CHAMPION OUTDOOR MEDIA P. LTD ( AMALGAMATED WITH LAQSHYA MEDIA P. LTD WEF. 1.4.2006), MUMBAI V. ACIT (OSD) CIR 2(2), MUMBAI

ITA 3365/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54995 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUBAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3365/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. CHAMPION OUTDOOR MEDIA P. LTD. ACIT (OSD), CIR CLE 2(2) (AMALGAMATED WITH LAQSHY MEDIA P. LTD.) ROOM NO. 545, AAYAKAR BHAVAN UNIT NO. 17, ANDHERI INDL. ESTATE VS. M.K. ROAD, MUMBAI 400020 OFF VEERA DESAI ROAD, ANDHERI (W) MUMBAI 400053 PAN - AAACL 5004 C APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI M.R. KUBAL DATE OF HEARING: 11.08.2011 DATE OF PRONOUNCEMENT: O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-V, MUMBAI DATED 15.03.2010. 2. ASSESSEE HAS RAISED 7 GROUNDS ON THE ISSUE OF CLAIM OF BAD DEBTS OF ` 2,68,007/- CLAIMED UNDER SECTION 36(1)(VII). THE A. O. DISALLOWED THE SAME STATING THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENC E ON THE CONDITIONS LAID DOWN IN SECTION 26(1)(VII) R.W.S. 36(2) ARE FULFILL ED. THE A.O. PRESUMED THAT ASSESSEE HAS NOTHING TO EXPLAIN AND ACCORDINGLY THE AMOUNT WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. BEFORE THE CIT( A) IT WAS CONTENDED THAT THE DETAILS OF SUNDRY BALANCES WERE FILED BEFORE TH E A.O. AND HOW THE CONDITIONS LAID DOWN IN THE SECTION ARE FULFILLED. THE CIT(A) EXTRACTED THE WRITTEN SUBMISSIONS MADE IN PARA 11 ALONGWITH THE D ETAILS OF THE SUNDRY BALANCES WRITTEN OFF OF 4 PARTIES AND ALSO THE EXPL ANATION THAT THE ABOVE PARTIES WERE EITHER PAID SHORT AMOUNTS OR WERE NOT PAID THE AMOUNTS DUE UNDER THE INVOICES. THE DETAILS AS PER THE CIT(A)S ORDER ARE AS UNDER: - ITA NO. 3365/MUM/2010 M/S. CHAMPION OUTDOOR MEDIA P. LTD. 2 A) ESPN SOFTWARE INDIA PRIVATE LIMITED RS.62,266/- AGAINST INVOICE DATED 14 TH OCTOBER 2004. B) KOTAK MAHINDRA FINANCE LIMITED RS.69,540/- AGAINST INVOICES DATED 16 TH NOVEMBER 2003 AND 22 ND JULY 2004. C) MAX NEW YORK LIFE INSURANCE COMPANY LIMITED RS.20,5 22/- AGAINST INVOICE DATED 21 ST DECEMBER 2004. D) NOKIA INDIA LIMITED RS.1,12,552/- AGAINST INVOICE D ATED 27 TH JANUARY 2004. 3. THE CIT(A), HOWEVER, NOTICED THAT ALL THE AMOUNTS W RITTEN OFF ARE RELATIVELY VERY OLD AND PERTAIN TO WELL KNOWN CONCE RNS. THEREFORE, HE WAS OF THE OPINION THAT THE DECISION TO WRITE OFF WAS NOT BONAFIDE, IF THE A.O. HAS TO ALLOW THE DEBT AS BAD DEBT. ACCORDINGLY HE UPHELD T HE ACTION OF THE A.O. 4. ASSESSEE WAS NOT REPRESENTED BEFORE US EITHER IN PE RSON OR THROUGH ANY AUTHORISED REPRESENTATIVE. THE CASE WAS HEARD E XPARTE ASSESSEE AND THE LEARNED D.R. PLACED ON RECORD THE DETAILS AS EXTRAC TED BY THE A.O. IN THE ORDER BY THE CIT(A). HE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE ISSUE. AS PER THE WRITTEN SU BMISSION FILED BEFORE THE CIT(A), EXTRACTED IN PARA 11 OF THE ORDE R ASSESSEE NOT ONLY FURNISHED THE DETAILS BEFORE THE A.O. BUT ALSO JUST IFIED THE WRITE OFF STATING THAT THE AMOUNTS ARE AGAINST INVOICES RAISED AND PA RTIES HAVE EITHER PAID SHORT AMOUNTS OF NOT PAID DUE TO VARIOUS PROBLEMS. IT IS NOT THE CASE THAT THESE AMOUNTS WERE NOT TAKEN AS INCOME IN EARLIER Y EAR. IT IS ALSO NOT THE CASE THAT ASSESSEE HAS NOT WRITTEN OFF THE AMOUNTS. IT IS THE BUSINESS DECISION WHICH THE ASSESSEE TAKES IN THE COURSE OF HIS BUSINESS WHETHER A PARTICULAR AMOUNT IS IRRECOVERABLE OR NOT. IF IT IS FELT THAT THE AMOUNT IS IRRECOVERABLE DUE TO VARIOUS REASONS BASED ON COMME RCIAL EXPEDIENCY THE AMOUNT IS WRITTEN OFF RATHER THAN PURSUING COLLECTI ON. ONCE THE AMOUNTS ARE WRITTEN OFF CONSEQUENT TO AMENDMENTS MAD W.E.F. 01. 04.1989 IT IS TO BE HELD THAT IT IS SUFFICIENT THAT THE BAD DEBTS ARE WRITTE N OFF AS IRRECOVERABLE AND SATISFIED THE CONDITIONS FOR ALLOWING THE AMOUNTS U NDER SECTION 36(1)(VII). SINCE THE AMOUNTS ARE WRITTEN OFF, RESPECTFULLY FOL LOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF TR F LIMITED 323 ITR 397 THE AMOUNTS CLAIMED AS DEDUCTION AS BAD DEBT UNDER SECTION 26(1)(VII) HAS TO BE ALLOWED AND IT IS NOT NECESSARY FOR THE TAX P AYER TO ESTABLISH THAT THE ITA NO. 3365/MUM/2010 M/S. CHAMPION OUTDOOR MEDIA P. LTD. 3 DEBT HAS ACTUALLY BECOME IRRECOVERABLE. IT IS SUFFI CIENT THAT THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUN T OF THE TAX PAYER. THE PRESENT CASE SQUARELY FALLS WITHIN THE PRINCIPLE LA ID DOWN BY THE ABOVE JUDGEMENT OF THE HON'BLE SUPREME COURT. THEREFORE, THE A.O. IS DIRECTED TO ALLOW THE AMOUNTS AS BAD DEBT AS THE CONDITIONS SPE CIFIED UNDER SECTION 36(1)(VII) R.W.S. 36(2) ARE SATISFIED IN THE PRESEN T CASE. THEREFORE THE ROUNDS ARE TREATED ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 2011. (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: AUGUST 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) V, MUMBAI 4. THE CIT II, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P. S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 11.08.11 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12.08.11 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM ITA NO. 3365/MUM/2010 M/S. CHAMPION OUTDOOR MEDIA P. LTD. 4 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER