Baldaou Agriculture & Plantation Pvt.Ltd., Baroda V. The Income tax Officer,Ward-1(1), Baroda

ITA 339/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6950 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-12-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 07-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ./ ITA NO. 339 /AHD/201 1 [ [ / ASSESSMENT YEAR: 20 0 1 - 02 BALDAOU AGRICULTURE & PLANTATION PVT LTD., VASU NIWAS, B/H. B N CHAMBER, ALKAPURI CLUB ROAD, ALKAPURI, VADODARA PAN : AABCB 2571 K VS INCOME TAX OFFICER, WARD - 1 (1) BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI SAKAR SHARMA, AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. / DATE OF HEARING : 03 / 12 /2014 / DATE OF PRONOUNCEMENT: 12 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, BARODA DATED 29 . 1 1 .201 0 FOR THE ASSESSMENT YEAR 20 0 1 - 0 2 . 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE READS AS UNDER: - THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS.7,50,000/ - EITHER AS BUSINESS LOSS OR AS BAD DEBTS. ITA NO. 339 /AHD/2011 BALDAOU AGRICULTURE & PLANTATION P LTD FOR AY 2001 - 02 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS WRITTEN OFF RS.7,50,000/ - IN ITS PROFIT AND LOSS ACCOUNT UNDER THE HEAD BAD DEBTS. THE ASSESSING OF FICER DISALLOWED THE ABOVE AMOUNT ON THE GROUND THAT THE SAME WAS NOT BAD DEBTS. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR THE REASON THAT NO MATERIAL WAS BROUGHT BEFORE HIM TO SHOW THAT THE ASSESSEE WAS ENGAGED IN THE B USINESS OF FINANCING AND NO MATERIAL WAS BROUGHT BEFORE HIM TO SHOW THAT THE LOSS OF RS.7,50,000/ - CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. 5. BEFORE US, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE AFORESAID LOSS OF RS.7,50, 000/ - AROSE DURING THE COURSE OF BUSINESS. ACCORDING TO THE ASSESSEE , THE FACTS OF THE CASE IS THAT ONE OF THE GROUP CONCERN M/S SOMANI CEMENT COMPANY LTD. DECIDED TO SETUP A PLANT IN NEPAL AND THEREFORE FORMED A COMPANY IN THE NAME OF SOMANI CEMENT COMPANY (NEPAL) LTD. UNDER THE LAWS OF NEPAL GOVT. THE ASSESSEE, BEING ENGAGED IN THE ACTIVITY OF GIVING L OANS AND ADVANCES , ADVANCED RS.7,50,000/ - IN JULY, 1998 IN THE ANTICIPATION THAT IT WILL FINANCE FURTHER IN THE SAID PROJECT AND THEREBY WILL BE ABLE TO EARN SUBSTANTIAL AMOUNT OF INTEREST. HOWEVER, OWING TO VARIOUS REGULATORY REQUIREMENTS AND OTHER REASON S , THE SAID PROJECT COULD NOT TAKE OFF IN TIME AND THEREFORE A REQUEST WAS MADE BY THE ASSESSEE TO ALLOT SHARES IN THE SAID COMPANY SO THAT ON A FUTURE DATE YOUR ASSESSEE CAN PARTICIPATE IN THE SAID COMPANY MORE MEANINGFULLY AND THEREFORE, THIS AMOUNT WAS TRANSFERRED TO LOAN ACCOUNT FROM SHARE APPLICATION MONEY ACCOUNT WITHOUT HAVING APPLIED FOR THE SHARES . LATER ON THIS COMPANY FAILED TO TAKE OFF EFFECTIVELY AND THEREFORE, AMOUNT SO ADVANCED IN THE NORMAL COURSE OF MONEY LEND I NG BUSINESS BECOME ITA NO. 339 /AHD/2011 BALDAOU AGRICULTURE & PLANTATION P LTD FOR AY 2001 - 02 3 IRRECOVERA BLE AND THEREFORE WAS WRITTEN OFF IN THE BOOKS AND DEBITED TO THE PROFIT & LOSS ACCOUNT . 6. WE FIND THAT NO MATERIAL HAS BEEN BROUGHT BEFORE US TO SHOW THAT ANY INTEREST INCOME WAS EVER EARNED BY THE ASSESSEE ON RS.7,50,000/ - ADVANCED BY THE ASSESSEE TO A GROUP COMPANY. 7. FURTHER, NO MATERIAL COULD ALSO BE BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE WAS ENGAGED IN SYSTEMATIC ACTIVITIES OF PROVIDING LOANS TO OTHERS. IN ABSENCE OF SUCH MATERIAL, WE DO NOT FIND ANY MATERIAL TO SUPPORT THE SUBMISSIONS OF T HE ASSESSEE THAT THE AMOUNT IN QUESTION WAS ADVANCED DURING THE NORMAL COURSE OF BUSINESS OF THE ASSESSEE. 8. FURTHER, IT IS NOT IN DISPUTE THAT THE LOAN IN QUESTION WAS NEVER ENTERED IN THE COMPUTATION OF THE INCOME OF THE ASSESSEE. IN ABOVE CIRCUMSTANCE S, IN OUR CONSIDERED VIEW, LOSS IN QUESTION WAS A CAPITAL LOSS IN THE HANDS OF THE ASSESSEE AND THERE WAS NO ERROR IN THE ORDERS OF THE LOWER AUTHORITIES IN DISALLOWING THE SAME. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 9. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 2 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 2 /1 2 /2014 BIJU T., PS ITA NO. 339 /AHD/2011 BALDAOU AGRICULTURE & PLANTATION P LTD FOR AY 2001 - 02 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - I , BARODA 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD