KIDUJA INDIA LTD, MUMBAI V. ADDL CIT RG 3(2), MUMBAI

ITA 2864/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0068 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3); 115JB; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 2864 /MUM/20 1 5 ( / ASSESSMENT YEAR : 20 1 1 - 12 ) M/S KIDUJA INDIA LIMITED, 127 - B, MITTAL TOWER, B WING, NARIMAN POINT, MUMBAI - 400021 / VS. ADDL. COMMISSIONER OF INCOME TAX - 3(2), MUMBAI . ./ PAN : AA A C K1 7 2 0 E ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJE SH P SHAH / RESPONDENT BY : SHRI PURUSHOTTAM KUMAR / DATE OF HEARING : 16.6 .2017 / DATE OF PRONOUNCEMENT : 21. 6 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESS EE AGAINST THE ORDER OF LD.CIT(A) - 8 , MUMBAI DATED 27.2.2015 FOR THE ASSESSMENT YEAR 20 1 1 - 12. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMI NG THE ACTION OF THE ASSESSING OFFICER OF NOT ALLOWING THE LOSS ON ACCOUNT OF 'SECURITIES WRITTEN OFF' OF RS.1.20 CRORES IN AY 2011 - 12 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CITCA) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN CONCLUDING THAT THE AMOUNT OF RS. 1.20 CRORES WAS NOT BAD DEBT AND 2 I.T.A. NO. 2864 /MUM/201 5 THAT THE SAME IS NOT ALLOWABLE AS IT HAS NEVER BEEN PART OF INCOME IN EARLIER YEARS. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW LD.CIT(A ) ERRED IN CONFIRMING ACTION OF THE AO IN CONCLUDING THAT THE SECURITIES WRITTEN OFF DOES NOT PERTAIN TO AY 2011 - 12 AND HENCE ADDED THE SUM OF RS.1.20 CRORES TO THE BOOK PROFIT CALCULATED UNDER THE PROVISIONS OF SECTION 115JB, WHICH IS BAD IN LAW. 3. ONLY ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION BY LD.CIT(A) AS MADE BY THE AO BY NOT ALLOWING THE LOSS ON ACCOUNT OF 'SECURITIES WRITTEN OFF' TO THE EXTENT OF RS.1.20 CRORES FOR THE REASONS THAT THE SAME WAS NOT BAD DEBTS AND NOT ALLOWABLE AS THE SAME WAS NOT PART OF THE INCOME IN ANY OF THE EARLIER YEARS AND ALSO THAT THE 'SECURITIES WRITTEN OFF' DID NOT BELONG TO AY 2011 - 12 AND THEREFORE ADDED TO THE BOOK PROFIT U/S 115JB. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.9.2011 DECLARING TOTAL INCOME AT NIL UNDER THE NORMAL PROVISIONS OF ACT AND RS.3,09,71,107/ - UNDER MAT. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF INVESTMENT AND DEALING IN SHARES AND SECURITIES AND WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE AO UPON PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE NOTICED THAT THE ASSESSEE HAS WRITTEN OFF EXPENDITURE OF RS.1.20 CRORES UNDER THE HEAD 'SECURITIES WRITTEN OFF' WHICH HAS BEEN ON ACCOUNT OF WITHDRAWAL OF CAPITAL COMMITMENT BY THE ASSESSEE IN KOTAK INDIA GROWTH FUND - II. THE ASSESSEE ORDINARY COURSE OF BUSINESS 3 I.T.A. NO. 2864 /MUM/201 5 ENTERED INTO AN AGREEMENT DATED 20.3. 2008 WITH KOTAK MAHINDRA TRUS TEESHIP SERVICES LTD. AS PER THE AGREEMENT, THE ASSESSE E AGREED TO CONTRIBUTE AND COMMIT A SUM OF RS.40 CRORES TO THE FUND IN TERMS OF AGREEMENT AND INITIAL DRAWDOWN RS. 1.20 CR BEING 3% OF TOTAL CAPITAL COMMITMENT WAS PAID ACCORDINGLY. THEREAFTER VIDE SECOND DRAWDOWN NOTICE DATED 7.11.2008, THE KOTAK INDIA GROWTH FUND - II ASKED THE ASSESSEE TO CONTRIBUTE 10% OF ITS CAPITAL COMMITMENT WHICH WORKED OUT TO BE AT RS.4,00,00,000/ - . WHEN THE ASSESSEE FAILED TO MAKE THE PAYMENT BY THE DUE DATE BY 15.12.2008 , THE SAME WAS EXTENDED TO 31.3.2009. THE AS SESSEE DECIDED NOT TO GO AHEAD WITH THE COMMITMENT OF CAPITAL IN VIEW OF THE ADVERSE MARKET CONDITIONS AND DECIDED TO WITHDRAW FROM SUCH COMMITMENT AS THERE WERE EVERY POSSIBILITY OF LOSING THE MONEY AND INCURRING FURTHER LOSS ES, HAD THE ASSESSEE CONTRIBU TED TO THIS FUND FURTHER . AS PER THE TERMS OF THE AGREEMENT IF THE AMOUNT AS PER SECOND DRAWDOWN NOTICE DATED 7.11.2008 WAS NOT PAID WITHIN DEFAULT CURE PERIOD ENDING ON 27.10.2009 THEN THE ASSESSEES CONTRIBUTION OF RS.1,20,00,000/ - WAS TO BE FORFEITED AND WHICH WAS ULTIMATELY FORFEITED . ACCORDINGLY THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE SAID CLAIM WAS ALLOWABLE IN AY 2011 - 12 WHICH WAS REPLIED BY THE ASSESSEE VIDE LET T E R DATED 17.2.2014 AS REPRODUCED BY THE AO IN PA R A 5.3 OF T HE ASSESSMENT ORDER. THE AO FINALLY CONCLUDED THAT THE ASSESSEES CONTRIBUTION OF RS.1,20,00,000/ - WAS FORFEITED IN THE FINANCIAL YEAR 4 I.T.A. NO. 2864 /MUM/201 5 2009 - 10 RELEVANT TO AY - 20010 - 11 A ND THEREFORE THE WRITING OFF SHOULD H A VE BEEN CLAIMED IN THE AY 2010 - 11 AND NOT IN TH E AY - 2011 - 12 AS CLAIMED BY THE ASSESSEE . A CCORDINGLY , THE SAME WAS A DDED TO THE TOTAL INCOME OF THE ASSESSEE BY F R AMING T HE ASSES S MEN T U/S 143(3) VIDE ORDER DATED 27.4.2014 BY ASSESSING THE TOTAL INCOME AT NIL UNDER THE NORMAL PROVISIONS OF ACT AND RS. 4,29,71,535/ - UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE FAA, THE ASSESSEE FILED DETAILED SUBMISSIONS WHICH HAVE BEEN INCORPORATED IN THE PARA 4 OF THE APPELLATE ORDER AND THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REJECTED THE CLAIM OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: GROUND NO. 1 , 2 & 3 THE ABOVE GROUNDS ARE T AKEN TOGETHER AS TH E Y ADDRESS A COM MON ISSUE. I FIND THAT A CONTRIBUTION AGREEMENT DATED 20TH MARCH, 2008 WAS ENTERED INTO BETWEEN THE APPELLANT AND KOTAK INVESTMENT ADVISORS L TD. AS PER IT THE APPELLANT AGREED TO' CONTRIBUTE CAPITAL COMMITMENT OF RS. 40 CR ORES TO THE FUND IN TERMS OF THE AGREEMENT. THE APPELLANT COMPANY PAID THE INITIAL DRAWDOWN OF 3% OF THE TOTAL CAPITAL COM M ITMENT I.E. RS. 1,20,00,000/ - . AS PER THE SECOND DRAWDOWN NOTICE DATED 7TH NOV . 2008, 'KOTAK INDIA GROWTH FUND - IL' REQUIRED THE ASSESSE E TO PAY 10% OF ITS CAPITAL COMMITMENT TO THE FUND BEING RS. 4,00,00,000/ - . THE DRAWD OWN DATE FOR THIS WAS 15TH DECEMBER, 2008 AND NOT LATER THAN 17 .30 IS T AT MUMBAI. THE ASSESSEE COMPANY DID NOT PAY THIS AMOUNT BY 15TH DEC ., 2008. SUBSEQUENTLY VIDE LETTER DATED 31.03.2009 'KOTAK INDIA GROWTH F UND - II EXTENDED THE DUE DATE OF SECOND DRAWDOWN FROM 5.12.2008 TO 23.04.2 009 AND IT WAS DECIDED TO 5 I.T.A. NO. 2864 /MUM/201 5 GRANT AN ADDITIONAL GRACE PERIOD OF 5 BUSINESS DAYS AND THEREBY MAKING 30.04.2009 AS 'REVISED DUE DATE'. PARA 6&7 O F LETTER DATED 31.03.2009 IS REPRODUCED AS UNDER: '6. UPON EXPIRY OF THE REVISED DUE DATE, YOU SHALL (BEING A DEFAULTING CONTRIBUTOR) HA VE AN ADDITIONAL 180 CALENDAR DAYS THEREAFTER (I.E. ON OR BEFORE OCTOBER 27, 2009)(THE 'DE FAULT CURE PERIOD') TO MAKE PAYMENT REQUIRED UNDER THE DRAWDOWN NOTICE, TOGETHER WITH INT EREST THEREON CALCULATED AT THE RATE OF THEN P REVAILIN G KOTAK PRIME LENDIN G RATE (PLR ) + 300 BASIS POINTS PER ANNUM FROM MAY 1, 2009 TILL ACTUAL PAYMENT/REALIZATION (DEFAULT AMOUNT) 7. IF THE DEFAULT AMOUNT IS NOT PAID WITHIN THE DEFAULT CURE PERIOD, YOUR CONTRIBUTIONS TO THE F UND MADE THUS FAR (I.E: TOWARDS SUBSCRIPTION OF THE PARTLY PAID UNITS OF THE FUND) SHALL, TOGETHER W ITH SUCH UNI TS, STANDS FORFEITED. THE INVESTMENT MANAGER MAY DEAL WIT H THE SAME IN ANY MANNER IT DEEMS FIT, INCLUDING THROUGH A SALE OF SUCH UNITS TO NON - DEFAULTING CONTRIBUTORS OF THIRD PARTIES O R CREDIT THE SAME TO THE CONTRIBUTION F U ND FOR THE, BENEFIT OF ALL THE CONTRIBUTORS.' IN VIEW OF THE PARA 7 MENTIONED HERE - IN - A BOVE, IF THE AMOUNT OF RS.4,00,00 , 000/ - AS PER THE SECOND DRAWDOWN NOTICE DATED 7TH NOVEMBER, 2008 WAS NOT PAID WITHIN THE 'DEFAULT CURE PERIOD' ENDING 27TH OCTOBER, 2009,THEN THE ASSESSEE'S CONTRIBUTION OF RS. 1,20,00,000/ - TO THE FUND WAS TO BE FORFEITED . I FIND THAT THE APPELLANT COMPANY HAS NOT PRODUCED THE DETAILS OF ANY CORRESPONDENCE MADE WITH THE 'KOTAK INDIA GROWTH FUND - IL' FOR GETTING THE 'REVISED DUE DATE' EXTENDED OR TO ENFORCE ITS RIGHTS, IF ANY, BEYOND THE 'REVISED DUE DATE'. IT ALSO DID NOT PRODUCE ANY DOCUMENT OR CORRESPONDENCE TO SUPPORT ITS CLAIM THAT THE RIGHTS WERE INTACT IN 'KOTAK INDIA GROWTH FUND' BEYOND 27TH OCTOBER, 2009. IN VIEW OF THE ABOVE, ALL THE RIGHTS OF THE ASSESSEE HAVE ENDED ON 27TH OCTOBER, 2009, AS THE AMOUNT OF RS.1,20, 00,000/ - WAS FORFEITED BY 'KOTAK INVESTMENT ADVISORS LIMITED' WITH THE EFFECT FROM 28TH OCTOBER, 2009. 6 I.T.A. NO. 2864 /MUM/201 5 THE APPELLANT FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. THE CONCEPT OF 'PRUDENCE' AND 'ACCRUAL' HAS BEEN DEFINED BY THE 'ACCOUNTING STANDARD - 1' U/ S. 1 45 AS UNDER: I. PRUDENCE: PROVISIONS SHOULD BE MADE FOR ALL KNOWN LIABILITIES AND LOSSES EVEN THROUGH THE AMOUNT CANNOT BE DETERMINED WITH CERTAINTY AND REPRESENTS ONLY A BEST ESTIMATE IN THE LIGHT OF AVAILABLE INFORMATION. II. ACCRUAL: IT REFERS TO T HE ASSUMPTION THAT REVENUES AND COSTS ARE ACCRUED, THAT IS, RECOGNIZED AS THEY ARE EARNED OR INCURRED (AND NOT AS MONEY IS RECEIVED OR PAID) AND RECORDED IN .THE FINANCIAL STATEMENTS OF THE PERIODS TO WHICH THEY RELATE; AS THE CLAIM OF THE EXPENDITURE OF RS. 1,20,00,000/ - BY THE ASSESSEE DOES NOT RELATE TO F.Y. 2010 - 11, THE CASE OF APPELLANT IS DISTINGUISHABLE FROM THE DECISIONS RELIED ON BY THE AR IN RESPECT OF BOOK PROFIT U/S 115JB. THE INCOME TAX ACT IS ANNUAL IN ITS STRUCTURE. EACH ' PREVIOUS YEAR ' IS A DISTINCT UNIT OF TIME FOR THE PURPOSES OF ASSESSMENT AND PROFITS MADE, OR THE LIABILITIES OR LOSSES INCURRED BEFORE OR AFTER THE RELEVANT PREVIOUS YEAR ARE IMMATERIAL IN ASSESSIN G THE PROFITS OF THAT :YEAR. 'IT' HAS BEEN HELD SO IN KIKAB HAI V/S CIT 24 ITR 506 (S C ); I TO V MU R LIDHAR 52 IT R 335 (SC); C I T V BRITISH PAINTS 188 ITR 44 (SC); RE CHOUTHMAL 6 ITR 733, 742; C I T V PLSM CONCERN 2 ITR 417, 420 - 21; CIT V BASAN TRAI 1 ITR 197 (PC); SUKHDEODAS V C IT 26 ITR 617, 625; ABDUL V C I T 184 ITR 404; S.M.ZIADD IN V CIT 203 ITR 136; VIPIN V C IT 251 ITR 782; BAKSHI V CIT 255 ITR 38, BALCHAND V/S CIT 10 ITR 507; GOVINDRAM V CIT 23 ITR 68; KOTAK MAHINDRA FINANCE LTD. V D CIT 265 ITR 114. THEREFORE, HAVING REGARD TO THE ABOVE FACTS, THE DISALLOWANCE OF RS . 1,20,00,0 00/ - MADE BY THE AO TO THE NORMAL PROFIT AS WELL AS BOOK PROFIT IS AFFIRMED AS THE SAID CLAIM DOES NOT RELATE TO FINANCIAL YEAR 2010 - 11 RELEVANT TO THE ASSESSMENT YEAR 2011 - 12. 7 I.T.A. NO. 2864 /MUM/201 5 6 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE DECISION TO WITHDRAW FR OM THE COMMITMENT FUNDS MADE TO ' KOTAK INDIA GROWTH FUND - II' WAS TAKEN OUT OF COMMERCIAL AND BUSINESS EXPEDIENCY PRIMARY TO AVOID THE INCURRENCE OF FURTHER LO SSES IN VIEW OF THE ADVERSE MARKET CONDITIONS .THE LD AR ARGUED THAT ANY FURTHER INVESTMENT W OULD HAVE BEEN WIPED UP AND JUST IF IED THE DECISION OF THE ASSESSEE TO WITHDRAW FROM THE COMMITMENT. AR FURTHER CONTENDED THAT THE ASSESSEE RIGHTLY CLAIMED THE WRITE OFF OF RS. 1.20 CR IN THE ASSESSMENT YEAR 2011 - 12 AS AGAINST THE FINDINGS OF T HE AO WHICH WA S CONFIRMED BY T HE FAA THAT THE SAME SHOULD HAVE BEEN WRITTEN OFF IN THE ASSESSMENT YEAR 2010 - 11. THE LD. AR ALSO SUBMITTED THAT THE SECURITY WRITTEN OFF IN THE ASSESSMENT YEAR 2011 - 12 WERE AS PER LAW AND THE PROVISIONS OF THE INCOME TAX ACT, 1961 AN D THE ASSESSEE WA S FULLY ENTITLED TO CLAIM THE SAID SET OFF AS THE ASSESSEE CONTINUED ITS EFFORTS TO RECOVER THE MONEY TILL THE CURRENT YEAR . ULTIMATELY WHEN FAILED IN ITS EFFORTS WR OTE OFF AS PROVIDED IN THE TERMS OF AGREEMENT THAT THE AMOUNT WAS TO BE F ORFEITED IF ANY OF THE TERMS AND CONDITIONS OF CLAUSE 7 OF THE MOU WERE VIOLATED . IN THE ALTERNATIVE, THE LD. AR CONTENDED THAT EVEN THEN THE AMOUNT WAS ADMISSIBLE IN THE ASSESSMENT YEAR 2010 - 11 AND WAS CLAIMED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2011 - 12 EVEN THEN ITS ADMISSIBILITY C OULD NOT BE DISPUTED AND DENIED TO THE ASSESSEE. IN DEFENCE OF HIS ARGUMENTS THE LD.AR RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . VISHNU 8 I.T.A. NO. 2864 /MUM/201 5 INDUSTRIAL GASES PVT LTD . DATED,06.05.2008 REPORTED IN ITR NO.229/1988 AND THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S ADBHUT TRADING CO.PVT .LTD REPORTED IN (2011) 338 ITR 94 (BOM). 7 . ON THE OTHER HAND THE LD. DR ARGUED THAT THE CLAIM OF THE ASSESSEE BY WAY OF WRITING OFF THE SECURITY WAS NOT ADMISSIBLE IN THE ASSESSMENT YEAR 2011 - 12 AS THE SAME BECAME AND FORWARDED TO THE ASSESSMENT YEAR 2010 - 11 AND OPENING TO THE CURRENT YEAR. THE LD.DR STRONGLY DEFENDED THE ORDERS OF AUTHORITIES BELOW AND ARGUED THAT EACH ASSESSMENT YE AR IS AN INDEPENDENT ASSESSMENT YEAR UNDER THE INCOME TAX ACT, AND AMOUNT TO BE ALLOWED AND NOT TO BE ALLOWED HAD TO BE WITH REFERENCE TO THAT OF EACH PREVIOUS YEAR AND THEREFORE HE PRAYED THAT THE ORDER OF THE AO BE UPHELD. 8 . WE HAVE CONSIDERED THE RIVA L CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND THE CASE LAW RELIED UPON BY THE ASSESSEE. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT AND DEALING IN SHARES AND SECURITIES. DURING T HE COURSE OF ORDINARY BUSINESS THE ASSESSMENT INVESTMENT IN THE COMMITMENT CAPITAL FUNDS OF RS. RS.4,00,00,000/ - TO M/S KOTAK INDIA GROWTH FUND - II AND AS PER THE TERMS AND AGREEMENT THE ASSESSEE ALSO CONTRIBUTED RS.1,20,00,000/ - AT THE RATE OF 3% OF T HE TOTAL CAPITAL COMMITMENT. DUE TO ADVERSE MARKET CONDITIONS, THE ASSESSEE DECIDED TO WITHDRAW FROM THE SAID INVESTMENT AND BUSINESS UNDERSTANDING WHICH RESULTED INTO FORFEITED OF RS.1,20,00,000/ - . 9 I.T.A. NO. 2864 /MUM/201 5 ACCORDING TO THE AO, THE ASSESSEE SHOULD HAVE CHA RGED THE LOSS TO THE PROFIT AND LOSS ACCOUNT IN THE ASSESSMENT YEAR 2010 - 11 AS IT WAS PERTAINING TO FINANCIAL YEAR 2009 - 10 AS IT BECAME BAD DEBTS IN TH A T YEAR. WHEREAS THE ASSESSEE CLAIMED THE SAID AMOUNT IN THE AY 2011 - 2012. THE LD. CIT(A) ALSO CONFIRM ED THE SAME BY HOLDING THAT EACH PREVIOUS YEAR IS SEPARATE AND DISTINCT IN THE INCOME TAX ACT AND EVERY ADMISSIBLE ALLOWANCES AND DISALLOWANCES HAS TO BE DECIDED WITH REFERENCE TO THE PARTICULAR PREVIOUS YEAR AND NOT AS PER THE WHIMS AND FANC IES OF TH E ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE WRITING OFF OF THIS AMOUNT WAS NOT IN CHALLENGE BUT THE YEAR IN WHICH THE AMOUNT WAS TO BE WRITTEN OFF AND THE YEAR IN WHICH IT HAS TO BE ALLOWED BY THE AUTHORITIES. WE FIND MERIT IN THE CONTENTI ON OF THE LD.AR THAT THE WRITING OFF OF THE SAID AMOUNT IN NEITHER OF THE ASSESSMENT YEAR I.E. 2010 - 11 OR 2011 - 12 IS TAX NEUTRAL AS IS CLEAR FROM THE COMPUTATION OF TOTAL INCOME FILED AT PAGE 1 AND 2 OF THE PAPER BOOK AS THE IN THAT BOTH THE YEARS THE TAX ABLE INCOME OF THE ASSESSEE WAS NIL. IN THE FIRST YEAR, THE ASSESSEE SUSTAINED LOSS OF RS.46,80,427/ - . IN THE NEXT YEAR INCOME AFTER ADJUST MENT OF THE BROUGHT FORWARD LOSSES TO THE TUNE OF RS.77,17,152/ - IS TURNED OUT TO BE NIL. IN THE CASE OF VISHNU INDUSTRIAL GASES PVT LTD (SUPRA), THE HONBLE DELHI HIGH COURT HAS HELD AS UNDER : 4. THE SITUATION DOES NOT SEEM TO HAVE CHANGED OVER THE LAST FIFTY YEARS AND THE REVENUE CONTINUES TO AGITATE THE QUESTION WHETHER TAX IS 10 I.T.A. NO. 2864 /MUM/201 5 LEVIABLE IN A PARTICULAR YEAR OR IN SOME OTHER YEAR. THIS IS HARDLY A QUESTION THAT SHOULD REQUIRE US TO EXERCISE OUR MINDS PARTICULARLY SINCE THERE IS NO DOUBT THAT THE TAX HAS BEEN PAID AND THE RATE OF TAX REMAINS THE SAME FOR BOTH THE ASSESSMENT YEARS. THE HONBLE HIGH COURT HAS HE LD THAT WHERE THE RATE OF TAX REMAINED SAME IN BOTH THE ASSESSMENT YEARS THEN THE ISSUE OF WHETHER THE TAX IS LEVIABLE IN ONE YEAR OR OTHER YEAR IS IMMATERIAL. IN THE PRESENT CASE, ALSO IN BOTH THE ASSESSMENT YEA R THE INCOME OF THE ASSESSEE IS NOT ASSESSA BLE TO TAX AT ALL. WE ALSO FIND THAT THE ASSESSEE HAS DECIDED TO WRITE OFF WHEN IT FINDS THAT THE FURTHER INVESTMENT IN THE SAID SECURITIES WOULD BE LOSS MAKING PROPOSITIONS CONSIDERING THE ADVERSE MARKET CONDITIONS. MOREOVER, IT IS THE ASSESSEE WHO CAN TAKE DECISION TO WRITE OFF OF THE AMOUNT WHICH BECAME BAD IN PARTICULAR YEAR AND THE REVENUE CANNOT DICTATE THE TERMS OF WRITING OFF THE BAD DEBTS OR HOW TO RUN THE BUSINESS IN THE ORDINARY COURSE OF BUSINESS . ON THIS COUNT ALSO THE DECIDING OF WR ITING OFF THE BAD DEBTS DESERVE D TO BE ALLOWED. WE, THEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF VISHNU INDUSTRIAL GASES PVT LTD (SUPRA), SET ASIDE THE ORDER OF THE FAA AND DIRECT THE AO TO DELETE THE DISALLOWA NCE. 9 . SINCE THE ISSUE OF DISALLOWANCE OF WRITTEN OFF BAD DEBTS HAS BEEN DELETED, THEREFORE, THE ISSUE RAISED IN GROUND NO.3 BECOMES ACADEMIC AND THEREFORE NEED NOT TO BE ADJUDICATED UPON. THEREFORE, DISMISSED AS ACADEMIC ONE. 11 I.T.A. NO. 2864 /MUM/201 5 10 . IN THE RESULT, THE AP PEAL OF THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE , 2017 . SD SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 21. 6 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI