The DCIT, (OSD) Range-8, Ahmedabad V. Sambhav Media Limited, Ahmedabad

ITA 2571/AHD/2007

• Counselvise Citation: 257120514 RSA 2007
• Duration Of Justice: 4 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 11-06-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N SOPARKAR
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2571 / AHD/2007 (ASSESSMENT YEAR 2004-05) DCIT, CIRCLE 8 (OSD), AHMEDABAD VS. SAMBHAV MEDIA LTD., SAMBHAV HOUSE, OPP. JUDGES BUNGLOWS, PREMCHANDNAGAR, VASTRAPUR, AHMEDABAD PAN/GIR NO. : AABCP1464F (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B L YADAV, DR RESPONDENT BY: SHRI S N SOPARKAR, AR DATE OF HEARING: 16.01.2012 DATE OF PRONOUNCEMENT: 28.03.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) XIV AHMEDABAD DATED 06.03.2007 FOR THE ASSESSMENT Y EAR 2004-05. 2. GROUND NO.1 IS AS UNDER: 1. THE ID. COMMISSIONER OF INCOME-TAX(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.35,26,374/- ON ACCOUNT OF BAD DEBTS. 3. WE FIND THAT THIS IS DECIDED BY LD. CIT(A) AS PE R PARA4 OF HIS ORDER WHICH IS AS UNDER: 4. THE THIRD GROUND OF APPEAL RELATES TO DISALLOWA NCE OF CLAIM OF BAD DEBTS OF RS.35,26,374/-. THE AO HAS DISALLOWED THE CLAIM OF BAD DEBT SAYING THAT IT PERTAINS TO AMALGAMATED COM PANY AND I.T.A.NO. 2571 /AHD/2007 2 HENCE THE SAME IS NOT ALLOWABLE. SIMILAR ISSUE AROS E IN A.Y. 2003- 04, WHEN THE ISSUE WAS DECIDED IN FAVOUR OF THE APP ELLANT BY THE (T F (M VIDE ORDER DL: 20-9-06. FOLLOWING THE SAID ORD ER, IT IS HELD THAT THE CLAIM OF BAD DEBT IS ALLOWABLE AND THE ADDITION MADE ON THIS COUNT IS HEREBY DELETED. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT THE DATE IN QUESTION IS IN RELATION WITH THE AMALGAMATED COMPANY ABHIJAN PRESS & PUBLICATION PVT. LTD. WHEN A QUERY WAS RAISED BY THE BENCH AS TO WHAT HAS HAPPENED IN ASSESSMENT YEAR 2003-04 IN TRIBUNAL, HE COULD NOT PLACE ANYTHING ON RECORD TO SHOW THAT THE ORDER OF LD. CIT(A) IN ASSESSMENT YEAR 2003-04 HAS BEEN REVE RSED BY THE TRIBUNAL. AS AGAINST THIS, LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. AS REPORTED IN 323 ITR 397 (S.C.). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT LD. CIT(A) HAS DELETED THIS DISALLOWANCE ON TH E BASIS OF THE ORDER OF LD. CIT(A) DATED 20.09.2006 FOR ASSESSMENT YEAR 200 3-04 IN THE ASSESSEES OWN CASE. THE A.O. HAS ALSO NOTED THIS FACT THAT IN ASSESSMENT YEAR 2003-04 THE A.O. MADE SIMILAR DISALLOWANCE. T HIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 AND LD. D.R. OF THE REVENUE COULD NOT SHOW THAT THE DECISION OF LD. CIT(A) FOR THE ASSESSMENT YEAR 2003-04 HAS NOT BEEN ACCEPTED AND APPEAL HAS BEEN FILED BY THE REVENUES BEFORE ITAT. NOW, WE ARE IN THE YEAR 2012 BUT STILL THE REVENUE COULD NOT PLACE ANY THING ON RECORD TO SHOW THAT IN ASSESSMENT YEAR 2003-04, THE DECISION OF LD. CIT(A) WAS REVERSED BY THE TRIBUNAL. MOREOVER, THIS ISSUE IS N OW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE I.T.A.NO. 2571 /AHD/2007 3 OF TRF LTD. (SUPRA). UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROUND OF THE REVENUE IS REJECTED. 6. GROUND NO.2 OF THE APPEAL IS AS UNDER: 2. THE ID. COMMISSIONER OF INCOME-TAX(A)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.16,83,345/- OUT OF TOTAL ADDITION MADE RS.18,83, 345/- ON ACCOUNT OF ADVANCE WRITTEN OFF. 7. THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NO TED BY LD. CIT(A) IN PARA 5.1 OF HIS ORDER WHICH IS REPRODUCED BELOW: 5.1 THE GROUND NO. 4 IS WITH REGARD TO DISALLOWANC E OF RS. 18,83,345/- BEING THE AMOUNT OF ADVANCE WRITTEN OFF . THE AO HAS SOUND THAT THE ASSESSEE HAS MADE THE FOLLOWING ADVA NCES:- 1) M/S. DARSHAN INVESTMENTS PVT. LTD. RS. 12,00,000/ - 2) SEAKING MARINE BLUE RS. 04,83,345/- 3) ADVANCE FOR OFFICE RS. 02,00,000/- THE AO HAS NOT ALLOWED THESE ADVANCES WRITTEN OFF B Y HOLDING THAT THESE WERE NOT TAKEN FOR THE PURPOSE OF ITS BUSINES S. 8. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO DELETED THIS DISALLOWANCE IN RESPECT OF TWO PARTIES TO THE EXTENT OF RS.16,83,345/- BUT CONFIRMED THE ADDITION OF RS.2 LACS IN RESPECT OF ADVANCE FOR OFFICE. NOW, THE REVENUE IS IN APPE AL FOR RELIEF ALLOWED BY LD. CIT(A). 9. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. ALSO THAT THE ADVANCES WERE GIVEN BY THE ASSESSEE COMPANY IN THE FINANCIAL YEAR 1994- 95 AND AT THAT TIME, THE ASSESSEE COMPANY WAS NAMED AS PEARL SECURITIES I.T.A.NO. 2571 /AHD/2007 4 LTD. AND ITS MAIN BUSINESS WAS TRADING IN SECURITIE S AND THESE ADVANCES WERE GIVEN TO SET UP BROKERAGE BUSINESS. THIS CLAI M OF THE ASSESSEE W AS REJECTED BY THE A.O. ON THIS BASIS THAT THE ASSESSE E COMPANY COULD NOT SUBSTANTIATE THESE CONTENTIONS. BEFORE LD. CIT(A), THE ASSESSEE SUBMITTED COPY OF ACCOUNTS OF THESE PARTIES FOR EAR LIER YEARS WHICH SHOW THAT THESE ADVANCES WERE OUTSTANDING. THIS WAS ALS O CONTENDED BEFORE LD. CIT(A) THAT IF THE SAME IS NOT ALLOWED AS BAD D EBT, THE SAME SHOULD BE ALLOWED AS BUSINESS LOSS U/S 28/29 OF THE INCOME TAX ACT, 1961. RELIANCE WAS PLACED BEFORE LD. CIT(A) ON VARIOUS JU DGEMENTS OF VARIOUS HIGH COURTS WHICH ARE NOTED BY LD. CIT(A) IN PARA 5 .2 OF HIS ORDER AND BY FOLLOWING THESE JUDGMENTS, RELIEF WAS ALLOWED BY LD. CIT(A). WE FIND THAT THE CLAIM WAS REJECTED BY THE A.O. ON THI S BASIS THAT THE ASSESSEE COMPANY COULD NOT SUBSTANTIATE ITS CONTENTION. BEF ORE LD. CIT(A) ALSO, THE ASSESSEE HAS MERELY SUBMITTED COPIES OF ACCOUNT S OF THESE PATES FOR EARLIER YEARS WHICH SHOW THAT THESE ADVANCES WERE O UTSTANDING BUT BEFORE CIT(A) ALSO, NO EVIDENCE WAS FURNISHED TO SHOW THAT THE ADVANCES WERE GIVEN TO THESE TWO PARTIES FOR THE PURPOSE OF BUSIN ESS I.E. TRADING IN SECURITIES. IN THE ABSENCE OF ANY EVIDENCE IN THIS REGARD, IT IS NOT ACCEPTABLE THAT THESE WERE BUSINESS ADVANCES AND HE NCE, ON NON RECOVERY OF THE SAME, THE LOSS IS ALLOWABLE AS BUSINESS LOSS . WE, THEREFORE, ARE OF THE CONSIDERED OPINION THAT THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE ON THIS ISSUE BECAUSE THE SAME IS WITHOUT ANY BASIS AN D WITHOUT ANY COGENT EVIDENCE REGARDING THIS CONTENTION THAT THESE ADVAN CES ERE BUSINESS ADVANCES. BEFORE US ALSO, NO SUCH EVIDENCE HAS BEE N FURNISHED. HENCE, THESE ARE NOT ALLOWABLE AS BUSINESS LOSS AND SINCE THESE ARE FOR WRITE OFF OF ADVANCES, THE SAME CANNOT BE ALLOWED U/S 36(1)(V II) BECAUSE IN RESPECT OF WRITE OFF OF ADVANCES, THE REQUIREMENT OF SECTIO N 36(2) IS NOT FULFILLED. I.T.A.NO. 2571 /AHD/2007 5 WE, THEREFORE, REVERSE THE ORDER OF LD. CIT(A) ON T HIS ISSUE AND RESTORE THAT OF THE A.O. THIS GROUND OF THE REVENUE IS ALL OWED. 11. GROUND NO.3 READS AS UNDER: 3. THE ID. COMMISSIONER OF INCOME-TAX(A)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.2,67,960/- ON ACCOUNT OF LATE PAYMENT OF EMPLOYE ES PROVIDENT FUND CONTRIBUTION. 12. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). RELIANCE WAS PL ACED BY HIM ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CITR VS ALOM EXTRUSIONS LTD. 319 ITR 306 (S.C.). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. THE JUDGEMENT CITED BY THE LD. A.R. IN THE CASE OF CIT VS ALOM EXTRUSIONS (SUPRA). WE FIND THAT LD. CIT(A) HAS ALLOWED RELIEF ON THIS BASIS THAT THE PAYMENT OF PF WAS MADE BY THE ASSESSEE WITHIN THE G RACE PERIOD OF FIVE DAYS AND, THEREFORE, IT HAS TO BE TAKEN AS PAID WIT HIN THE DUE DATE. HE HAS SIMPLY DIRECTED THE A.O. TO ALLOW THE BENEFIT IF IT WAS PAID WITHIN FIVE DAYS OF GRACE PERIOD. IN THE FACTS OF THE PRESENT CASE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON T HIS ISSUE. THIS GROUND OF THE REVENUE IS REJECTED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (BHAVNESH SAINI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP ORDER PRONOUNCED ON SD./- (KB) JM SD./- )AM I.T.A.NO. 2571 /AHD/2007 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 2/3/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/3/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 28/3 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.28/3 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28/3/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .