BRITACEL SILICONES LTD, MUMBAI V. ACIT 8(1), MUMBAI

ITA 30/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71204 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Bad and doubtful debts
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SRI H.L. KARWA, PRESIDENT, AND SHRI N.K.BILL AIYA, AM ./ I.T.A. NO. 30/MUM/2012 ( / ASSESSMENT YEAR : 2007-08) M/S BRITACEL SILICONES LTD. F-18 F BLOCK ROAD, MIDC MAROL, ANDHERI (EAST), MUMBAI-400093 / VS. ACIT , CIRCLE-8(1), MUMBAI !' $ ./ PAN : AAACEO309B ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( ) / APPELLANT BY : SHRI PRAMOD KUMAR PARIDA &''% ( ) / RESPONDENT BY : SHRI MANVENDRA GOYAL ( *$ / DATE OF HEARING : 11-09-2013 +, ( *$ / DATE OF PRONOUNCEMENT : 11-09-2013 -. / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 16, DATED 20.10.2011 PERTAINING TO A.Y. 2007-08. 2. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED BAD DEBTS OF RS.52,31,483/ -. ON SCRUTINIZING THE DETAILS, THE AO FOUND THAT THE BAD DEBT WRITTEN OFF INCLUDES AN AMOUNT OF RS.10,00,000/- ON ACCOUNT OF ADVANCE GIVEN TO MR. S AINI OF M/S EDUCATIONAL CONSULTANCY SERVICES PVT. LTD. THE AO SOUGHT EXPLA NATION FROM THE 2 ITA NO.30/MUM/2012 MS. BRITACEL SILICONES LTD. ASSESSEE TO SUBSTANTIATE ITS CLAIM OF BAD DEBT WITH REFERENCE TO SECTION 36(1)(VII) READ WITH SECTION 36(2). 3. THE ASSESSEE FILED A DETAILED REPLY IN WHICH ST ATED THAT IT HAS MADE AN ADVANCE FOR THE PURPOSES OF BUSINESS, THE ASSESSEE CLAIMED THAT ANY BONA FIDE LOSS ARISING IN ORDINARY COURSE OF CARRYING ON OF B USINESS WHICH IS REVENUE IN NATURE IT TO BE ALLOWED AS BUSINESS LOSS EVEN IF PROVISIONS RELATING TO DEDUCTION OF BAD DEBT DID NOT APPLY. THE AO WAS OF THE FIRM BELIEF THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IS NOT ALLOWA BLE U/S 36(1)(VII) OF THE ACT. THE AO, FURTHER DISALLOWED THE CLAIM U/S 28 S TATING THAT THE ASSESSEE HAS NOT GIVEN THE PURPOSE OF GIVING THE ADVANCES TO THE SAID PARTY. AS THE ASSESSEES BUSINESS IS OF MANUFACTURING SILICON AND THE ADVANCE HAS BEEN GIVEN TO A COMPANY GIVING EDUCATIONAL CONSULTANCY S ERVICES. THE AO DISALLOWED THE CLAIM OF RS.10 LAKHS. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE CIT(A) WAS OF THE FIRM BELIEF THAT ALL EXPENDITURE AND LOSSES INCIDENTAL TO THE BUSINESS A RE ALLOWABLE AS PER COMMERCIAL ACCOUNTING PRINCIPLES. IN THE CASE OF T HE ASSESSEE, THE ASSESSEE HAS TO PRODUCE SUFFICIENT EVIDENCES SHOWING HOW AND UNDER WHAT CIRCUMSTANCES IT HAS INCURRED SUCH LOSS AND DISMISS ED ASSESSEES APPEAL. 4. AGGRIEVED BY THIS, ASSESSEE IS BEFORE US. COUNS EL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. THE DR STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHOR ITIES. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. IT IS NOT IN DISPUTE THAT THE CLAIM OF THE ASSESSEE DOES NOT SATISFY THE MANDATORY CONDITION OF SECTION 36(2) OF THE ACT. THEREFORE, IT CANNOT BE ALLOWED AS BAD DEBT. HOWEVER, THE ASSESSEE HAS TAKEN AN ALTERNATI VE PLEA TO ALLOW THE SAME AS A BUSINESS LOSS. UNDER THE LAW, THE ASSESSEE HA S TO PROVE THAT HOW AND UNDER WHAT CIRCUMSTANCES, IT HAD INCURRED SUCH LOSS ESS. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY. WE RESTORE THIS ISSUE BACK TO THE FILE OF THE 3 ITA NO.30/MUM/2012 MS. BRITACEL SILICONES LTD. AO. THE ASSESSEE IS DIRECTED TO SATISFY THE AO THE BUSINESS CONNECTION FOR GIVING SUCH ADVANCE TO AN EDUCATIONAL INSTITUTION. THE AO IS DIRECTED TO VERIFY THE DETAILS FILED BY THE ASSESSEE AND GIVE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THE ISSUE A AFRESH. 6. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 11/09/201 3 -. ( +, $ /- 11/09/2013 , , ( 0 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HON BLE PRESIDENT ACCOUNTANT MEMBER MUMBAI; /- /DATED : 11 TH SEPTEMBER, 2013. SHEKHAR. P.S. -. -. -. -. ( (( ( &*12 &*12 &*12 &*12 32 * 32 * 32 * 32 * / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 4 ( ) / THE CIT- , MUMBAI. 4. 4 / CIT(A)- , MUMBAI 5. 250 &* , , / DR, ITAT, MUMBAI 6. 0 6 7 / GUARD FILE. -. -. -. -. / BY ORDER, '2* &* //TRUE COPY// 8 88 8 / 9 9 9 9 : : : : (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI