Khandwala Integrated Financial Services Pvt. Ltd, Ahmedabad V. The ACIT.,Circle-3, Ahmedabad

ITA 2754/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94342 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER KHANDWALA INTEGRATED FINANCIAL SERVICES PVT. LTD, B - 81, PARISHEEMA COMPLEX, C.G. ROAD, AHMEDABAD - 380015 PAN: AAACK6128Q (APPELLANT) VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3, AMBAVADI, AHMEDABAD (RESPONDENT ) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3, AMBAVADI, AHMEDABAD (APPELLANT) VS KHANDWALA INTEGRATED FINANCIAL SERVICES PVT LTD, B - 81, PARISHEEMA COMPLEX, C.G. ROAD, AHMED ABAD - 380015 PAN: AAACK6128Q (RESPONDENT) REVENUE BY : S H RI DINESH SINGH , SR. D . R. ASSESSEE BY: S H RI TUSHAR P. HEMANI , A.R. I T A NO . 2754/AHD/2011 A SSESSMENT YEAR 200 8 - 09 ITA NO. 2884 /AHD/20 11 ASSESSMENT YEAR 200 8 - 09 I .T.A NO S.2754 & 2884 /AHD /2011 A.Y. 2008 - 08 PAGE NO KHANDWALA INTEGRATED FINANCIAL SERVICES PVT . LTD VS. ACIT 2 DATE OF HEARING : 05 - 08 - 2 015 DATE OF PRONOUNCEMENT : 04 - 09 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE S E CROSS APPEAL S OF ASSESSEE AND THE REVENUE FOR ASSESSMENT YEAR 200 8 - 09 , AR ISE FROM ORDER OF THE CIT(A) - 6, AHMEDABAD DATED 02 - 09 - 2011 IN APPEAL NO. CIT(A) - VI / ACIT/CIR.3/707/ 10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME TO ASSESSEE S APPEAL ITA 2754/AHD/2011 AND FIND THAT ITS SOLE SUBSTANTIVE GRIEVANCE CHALLENGES THE CIT(A) S ORDER CONFIRMING S ECTION 40(A)(IA) DISALLOWANCE ON PROPORTIONATE BASIS ON PA YMENTS OF RS. 20,84,588/ - ON VSAT AND RS. 29,20,614/ - ON LEASE LINE EXP ENSES. THE REVENUE S PLEADINGS ON THE OTHER HAND ASSAIL CORRECTNESS OF THE LOWER APPELLATE ORDER INTER ALIA DELETING DISALL OWANCES OF BAD DEBTS OF RS. 2,57,76,120/ - , VSAT AND LEASE LINE EXPENSES ON PROPORTIONATE BASIS OF RS. 13,54,301/ - AND RS. 13 ,70,026/ - ; RESPE CTIVELY. WE FIND THAT ASSESSEE S SOLE GROUND AND THE REVENUE S LATTER TWO GRIEVANCES RAISING ISSUES OF VSAT AND L EASE LINE CHARGES ARE CONNECTED . PARTIES PLACE ON RECOR D COPY OF THE TRIBUNAL S ORDER DATED 17 - 07 - 2015 IN ASSESSEE S OWN CASE DECIDING ALL OF THES E ISSUES AGAINST THE REVENUE. I .T.A NO S.2754 & 2884 /AHD /2011 A.Y. 2008 - 08 PAGE NO KHANDWALA INTEGRATED FINANCIAL SERVICES PVT . LTD VS. ACIT 3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. 3. WE COME TO ASSESSEE S APPEAL AND THE REVENUE S TWO LATTER GROUNDS ON THE ISSUE OF PROPORTIONATE DISALLOWANCE U/S. 40(A)(IA) RELATING TO VSAT AND LEASE LINE PAYMENTS. THE ASSESSEE HAD D EDUCTED TDS U/S. 194J QUA THE SAME . THE ASSESSING OFFICER WAS OF THE VIEW THAT TH E SAME HAD TO BE DEDUCTED U/S. 194I OF THE AC T. THIS MADE HIM TO DISALLOW THESE PAYMENTS U/S. 40(A)(IA) IN ASSESSMENT ORDER DATED 30 - 12 - 2010. THE CIT(A) HOLDS THAT ONLY PROPORTIONATE DISALLOWANCE IS TO BE MADE IN VIEW OF THE FACT THAT THE ASSESSEE HAD AL READY DEDUCTED TDS . IT IS EVIDENT THAT THE CO - ORDINATE BENCH IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2006 - 07 (SUPRA) HOLDS THAT THE DISALLOWANCE IN QUESTION CANNOT BE MADE BECAUS E OF SHORTFALL IN TDS DEDUCTION AS PER HON BLE JURISDICTIONAL HIGH COURT DECISION IN CIT VS. PRAYAS ENGINEERING LTD TAX APPEAL NO. 1237 OF 2014 DECIDED ON 17 - 11 - 2014 AND THAT OF CIT VS. S.K. TEKRIWAL (2014) 361 ITR 432 (CAL) . THE REVENUE FAILS TO DRAW ANY DISTINCTION ON FACTS OR LAW. WE ACCORDINGLY HOLD THAT THE CIT(A) HAS ER RED IN PARTIALLY CONFIRMING THE ASSESSING OFFICER S ACTION MAKING THE IMPUGNED DISALLOWANCE OF VSAT AND LEASE LINE CHARGES IN QUESTION. THE ASSESSEE S ARGUMENTS ARE ACCORDINGLY ACCEPTED AND THAT OF THE REVENUE ARE REJECTED. ASSESSEE S APPEAL ITA 2754/AHD /2011 SUCCEEDS . 4. NOW , WE COME TO THE REVENUE S APPEAL ITA 2884/AHD/2011 RAISING ISSUE OF BAD DEBTS OF RS. 2,57,76,120/ - DISALLOWED IN I .T.A NO S.2754 & 2884 /AHD /2011 A.Y. 2008 - 08 PAGE NO KHANDWALA INTEGRATED FINANCIAL SERVICES PVT . LTD VS. ACIT 4 ASSESSMENT ORDER AND DELETED IN LOWER APPELLATE PROCEEDINGS . THE ASSESSEE HAD CLAIMED THESE AMOUNTS ARISING FROM DOW NFALL/MARKET CRASH IN JAN, 2008 DUE TO WHICH WEALTH OF INVESTOR S VANISHED AND THEY WERE NOT IN A POSITION TO PAY THE SAME AS INVESTMENT IN QUESTION REACHED TO NEGLIGIBLE VALUE RESULTING IN HUGE UNPA ID LIABILITIES. THE ASSESSING OFFICER INVOKED SEC. 36(2) AND MADE THE IMPUGNED DISALLOWANCE. THE CIT(A) FOLL OWS LOWER APPELLATE ORDER IN PRECEDING ASSESSMENT YEAR DECIDING THE ISSUE IN ASSESSEE S FAVOUR. HE QUOTES CASE LAW OF TRF LTD. VS. CIT (2 010) 323 ITR 397 (SC) AND DCIT VS. SH REYS MORAKHIA (2010) 5 ITR 01 (T RIB) IN SUPPORT. WE FIND THAT THE CO - ORDINATE BENCH (SUPRA) HAS ALREADY REJECTED THE REVENUE S IDENTICAL GROUND IN PRECEDING ASSESSMENT YEAR . IT DOES NOT POI NT OUT ANY EXCEPTI ON ON FACTS OR LAW IN THE IMPUGNED ASSESSMENT YEAR . THE REVENUE S CORRESP ONDING GROUND IS DECIDED IN ASSESSEE S FAVOUR. SO IS OUR DECISION ON ITS REMAINING TWO GROUNDS BEING ALREADY ADJUDICATED IN ASSEESS S APPEAL HEREINABOVE. REVENUE S APPEAL ITA 2884/AHD/2011 FAILS. ASSESSEE S APPEAL ITA 2754/AHD/2011 IS ALLOWED AND R EVENUE S APPEAL ITA 2884/AHD/2011 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 : DAT ED 04 /0 9 /2015 AK I .T.A NO S.2754 & 2884 /AHD /2011 A.Y. 2008 - 08 PAGE NO KHANDWALA INTEGRATED FINANCIAL SERVICES PVT . LTD VS. ACIT 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,