PIXEL IMAGE INDIA P. LTD, PUNE V. ITO WD 8(2)(4), MUMBAI

ITA 3252/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92572 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M C NANIWADEKAR
• Keywords: Wholly owned subsidiary

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.3252/MUM/2012 ASSESSMENT YEAR: 2008-09 M/S PIXEL IMAGE INDIA PRIVATE LIMITED, FLAT NO.13, 6 TH FLOOR, DEE BEE TOWER, SOUTH MAIN ROAD, KOREGAON PARK, PUNE-411001 / VS. INCOME TAX OFFICER, WARD 8(2)(4), MUMBAI ( #$% & /ASSESSEE) ( ' / REVENUE) P.A. NO. AACCP2905Q #$% & / ASSESSEE BY SHRI M.C. NANIWADEKAR ' / REVENUE BY SHRI NEIL PHILIP-DR ( ') * & + / DATE OF HEARING : 18/05/2015 * & + / DATE OF ORDER: 18/05/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 20/02/2012, OF THE LD. FIRST APPELLATE AUTHORITY, M UMBAI. M/S PIXEL IMAGE INDIA PRIVATE LIMITED 2 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI M.C. NANIWADEKAR, DID NOT PRESS GROUND NO.2 WITH RESPECT TO APPROPRIATED DEDUCTION U/S 10A OF THE ACT, THUS, THIS GROUND IS DISMISSED AS NOT PRESSED. 2.1. THE ONLY GROUND AGITATED BY THE LD. COUNSEL PERTAINS TO DISALLOWANCE OF RS.61,91,965/- CLAIMED AS BAD DEBT U/S 36(1)(VII) READ WITH SECTION 36(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), BY CONTENDING THAT THE AMOUNT WAS ACTUALLY WRITTEN OFF IN ITS BOOKS OF ACC OUNTS, THEREFORE, IN VIEW OF THE DECISION IN T.R.F. LTD. V S CIT 323 ITR 397 (SC), THE CLAIM OF THE ASSESSEE HAS TO BE ALLOW ED. ON THE OTHER HAND, THE LD. DR, SHRI NEIL PHILIP, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONT ENDING THAT THE ENTIRE SALE OF GRAPHIC ANIMATION IMAGES WE RE SOLD TO PARENT COMPANY OF THE ASSESSEE, CONSEQUENTLY, IT WA S MERELY A ARRANGEMENT TO DEFRAUD THE REVENUE SO AS TO REDUC E TAX LIABILITY. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING STILL GRAPHIC ANIMATION IMAGES, CLAIMED RS.61,91,962/- AS BAD DEBT WRITTEN OFF. THE LD. AS SESSING OFFICER DENIED THE CLAIM ON THE GROUND THAT THE DEB TS, WHICH WERE WRITTEN OFF WAS ONLY OF PARENT COMPANY AS THE ASSESSEE IS 100% SUBSIDIARY OF THE DEBTOR AND THUS, SUCH CLA IM WAS NOT A BONA-FIDE COMMERCIAL DECISION. ON APPEAL, BE FORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE STAND OF THE M/S PIXEL IMAGE INDIA PRIVATE LIMITED 3 ASSESSING OFFICER WAS AFFIRMED AGAINST WHICH THE AS SESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT AFTER 01/0 4/1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH T HAT DEBT, IN FACT, HAS BECOME IRRECOVERABLE, IT IS ENOUGH, IF BA D DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE AS WAS HELD IN T.R.F. LTD. VS CIT 323 ITR 397 (SC), CI T VS AUTO METERS LTD. 292 ITR 345 (DEL.), CIT VS MORGAN SECUR ITIES AND CREDITS PVT. LTD. 162 TAXMAN 124 (DEL.), SURESH GAG GAL VS ITO (2009) 180 TAXMAN 90 (HP), LAWLYS ENTERPRISES L TD. VS CIT 314 ITR 297 (PAT.), DIT VS OWAN INTERNATIONAL B ANK (2009) 184 TAXMAN 314 (BOM.) THE FACT OF AMENDMENT TO SECTION 36(1)(VII) READ WITH SECTION 36(2) IS ONLY THAT NOW FOR CLAIMING DEDUCTION U/S 36(1)(VII) MERE WRITING OFF DEBT OR PART THEREOF AS IRRECOVERABLE IS A SUBSTANTIAL COMPLIANC E. OUR VIEW IS FURTHER SUPPORTED BY THE DECISION IN CIT VS KOHLI BROTHERS COLOR LAB PVT. LTD. (2010) 186 TAXMAN 62 ( ALL.) AND CIT VS SMT. NILOPHER I. SINGH 309 ITR 233 (DEL.). I N VIEW OF THE AFOREMENTIONED JUDICIAL PRONOUNCEMENTS, THE CLA IM OF THE ASSESSEE IS ALLOWED. THUS, THIS GROUND OF THE ASSE SSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. M/S PIXEL IMAGE INDIA PRIVATE LIMITED 4 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 18/05/2015. SD/- SD/- ( N.K. BILLAIYA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( ) MUMBAI; , DATED : 18/05/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 ( 4& ( -. ) / THE CIT, MUMBAI. P4. 3 3 ( 4& / CIT(A)- , MUMBAI 5. 6'7 1&# , 3 -.+ -# 8 , ( ) / DR, ITAT, MUMBAI 6. 9$ :) / GUARD FILE. / BY ORDER, 26.& 1& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI