DATE OF PRONOUNCEMENT : 14.12.2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-2007 IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-XVI, DATED 21.05.2010. 2. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE AS UNDER: 1. THAT THE LD.CIT(A)ERRED IN CONFIRMING AND LEARN ED ITO HAS ERRED IN DISALLOWING CLAIM OF BAD DEBT OF RS.5,41,8 44/- FOR THE REASONS STATED IN THEIR RESPECTIVE ORDERS. SR.NO. NAME OF PARTY AMOUNT (RS.) 1. AJANTA MFG. CO. 78,600 ITA NO.2353/AHD/2010 -2- 2. STERLING CERAMICS LTD. 3,61,520 3. ARTISTIAVE CERA PVT. LTD. 1,01,724 2. THAT WHILE CONFIRMING/DISALLOWING CLAIM OF BAD D EBT THE LD.CIT(A) AS WELL AS ITO HAVE ERRED IN NOT APPRECIA TING VARIOUS EXPLANATION/PROOFS ETC. FURNISHED BY THE APPELLANT AS WELL AS HAVE FAILED TO NOTE THAT CLAIM OF APPELLANT WAS SUPPORTE D BY CORRESPONDING ENTRIES IN RELEVANT PARTYS ACCOUNT A S WELL AS FACT THAT AMOUNT OF RS.2,35,000/- RECOVERED FROM BAD DEB T AMOUNT SHOWN AS INCOME IN A.Y.2007-2008, THE DISALLOWANCE, AT THE WORST WAS REQUIRED TO BE REDUCED BY RS.2,35,000/- 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ONLY ISSUE IN THIS GROUND OF THE ASSESSEE IS REGARDING DISALLO WANCE OF BAD DEBTS AMOUNTING TO RS.5,41,844/- HE SUBMITTED THAT IT CO NSISTED OF THREE PARTIES, OUT OF WHICH THE AMOUNT OF RS.1,01,724/- R ELATES TO M/S.ARTISTIAVE CERA PVT. LTD. REGARDING THIS AMOUNT, HE SUBMITTED THAT THE CIT(A) HAS ACCEPTED THE GENUINENESS OF THE CLAIM OF THE ASSESS EE AND STILL WHILE PASSING THE OPERATIVE PORTION OF THE APPELLATE ORDE R, DID NOT ALLOW THE NECESSARY RELIEF TO THE ASSESSEE. WITH REGARD TO T HE CLAIM OF THE ASSESSEE OF BAD DEBTS PERTAINING TO M/S.ARTISTIAVE CERA PVT. LTD. AND M/S.STERLING CERAMICS LTD., HE SUBMITTED THAT SOME AMOUNT PERTAI NING TO THEM WAS RECEIVED NEXT YEAR AND THE ASSESSEE HAS NO OBJECTIO N IF THE AMOUNT RECOVERED NEXT YEAR FROM THESE TWO PARTIES AND SHOW N AS INCOME BY THE ASSESSEE, IS DIRECTED TO BE ALLOWED AS DEDUCTION IN THE NEXT YEAR. THE LEARNED DR HAS RELIED ON THE ORDERS OF THE AO AND T HE CIT(A) IN SUPPORT OF THE CASE OF THE REVENUE. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WITH REGA RD TO THE BAD DEBTS PERTAINING TO M/S.ARTISTIAVE CERA PVT. LTD, W E FIND THAT IN THE APPELLATE ORDER PASSED BY THE CIT(A), HE HAS ACCEPT ED THE CLAIM OF THE ASSESSEE WITH REGARD TO THE PARTY, BUT IN THE OPERA TIVE PORTION OF HIS ORDER, HE HAS NOT ALLOWED ANY RELIEF ON THIS ISSUE TO THE ASSESSEE. THE ASSESSEE ITA NO.2353/AHD/2010 -3- HAS WRITTEN OFF THE AMOUNT OF RS.1,01,724/- IN ITS BOOKS OF ACCOUNTS AND THE FACTS OF THE CASE JUSTIFIES THE DEDUCTION THERE OF IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE CLAIM OF THE ASSESSEE O F BAD DEBTS OF RS.1,01,724/- WITH REGARD TO THE ARTISTIAVE CERA PV T. LTD. IS ALLOWED AS DEDUCTION TO THE ASSESSEE. WITH REGARD TO THE CLAI M PERTAINING TO M/S.AJANTA MFG. CO., AND STERLING CERAMICS LTD. WE FIND THAT THE ASSESSEE HAS RUNNING ACCOUNT WITH THESE TWO PARTIES AND HAS ALSO RECEIVED CERTAIN AMOUNT DURING THE RELEVANT PERIOD FROM THES E PARTIES, AND THEREFORE, THE CLAIM OF BAD DEBTS WITH REGARD TO TH ESE TWO PARTIES COULD NOT BE ALLOWED TO THE ASSESSEE. HOWEVER, THE ALTER NATE REQUEST OF THE ASSESSEE TO DIRECT THE AO TO VERIFY AND IN CASE SOM E AMOUNT OUT OF BAD DEBTS HAS BEEN RECEIVED FROM THESE TWO PARTIES AND HAS BEEN SHOWN AS INCOME BY THE ASSESSEE IN THE SUCCEEDING YEAR, THE SAME SHOULD BE ALLOWED AS DEDUCTION TO THE ASSESSEE IN THE SUCCEED ING YEAR. WE DIRECT ACCORDINGLY AND THE GROUND NOS.1 AND 2 OF THE ASSES SEES APPEAL ARE PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( #.% $% /A.MOHAN ALANKAMONY) &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD