The ACIT, Circle-1, Ahmedabad V. Ashima Limited, Ahmedabad

ITA 2737/AHD/2005

• Counselvise Citation: 273720514 RSA 2005
• Duration Of Justice: 9 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-08-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 26-12-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE
• Assessee Lawyers: S N SOPARKAR
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER ACIT, CIRCLE - 1, 3 RD FLOOR, JITENDRA CHAMBERS, RBI LANE, ASHRAM ROAD, AHMEDABAD (APPELLANT) VS ASHIMA LIMITED. 310, ASHIMA HOUSE, NR. M.J. LIBRARY, ELLIS BRIDGE, AHEMDABAD PAN: AACCA2750L (RESPONDENT) REVENU E BY : S H RI VILAS SHINDE , SR. D . R. ASSESSEE BY: S H RI S. N. SOPARKAR , A.R. DATE OF HEARING : 20 - 08 - 2 015 DATE OF PRONOUNCEMENT : 04 - 09 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS R EVENUE S APPEAL FOR A.Y. 2002 - 03 , AR ISES FROM ORDER OF THE CIT(A) - V, AHMEDABAD DATED 10 - 10 - 2005 IN APPEAL NO. CIT(A) - I T A NO . 2737 / A HD/20 05 A SSESSMENT YEAR 200 2 - 03 I.T.A NO . 2737 /AHD/20 05 A.Y. 2002 - 03 PAGE NO ACIT VS. ASHIMA LIMITED 2 V/ACIT CIR.1/49/2005 - 06 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE S TWO SUBSTANTIVE GROUNDS CHALLENGE THAT CIT(A) S ORDER DELETING DISALLOWANCES OF BAD DEBTS ON ACCOUNT OF INTEREST INCOME AND COMMISSION SUMS WRITTEN OFF AMOUNTING TO RS. 2,36,03,059/ - AND RS. 93,90,021/ - ; RESPEC TIVELY. THE ASSESSEE HAD DEBITED ITS P & L ACCOUNT WITH THESE TWO SUMS ON ACCOUNT OF SUNDRY BALANCES WRITTEN OFF. THE FORMER ONE WAS OF AGENCY DEPOSITS WITH M/S J.K. SYNTHETICS LTD AND INTEREST RECEIVABLES FROM OTHER PARTIES. THE LATTER HEAD OF COMMISSI ON ALSO RELATED TO THE ABOVE STATED ENTITY. THE ASSESSING OFFICER QUOTED LACK OF EVIDENCE BEING LED ON ASSESSEE S PART TO PROVE THE ABOVE STATED SUMS TO HAVE BECOME ACTUALLY BAD AND OBSERVED THAT THE ABOVE NAMED ENTITY HAD STRONG FINANCIAL CREDENTIALS. H E PROCEEDED ON THIS REASONING AND INVOKED DISALLOWANCE OF THE ABOVE STATED TWO CLAIMS. 3. THE CIT(A) HAS ACCEPTED ASSESSEE S CORRESPONDING GROUNDS AS FOLLOWS: - 4.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. THE APPELLAN T HAS IN THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO IN DETAILS FURNISHED BEFORE ME CLEARLY BROUGHT OUT ITS CLAIMED FOR DEBT IN RESPECT OF VARIOUS ITEMS. IT IS SEEN THAT SO FAR AS INTEREST INCOME IS CONCERNED IT IS ALREADY SHOWN IN THE EARLIER YEAR. HOW EVER, AS THE RECOVERY IS NOT POSSIBLE FOR THE SAME IT IS WRITTEN OFF. SO FAR AS THE SPECIFIC REFERENCE TO JK. SYNTHETICS MADE BY THE ASSESSING OFFICER IS CONCERNED THE APPELLANT HAS POINTED OUT THAT THE SAID COMPANY HAS BECOME SICK AND IS REGISTERED WITH B IFR FOR RECONSTRUCTION AND IT IS NOT LIKELY TO BE RECOVERED EVEN THE PRINCIPAL AMOUNT. THEREFORE, THE ASSESSEE WAS JUSTIFIED IN WRITING OFF I.T.A NO . 2737 /AHD/20 05 A.Y. 2002 - 03 PAGE NO ACIT VS. ASHIMA LIMITED 3 OF SUCH AMOUNT. THE FACTS RELATING TO COMMISSION INCOME ARE ALSO SIMILAR. HOWEVER, IN SO FAR AS SALES TAX AMOUNT OF RS. 33.27 LAKHS IS CONCERNED, IT WAS PAID IN EARLIER YEAR AND, THEREFORE, COULD BE CLAIMED IN THE YEAR OF PAYMENT OR THE DEMAND RAISED BY THE SALES TAX DEPARTMENT. THEREFORE, TO THAT EXTENT THE CLAIM IS NOT ADMISSIBLE IN THE PRESENT YEAR. SO FAR AS THE AMO UNT OF RS. 7.97 LAKHS IN RESPECT OF MISCELLANEOUS INCOME IS CONCERNED I COULD NOT GET ANY SPECIFIC DETAILS FOR THE SAME AS TO WHETHER IT REPRESENT ANY INCOME IN THE EARLIER YEAR OR NOT AND THEREFORE THE SAME IS NOT ADMISSIBLE. THE APPELLANT THUS GETS RELIE F FOR THE AMOUNT OF RS. 2,36,03,059/ - BEING INTEREST INCOME WRITTEN OFF AND RS. 93,90,021/ - BEING COMMISSION INCOME WRITTEN OFF. AS FAR AS THE ASSESSING OFFICER'S ARGUMENT THAT DEBT IS NOT ESTABLISHED TO BE BAD I FIND THAT LOOKING TO THE IMPOSSIBILITY OF RECOVERY OF VARIOUS ITEMS THE APPELLANT HAD WRITTEN OF SUCH AMOUNT. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM MAINLY FOR THE REASON THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE DEBT HAD BECOME BAD. HOWEVER, AS HELD IN THE CASE OF GIRISH BHAGWATPR ASAD, AFTER THE AMENDMENT EFFECTIVE FROM 1 - 4 - 1989 ALL THAT IS REQUIRED TO BE SHOWN IS THAT THE DEBT HAS BEEN WRITTEN OFF AS IRRECOVERABLE. THE ASSESSING OFFICER HAS RELIED UPON THE ITAT DELHI DECISION IN THE CASE OF INDIA THERMIT CORPORATION LTD. HOWEVER T HE BOMBAY ITAT IN THE CASE OF ANIL H. RASTOGI BY A DECISION OF A THIRD MEMBER REPORTED AT 86 ITD 193 BY MAJORITY VIEW HELD THAT FOR THE PURPOSE OF CLAIMING BAD DEBT IT IS NOT NECESSARY THAT THE DEBTS SHOULD BE ESTABLISHED TO BE BAD OR IRRECOVERABLE. THE IT AT MUMBAI HAS DECIDED THIS ISSUE AFTER CONSIDERING THE DECISION IN THE CASE OF INDIA THERMIT CORPORATION LTD. HAVING REGARD TO THE ABOVE DECISIONS OF THE ITAT AND THE GUJARAT HIGH COURT JUDGMENT THE A.O. WAS NOT JUSTIFIED IN NOT ALLOWING THE CLAIM FOR BAD DEBT ON THIS GROUND. 4. HEARD BOTH SIDES. CASE FILE PERUSED. IT HAS COME ON RECORD THAT THE ASSESSEE HAS ACTUALLY WRITTEN OFF THE IMPUGNED INTEREST RECEIVABLE AND COMMISSION SUMS OF RS. 2,36,03,059/ - AND RS. 93,90,02/ - RESPECTIVELY AFTER DECLARING THE SAME AS ITS INCOME OF THE PRECEDING ASSESSMENT YEAR. THE ASSESSING AUTHORITY DISALLOWED THE SAME ON THE GROUND TO PROVE THAT THESE AMOUNTS HAD IN FACT BECOME I.T.A NO . 2737 /AHD/20 05 A.Y. 2002 - 03 PAGE NO ACIT VS. ASHIMA LIMITED 4 BAD. THE HON BLE APEX COURT IN CASE OF TRF LTD VS. CIT (2010) 323 ITR 397 (SC) CONSIDERS AMENDME NT IN SEC. 36(1)(VII) W.E.F. 01 - 04 - 1989 AND HOLDS THAT MERE WRITING OFF BAD DEBTS AS HAVING BECOME IRRECOVERABLE IS SUFFICIENT INSTEAD OF PLEADING ACTUAL PROOF OF THESE DEBTS TO HAVE BECOME BAD. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR L AW. NOR DOES IT REFER TO ANY COGENT EVIDENCE AVAILABLE IN THE CASE FILE FOR REBUTTING CIT(A) S FINDINGS UNDER CHALLENGE. ITS BOTH SUBSTANTIVE GROUNDS ARE ACCORDINGLY REJECTED. 4.1 THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 04 - 09 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 04/09 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,