INDIAN OIL BLENDING LTD ( NOW AMALGAMATED WITH INDIAN OIL CORPORATION LTD), MUMBAI V. ACIT 10(1), MUMBAI

ITA 2740/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7166 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 26-03-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D. C. JAIN
• Assessee Lawyers: MOHAMMED USMAN
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I,MUMBAI BEFORE SMT.P.MADHAVI DEVI (J.M) & RAJENDRA SI NGH(A.M) ITA NO.2047/MUM/2009(A.Y.2005-06) THE ITO WARD 18(2)(2), ROOM NO.111, PIRAMAL CHAMBERS, MUMBAI . (APPELLANT) VS. M/S. THERAPEUTIC PHARMACEUTICALS, 951, A.M. MARG, PRABHADEVI, MUMBAI 25. PAN: AAAFH 1113B (RESPONDENT) APPELLANT BY : SHRI MOHAMMED USMAN RESPONDENT BY : SHRI D.C.JAIN ORDER PER RAJENDRA SINGH, A.M, THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 18/12/2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY D ISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING DELETION OF ADDITION OF RS. 8,0 2,424/- MADE BY THE A.O. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE DURING THE RELEVANT YEAR HAD CLAIMED DEDUCTION OF RS.8,25,828/- ON ACCOUNT O F BAD DEBT WHICH INCLUDED A SUM OF RS.8.02 LACS ON ACCOUNT OF EXPORTS MADE TO M/S. S ONAPHAR, S.A. IN GUINEA, WEST AFRICA. THE A.O NOTED FROM THE CERTIFICATE ISSUED BY THE EXPORT CREDIT GUARANTEE CORPORATION (ECGC) IN RELATION TO SAID DEBT THAT CL AIM OF RS. 13,87,276/- BEING 95% OF RS.14,60,290/- HAD BEEN ADMITTED FOR PAYMENT IN FUL L AND FINAL SETTLEMENT. THE A.O, THEREFORE, CONCLUDED THAT THERE WERE STILL CHANCES OF RECOVERY AND THE CLAIM COULD NOT BE SAID TO HAVE BECOME BAD. ACCORDINGLY HE DISALLO WED THE CLAIM OF RS.8,02,424/-. IN APPEAL THE ASSESSEE SUBMITTED THAT IN RESPECT OF E XPORT TRANSACTIONS UNDERTAKEN THE ASSESSEE HAD REGULAR INSURANCE TRANSACTIONS WITH EC GC. IN SO FAR AS M/S. SONAPHAR, ITA NO.2047/MUM/2009(A.Y.2005-06) 2 S.A. IN GUINEA, WEST AFRICA WERE CONCERNED THE ASS ESSEE HAD EXPORTED GOODS WORTH RS.59.00 LACS IN SEPTEMBER, 2004 (US $129658). THE ASSESSEE HAD RECOVERED IN 2004- 05 US $22236 AND LODGED CLAIM WITH ECGC, WHO ALLOWE D RS. 13.87 LACS AND THE BALANCE AMOUNT OF RS. 8.02 LACS WHICH WAS NOT RECOV ERED WAS WRITTEN OFF. COMPLETE DETAILS OF TRANSACTIONS IN RELATION TO SAID PARTY W ERE GIVEN AS UNDER:- IN NUTSHELL INVOICE VALUE RS. 59.85 LAKHS LESS: ADVANCE RECEIVED BY T.T RS. 30.19 LAKHS SUB T OTAL : RS. 29.66 LAKH S LESS: CREDIT GIVEN TO PARTY VIDE JOURNAL ENTRY RS. 2.34 LAKHS SUB TOTAL : RS. 27.32 LAKH S LESS: T.T. REMITTANCE OF 22.01.2005 RS. 5.39 LAKHS SU B TOTAL RS. 21.93 LAKH S LESS: CLAIM ALLOWED BY ECGC RS. 13.87 LAKHS BA LANCE O/S. RS. 8.06 LAKHS (SHOWN IN OUR BOOKS AS RS. 8. 02) 3. THE ASSESSEE ALSO ARGUED THAT IN VIEW OF AMENDE D PROVISIONS W.E.F. 1/4/1989 THE ASSESSEE WAS NO LONGER REQUIRED TO PROVE THAT T HE DEBT HAD ACTUALLY BECOME BAD. RELIANCE WAS PLACED ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF OMAN INTERNATIONAL BANK, 100 ITD 285. THE CIT(A) WAS S ATISFIED BY THE EXPLANATION GIVEN AND ALLOWED THE CLAIM OF THE ASSESSEE, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.2047/MUM/2009(A.Y.2005-06) 3 4. BEFORE US LD. A.R FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE CIT(A), WHILE LD. D.R PLACED RELIANCE ON THE ORDER OF AO. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF BAD DEBT IN RELATION T O EXPORT MADE TO M/S. SONAPHAR, S.A. IN GUINEA, WEST AFRICA. THE RECORD SHOWS THAT THE ASS ESSEE HAD MADE RECOVERY THROUGH ITS OWN EFFORTS AND FOR THE BALANCE AMOUNT IT HAD LODGED CLAIM WITH ECGC WITH WHOM THE TRANSACTION HAD BEEN INSURED. THE ECGC HAD AL LOWED CLAIM TO THE TUNE OF RS. 13.87 LACS. AFTER CONSIDERING THE EARLIER RECOVERY AS WELL AS THE CLAIM ALLOWED BY ECGC BALANCE OF RS. 8.02 LACS WAS CLAIMED AS BAD DEBT. THE COMPLETE DETAILS OF TRANSACTIONS HAVE BEEN GIVEN BY THE ASSESSEE, WHICH IS REPRODUC ED IN PARA -2 ABOVE, IN WHICH NO MISTAKES OF ANY KIND HAVE BEEN POINTED OUT BY LD. D .R. IT IS A SETTLED LEGAL POSITION THAT IN VIEW OF THE AMENDED PROVISION W.E.F. 1/4/1989 TH E BURDEN IS NO LONGER ON THE ASSESSEE TO PROVE THAT THE DEBT HAD ACTUALLY BE COME BAD. THE ONLY REQUIREMENT FOR ALLOWING THE CLAIM IS THAT THE DEBTS SHOULD BE ACT UALLY WRITTEN OFF AND IT SHOULD HAVE BEEN TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME I N EARLIER YEAR. THERE IS NO DISPUTE THAT THESE CONDITIONS ARE SATISFIED IN THE CASE OF THE ASSESSEE. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING TH E CLAIM AND THE SAME IS THEREFORE, UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THE 31 ST DAY OF MARCH, 2010. SD/- SD/- (P.MADHAVI DEVI) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT. 31 ST MARCH, 2010 ITA NO.2047/MUM/2009(A.Y.2005-06) 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT(A)CONCERNED 4. THE CIT,CITY -CONCERNED. 5. THE D.RI BENC H. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2047/MUM/2009(A.Y.2005-06) 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 19/3/2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 19/3/2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.2047/MUM/2009(A.Y.2005-06) 6 ITA NO.2047/MUM/2009(A.Y.2005-06) 7