ACIT, New Delhi V. M/s Shree Om Enterprises Pvt. Ltd., New Delhi

ITA 2462/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3431 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA SENIOR
• Assessee Lawyers: D M PARANAJPAY
• Keywords: Bad and doubtful debts
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G, NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2462/DEL/2010 (ASSESSMENT YEAR : 2006-07) ACIT, CIRCLE 8 (1), VS. M/S. SHREE OM ENTERPRISES PVT. LTD., NEW DELHI. A 98/3, OKHLA INDL. AREA, PHASE-II, NEW DELHI 110 020. (PAN : AAACS2078K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.M. PARANAJPAY, FCA REVENUE BY : MS. ANUSHA KHURANA, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF THE CIT (APPEALS)-XI, NEW DELHI DATED 16.2.2010 FOR THE ASS ESSMENT YEAR 2006-07. THE FOLLOWING GROUNDS OF APPEAL ARE TAKEN BY THE RE VENUE : 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.3,80,536/- MADE BY THE A.O. ON ACCOU NT OF ESI & EPF. 2. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.4,59,876/- MADE BY THE A.O. ON ACCOU NT OF BAD DEBTS. ITA NO.2462/DEL/2010 2 3. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, AD D OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR D URING THE HARING OF THIS APPEAL. 2. GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.3,80,536/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESI & EPF. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE HAS DEPOSITED THE EMPLOYEES PF CONTRIBUTION AS WELL AS EMPLOYEES ES I CONTRIBUTION AFTER DUE DATE AND, THEREFORE, HE DISALLOWED THESE CONTRI BUTIONS AND ADDED BACK TO THE INCOME OF THE ASSESSEE. CIT (A) DELETED THE AD DITION FOLLOWING THE JUDGMENTS OF HON'BLE SUPREME COURT AND JURISDICTION AL HIGH COURT VIDE PARA 2.3 OF HIS ORDER. 3. WHILE PLEADING ON BEHALF OF THE REVENUE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LEA RNED AR FOR THE ASSESSEE RELIED ON THE ORDER OF CIT (A) AND ALSO SUBMITTED T HAT THIS ISSUE IS COVERED BY VARIOUS JUDGMENTS IN FAVOUR OF THE ASSESSEE INCL UDING THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION S LIMITED 319 ITR 306 (SC). HE ALSO SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AI MIL LIMITED. 4. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE I SSUE REGARDING THE PAYMENT OF ESI & EPF CONTRIBUTIONS IS ALLOWABLE WHE N THE SAME IS PAID ITA NO.2462/DEL/2010 3 BEFORE THE DUE DATE OF FILING THE RETURN. THE HON' BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LIMITED (SUPRA) HAS HELD AS UNDER :- THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT, 2003, OPE RATED, RETROSPECTIVELY, WITH EFFECT FROM APRIL 1, 1988 AND NOT PROSPECTIVELY FROM APRIL 1, 2004. EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, ASSESSEES WERE EN TITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOOD CREDITED O N OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUNDS ACT. THI S CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATION MADE T O THE FINANCE MINISTRY ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WI TH EFFECT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN N ATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1 988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WOR KABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULAR LY TO GIVE EFFECT TO THE SECTION AS A WHOLE. IN VIEW OF THIS, WE SEE NO FAULT IN THE ORDER OF CI T (A) AND DISMISS THIS GROUND OF APPEAL TAKEN BY THE REVENUE. 5. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.4,59,876/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SHOWED BAD DEBTS WRITTE N OFF OF RS.4,59,876/- AND THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO EXPLAIN THE NATURE OF EXPENSES UNDER THIS HEAD. BUT, IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED TO THE ASSESSEE COMPANY, THE ASSESSEE COULD NOT FILE A NY PLAUSIBLE EXPLANATION ITA NO.2462/DEL/2010 4 NOR ADDUCE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM. ASSESSING OFFICER OBSERVED THAT NO EFFORT WAS MADE BY THE ASSESSEE TO RECOVER AND ACCORDINGLY THE AMOUNT OF BAD DEBTS OF RS.4,59,876/- IS DISALLO WED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. CIT (A), AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE DURING THE PROCEEDINGS BEFORE HIM, VIDE 2. 8 OF HIS ORDER, DELETED THE ADDITION. 6. WHILE PLEADING ON BEHALF OF THE REVENUE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, LE ARNED AR FOR THE ASSESSEE SUBMITTED THAT THIS DEBT WAS CONSIDERED IN COMPUTIN G THE INCOME OF PAST YEARS AND DURING THE YEAR, SAME BECAME UNRECOVERABL E AND HENCE THE SAME IS WRITTEN OFF AS BAD DEBT. ASSESSEE HAD FULFILLED AL L THE CONDITIONS LAID DOWN IN THE PROVISION RELATING TO THE BAD DEBT U/S 36(1) (VII) AND 36(2) OF THE INCOME-TAX ACT. THEREFORE, THE CIT (A) HAS RIGHTL Y DELETED THE ADDITION AND THE SAME DESERVES TO BE SUSTAINED. 7. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE R EVENUE HAS NOT CONTROVERTED THE FINDING THAT THE AMOUNT WAS CONSID ERED IN COMPUTING THE INCOME OF THE ASSESSEE IN THE PAST YEARS AND THE AS SESSEE HAS WRITTEN OFF THE SAME IN THE BOOKS DURING THE YEAR WHICH HE WAS NOT ABLE TO RECOVER. KEEPING THESE FACTS IN VIEW, WE FIND THAT THE CIT ( A) HAS RIGHTLY DELETED THE ADDITION. WE SUSTAIN THE ORDER OF THE CIT (A) ON T HIS GROUND AND DISMISS THE SECOND GROUND. ITA NO.2462/DEL/2010 5 8. GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE 30 TH DAY OF JULY 2010. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 30 TH DAY OF JULY, 2010 TS COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-XI, NEW DELHI. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.