The ACIT,(OSD), Circle-8, Ahmedabad V. Swati Switchgears (I) Pvt. Ltd., Ahmedabad

ITA 2784/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1918 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH SRDR
• Assessee Lawyers: S N DIVETIA
• Keywords: Reasonable cause; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.2784/AHD/2010 ASSESSMENT YEAR:2005-06 DATE OF HEARING:4.3.11 DRAFTED:8.3.11 ACIT, (OSD), CIRCLE-8, AHMEDABAD V/S. SWATI SWITCHGEARS (INDIA) PVT. LTD., 36, SUBHLAXMI INDL. ESTATE, VILL. MORIYA, AHMEDABAD PAN NO.AAACZ0615P (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P.R GHOSH, SR-DR RESPONDENT BY:- SHRI S.N. DIVETIA, AR O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME-TAX(APPEALS)-XIV, AHMEDABAD IN APPEAL NO. CI T(A) XIV/DC(OSD) C.8/ 157/ 09-10 DATED 07-10-2010 FOR TH E ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS TAKEN FOLLOWING GROUND:- 1) THE LD. CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.12,29,520/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF ASSESSEES CL AIM OF BAD DEBTS. ITA 2784/AHD/2010 A.Y. 2005-06 ACIT (OSD) CIR-8, ABD V. SWATI SWITCHGEARS (I) PVT . LTD. PAG E 2 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (A)-XIV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING ASSE SSMENT PROCEEDINGS THE ASSESSEE WAS ASKED BY ASSESSING OFFICER TO SHOW CAUSE AS TO WHY THE BAD DEBT AMOUNTING TO RS.12,29,520/- WRITTEN OF F SHOULD NOT BE DISALLOWED. AFTER TAKING INTO CONSIDERATION THE REP LY OF ASSESSEE, ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE AS SESSEE HAS NOT FURNISHED ANY DETAILS OF EFFORT MADE TO RECOVER THE SAID BAD DEBTS AND NO COMMUNICATION WAS MADE IN THIS REGARD TO THE PARTIE S WRITING OFF OF BAD DEBTS THAT WAS WITHOUT REASONABLE CAUSE. HE, THEREF ORE, PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF DHALL ENTERPRISES AND ENGINEER PVT. LTD. V CIT (2007) 295 ITR 481 (GUJ) OBSERVED THAT CERTAIN CONDITIONS SHOULD HAVE BEEN F ULFILLED BY THE ASSESSEE AND AO WAS OF THE VIEW THAT DEBT SHOULD BE WRITTEN OFF AS IRRECOVERABLE AND ASSESSEE SHOULD PROVE THAT DEBT H AS BECOME BAD IN THAT YEAR AND MERE DEBITING THE AMOUNT IS NOT SUFFI CIENT. THE CLAIM OF THE ASSESSEE OF BAD DEBT OF RS.12,29,520/- WAS THEREFOR E DISALLOWED AND ADDED TO THE INCOME OF ASSESSEE. IN APPEAL LD. CIT( APPEALS) FOLLOWING THE RATIO OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LIMITED V. COMMISSIONER OF INCOME TAX (2010) 323 ITR 397 (SC) AND ITAT AHMEDABAD BENCH IN THE CASE OF RIDDHI SIDDHI GLUCO BOILS LTD. V. JCIT ORDER DATED 02-12-2009 DELETED THIS ADDITION. 4. AGGRIEVED BY THIS ORDER OF LD. CIT(APPEALS) REVE NUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. AFTER HEARING BOTH THE PARTIES AND PERUSING ITA 2784/AHD/2010 A.Y. 2005-06 ACIT (OSD) CIR-8, ABD V. SWATI SWITCHGEARS (I) PVT . LTD. PAG E 3 THE RECORDS, WE FIND THAT LD. CIT(APPEALS) HAS GIVE N THE RELIEF TO THE ASSESSEE BY FOLLOWING THE RATIO LAID DOWN IN THE CA SE OF T.R.F. LIMITED (SUPRA), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE IN COME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO O BTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR T HE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECO VERABLE : IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSEE. IN THE PRESENT CASE, IT IS A FACT THAT THE ASSESSEE HAS WRITTEN OFF BAD DEBTS IN ITS BOOKS OF ACCOUNT AND ACCORDINGLY THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACC ORDINGLY, WE CONFIRM THE ORDER OF CIT(A) DELETING THE DISALLOWAN CE OF BAD DEBTS AND THIS ISSUE OF REVENUE APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04/03/2011 SD/- SD/- (A.N.PHAUJA) ( D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 04/03/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 4. THE CIT CONCERNS. 2. THE RESPONDENT. 5. THE DR, ITAT, AHMEDABAD 3. THE CIT(APPEALS)-XIV, 6. GUARD FILE. AHMEDABAD /TRUE COPY/ BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD