TATA CUMMINS PRIVATE LTD , JSR V. DCIT CIRCLE-3, JSR

ITA 348/RAN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0620 (ITAT-RANCHI)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJIT SINGH CITSR
• Keywords: Rejection of books of accounts; Depreciation; Tangible material; Bad and doubtful debts; Capital expenditure
• Section: 32

Judgement Text

1 ITA NO. 329&348 /RAN/20 1 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 329 / RAN/20 1 7 ASSESSMENT YEAR : 20 10 - 201 1 ACIT, CIRCLE - 3, JAMSHEDPUR V S M/S TATA CUMMINS PRIVATE LTD., CUMMINS ROAD, TELCO TOWNSHIP, JAMSHEDPUR - 831004 PAN NO. : AA ACT 6353 L (APPELLANT ) .. RESPONDENT AND ITA NO.348/RAN/2017 ASSESSMENT YEAR : 2010 - 2011 M/S TATA CUMMINS PRIVATE LTD. (FORMERLY KNOWN AS TATA CUMMINS LIMITED) , CUMMINS ROAD, TELCO TOWNSHIP, J AMSHEDPUR - 831004 V S D CIT, CIRCLE - 3, JAMSHEDPUR PAN NO. : AAACT 6353 L (APPELLANT ) .. RESPONDENT REVENUE BY : SHRI INDERJIT SINGH, CIT(SR.DR) ASSESSEE BY : SHRI KETAN VED, CA DATE OF HEARING : 2 8 . 11 .201 8 DATE OF PRONOUNCEMENT : 30 . 11 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : THE REVENUE AND ASSESSEE HA VE FILED THE CROSS APPEALS AGAINST THE ORDER OF CIT(A), JAMSHEDPUR , DATED 12.09.2017 FOR THE ASSESSMENT YEAR 2010 - 2011. 2 ITA NO. 329&348 /RAN/20 1 7 2. FIRST WE SHALL DEC IDE THE APPEAL OF REVENUE IN ITA NO.329/RAN/2017 FOR THE ASSESSMENT YEAR 2010 - 2011 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT THE LD. CIT(A) ERRED IN LAW & IN FACT IN ALLOWING THE ASSESSEE'S CLAIM U/S 35(2AB) AT 150% OF RS.6 ,57,12,000/ - I.E. FOR RS.8,93,63,706/ - . 2. THAT THE LD. CIT(A) ERRED IN LAW & IN FACT IN ALLOWING THE ASSESSEE'S CLAIM ON THE BASIS OF THE CERTIFICATE ISSUED BY THE AUDITOR M/S DELOITTE HASKINS AND SELLS AND COPY OF APPROVAL GRANTED BY DEPARTMENT OF SCIEN TIFIC AND RESEARCH CENTRE, GOVT, OF INDIA, NEW DELHI. 3. THAT THE LD. CIT(A) ERRED IN LAW & IN FACT IN DELETING THE ADDITION OF RS.77,02,514/ - ON ACCOUNT OF SCRAP SALES BY HOLDING THAT THE AO WENT BY SIMPLE ARITHMETICAL CALCULATION. 4. THAT THE LD. C IT(A) ERRED IN LAW & IN FACT IN DELETING THE ADDITION ON ACCOUNT OF SCRAP SALES BY HOLDING THAT THE AO WENT BY SIMPLE ARITHMETICAL CALCULATION EVEN THOUGH THERE WAS NO SUBMISSION THE PART OF THE ASSESSEE IN THIS REGARD BOTH AT THE TIME OF ASSESSMENT & AT T HE APPELLATE STAGE. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF INTERNAL COMBUSTION ENGINES AND COMPONENTS FOR TATA MOTORS LTD AND FILED RETURN OF INCOME ON 30.09.201 0 DECLARING TOTAL INCOME OF RS. 1,65,17,71,720/ - . UPON SELECTION OF THE CASE FOR SCRUTINY , NOTICES U/S.143(2)/142(1) OF THE ACT WERE ISSUED. THEREAFTER THE AO COMPLETED THE ASSESSMENT MAKING VARIOUS ADDITIONS AND ASSESSED THE TOTA L INCOME OF THE ASSESSEE RS.1,84,78,91,180/ - AND PASSE D ORDER U/S.143(3) OF THE ACT, DATED 12.03.2014. 4 . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE 3 ITA NO. 329&348 /RAN/20 1 7 APPEARED AND ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFOR E THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF AO, PARTY ALLOWED THE APPEAL OF THE ASSESSEE . 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . LD. DR BEFORE US ARGUED ON THE ABOVE GROUNDS AND RELIED ON THE ORDER OF AO. 7 . CONTRA, LD. AR SUPPORTED THE ORDER OF CIT(A) ON THE GROUNDS RAISED BY THE REVENUE . 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE FIRST GROUND THE CONTENTION OF LD. DR IS THAT THE CIT(A) ERRED IN ALLOWING ASSESSEES CLAIM U/S.35(2AB) OF THE ACT. WE ON PERUSAL OF THE CIT(A)S ORDER, WE FIND THAT THE CIT(A) WHILE DEALT WITH THE DISPUTED ISSUE RELIED ON THE VARIOUS JUDICIAL DECISIONS AND ALLOWED THE CLAIM OF THE ASSESSEE AN D OBSERVED AT PARA 1.37 OF THE ORDER WHICH READS AS UNDER: - 1.37 FOLLOWING THE DECISION OF THE ITAT, KOLKATA IN THE FOREGOING CASE, THE APPELLANT SUBMITS THAT THE R&D FACILITY WAS BEING OPERATED FOR CARRYING OUT RESEARCH & DEVELOPMENT IN THE FIELD OF AUTO MOTIVE ENGINEERING. ADMITTEDLY THE APPELLANTS BUSINESS WAS ALSO IN THE SAME FILED. IN THE CIRCUMSTANCES THE EXPENSES INCURRED AT THE R&D FACILITY ALSO ASSISTED THE APPELLANT IN TIS BUSINESS ACTIVITIES. THEREFORE EVEN IF THE WEIGHTED DEDUCTION CLAIMED UNDE R SECTION 35(2AB) IN RESPECT OF EXPENSES INCURRED BY ITS R&D FACILITY IS DISALLOWED; THEN IN THE ALTERNATE NORMAL DEDUCTION IN RESPECT OF THE R&D EXPENSES OF RS.5.9981,804/ - DESERVES TO BE ALLOWED WHILE COMPUTING PROFITS OF THE BUSINESS. WITH REGARD TO A DDITION MADE ON ACCOUNT OF SCRAP SALES, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITION OBSERVING THAT THE AO 4 ITA NO. 329&348 /RAN/20 1 7 NEITHER HAS REJECTED THE BOOKS OF ACCOUNTS NOR THE PROVISIONS OF SECTION 145(3) OF THE ACT HAVE BEEN INVOKED, WHICH COULD WA RRANT ESTIMATION OF INCOME. THE OBSERVATIONS OF THE CIT(A) ON THIS GROUND AT PARA 4.6 ARE AS UNDER : - 4.6 IN ALL THE ABOVE DECISIONS; THE APEX COURT CONSISTENTLY HE L D THAT THE SUBJECT MATTER OF TAX UNDER THE IT ACT CAN ONLY BE THE REAL INCOME AND NOT HY POTHETICAL OR ILLUSORY INCOME. T HE REVENUE CAN LEVY T AX ONLY ON THE REAL INCOME EARNED WHICH IS CHARGEABLE TO TAX UNDER THE LAW. THERE IS NO PROVISION IN THE INCOME - TAX ACT, 19961 TO TAX NOTIONAL INCOME. THE BURDEN IS ON THE REVENUE TO ESTABLISH WITH CORRO BORATIVE AND TANGIBLE MATERIAL THAT THE ASSESSEE HAD ACTUAL RECEIVED MORE THAN WHAT HAS BEEN DECLARED AND OFFERED TO TAX. IN THE FACTS OF THE PRESENT CASE THE AO HAS NOWHERE ALLEGED THAT THE ASSESSEE HAD SOLD SCRAP OUTSIDE THE BOOKS OR INCOME FROM SALE OF SCRAP WAS UNDER - REPORTED. THE AO HAS ALSO NOT GIVEN ANY TANGIBLE MATERIAL OR EVIDENCE WHICH WOULD EVEN REMOTELY SUGGEST THA T THE APPELLANT HAD SOLD SCRAP MORE THAN WHAT WAS REPORTED IN THE BOOKS. ADMITTEDLY NEITHER HAVE THE BOO K S OF ACCOUNTS BEEN REJEC T ED NOR HAVE THE PROVISIONS OF SECTION 145(3) BEEN INVOLVED BY THE AO, WHICH COULD WARRANT ESTIMATION OF INCOME. IN TH E CIRCUMSTANCES THE ARBITRARY & ADHOC ADDITION OF RS. 77,02,514/ - MADE BY THE AO BASED O PURE CONJECTURES & SURMISES WAS BAD IN LAW AND HENCE D ESERVES TO BE DELETED IN FULL. 9 . DURING THE COURSE OF HEARING THE LD. DR HAS ARGUED ABOVE GROUNDS OF APPEAL ONLY AND SUPPORTED THE ORDER OF ASSESSING OFFICER AND COULD NOT BRING ANY NEW COGENT EVIDENCE TO CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). AC CORDINGLY, WE ARE OF THE OPINION THAT THE CIT(A) HAS PASSED A REASONED ORDER, WHICH WE UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF REVENUE. 10 . THUS, THE APPEAL OF THE REVENUE IS DISMISSED. 11 . NOW, WE SHALL TAKE THE APPEAL OF THE ASSESSEE IN ITA NO.348/RAN/2017 FOR THE ASSESSMENT YEAR 2010 - 2011, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 5 ITA NO. 329&348 /RAN/20 1 7 1 : 0 RE.: DISALLOWANCE OF BAD - DEBTS: 1: 1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER O F DISALLOWING THE BAD - DEBTS OF RS. 55,07,182/ - WRITTEN OFF BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. 1 : 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT IS ENTITLED TO CLA IM A DEDUCTION FOR THE DEBT OF RS. 55,07,182/ - WRITTEN OFF AS BAD DURING THE YEAR UNDER CONSIDERATION AND THE STAND TAKEN BY THE ASSESSING OFFICER IN THIS REGARD IS MISCONCEIVED, INCORRECT AND ILLEGAL AND THE COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO H AVE HELD AS SUCH. 1:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE DISALLOWANCE MADE BY HIM AND TO RE - COMPUTE THE APPELLANTS TOTAL INCOME AND TAX THEREON ACCORDINGLY. 2:0 RE.: SHORT GRANTING OF DEDUCTION FOR THE PROVISION FO R WARRANTY CHARGES: 2:1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN GRANTING THE APPELLANT A DEDUCTION FOR THE PROVISION MADE FOR WARRANTY CHARGES ONLY TO THE EXTENT OF RS. 20,92,34,942/ - AS AGAI NST THE CLAIM OF RS. 23,28,51,000/ - MADE BY THE APPELLANT. 2:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT, IT IS ENTITLED TO CLAIM A DEDUCTION FOR THE WHOLE AMOUNT OF PROVISION FOR WARRANTY MADE I.E. RS. 23,28,51,000/ - AND THE STAND TAKEN BY THE ASSESSING OFFICER IN THIS REGARD IS MISCONCEIVED, INCORRECT AND ILLEGAL AND THE COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 2.3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO ALLOW THE DEDUCTION AS CLAIMED BY THE APPELLANT AND TO RE - COMPUTE ITS TOTAL INCOME AND TAX THEREON ACCORDINGLY. 3:0 RE.: ADDITION ON ACCOUNT OF ALLEGED EXCESS UNUTILIZED PROVISION FOR WARRANTY CHARGES: 3:1 THE COMMISSIONER OF INC OME - TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF ADDING AN AMOUNT OF RS. 6,99,30,000/ - BEING ALLEGED EXCESS UNUTILIZED PROVISION FOR WARRANTY CHARGES WHICH HAVE NOT BEEN WRITTEN BACK BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS . 6 ITA NO. 329&348 /RAN/20 1 7 3:2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT, THERE IS NO UNUTILIZED PROVISION FOR WARRANTY CHARGES WHICH OUGHT TO HAVE BEEN WRITTEN BACK BY IT AND THE STAND TAKEN BY THE ASSESSI NG OFFICER IN THIS REGARD IS MISCONCEIVED, INCORRECT AND ILLEGAL AND THE COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 3:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE ADDITION SO MADE BY HIM AND TO RE - CO MPUTE ITS TOTAL INCOME AND TAX THEREON ACCORDINGLY. 4 : 0 RE.: NON - GRANTING OF DEPRECIATION ON THE INTANGIBLE ASSETS: 4 : 1 THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN NOT SPECIFICALLY DIRECTING THE ASSESSING OFFICER TO GRANT THE APPELLANT DEP RECIATION ON THE AMOUNT OF TECHNICAL KNOW - HOW FEES PAID BY THE APPELLANT IN THE EARLIER YEARS WHICH PAYMENT HAS BEEN TREATED AS CAPITAL EXPENDITURE TOWARDS ACQUISITION OF INTANGIBLE ASSETS IN THE RESPECTIVE YEARS. 4:2 THE APPELLANT SUBMITS THAT CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT IS ENTITLED TO CLAIM DEPRECIATION ON THE AMOUNTS TREATED AS CAPITAL EXPENDITURE TOWARDS ACQUISITION OF INTANGIBLE ASSETS IN THE EARLIER YEAR(S) AND THE NON - GRANTING OF DEPRE CIATION THEREON BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION IS MISCONCEIVED, INCORRECT AND ILLEGAL AND THE COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE SPECIFICALLY DIRECTED THE ASSESSING OFFICER TO GRANT THE APPELLANT DEPRECIATION THER EON IN ACCORDANCE WITH LAW. 4 : 3 THE APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO CONSIDER DEPRECIATION U/S. 32 OF THE INCOME - TAX ACT, 1961 IF THE SAME HAS BEEN CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME. 4:4 THE APPELLANT SUBMITS THAT ASSESSING OFFICER BE DIRECTED TO GRANT DEPRECIATION ON THE AMOUNTS TREATED AS CAPITAL EXPENDITURE TOWARDS ACQUISITION OF INTANGIBLE ASSETS IN THE EARLIER YEAR(S) AND TO RE - COMPUTE ITS TOTAL INCOME AND TA X THEREON ACCORDINGLY. 5:0 RE.: GENERAL: 5:1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR SUBSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER MODIFY ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 7 ITA NO. 329&348 /RAN/20 1 7 12 . BEFORE US, LD. AR IN RESPECT OF GROUND NO.1 FOR DISALLOWANCE OF BAD DEBTS, LD. AR RELIED ON THE SUBMISSIONS MADE BEFORE THE AO AND CIT(A). LD. AR DREW OUR ATTENTION TO THE OBSERVATIONS CIT(A) AT PAGE 33 TO 35 PARA 2.1 TO 2.5 AND ALSO RELIED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF CIT VS HCL COMNET SYSTEMS & SERVICES LTD. [2008] 305 ITR 409. THE CONTENTION OF LD. AR IS THAT ENTRIES IN THE BOOKS OF ACCOUNTS HAVE BEEN MADE, THEREFORE, SINCE THE ASSESSEE HAS NOT CLAIMED IN EARLIER YEARS AND IN THE COM PUTATION IN THE EARLIER YEARS THE BAD DEBTS WAS DEBITED AND THE TAXABILITY HAS BEEN CALCULATED, WHEREAS OBSERVATIONS OF THE ARE IN CONSONANCE WITH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. FURTHER THE LD. AR SUBMITTED THAT T HE BAD DEBTS OF RS.55,07,1 82/ - WRITTEN OFF IN THE RELEVANT YEAR WAS NEVER CHARGED NOR DEBITED TO THE PROFIT & LOSS ACCOUNT. INSTEAD IT WAS DIRECTLY ADJUSTED WITH THE OPENING PROVISION FOR BAD & DOUBTFUL DEBTS BROUGHT FORWARD FROM EARLIER YEARS. IT WAS ALSO THE SUBMISSION OF LD AR T HAT THE SAID PROVISION OF RS.55,07,182/ - WHICH WAS MADE IN AYS 2008 - 09 & 2009 - 10 WAS NEVER CLAIMED AS DEDUCTION IN THE RESPECTIVE ASSESSMENT YEARS , THEREFORE, THE ASSESSEE HAD RIGHTLY CLAIMED DEDUCTION OF RS.55,07,182/ - IN RESPECT OF BAD DEBTS ACTUALLY WRI TTEN OFF WHILE COMPUTING THE PROFITS OF THE BUSINESS. THE BAD DEBTS HAVE BEEN RIGHTLY CLAIMED AS DEDUCTION IN THE YEAR IN WHICH IT HAS BEEN ACTUALLY WRITTEN OFF AND NOT IN THE YEAR IN WHICH THE PROVISION FOR THE SAME WAS MADE. THE AO HOWEVER FAILED TO APPR ECIATE THE FOREGOING JURISDICTIONAL FACTS AND ARBITRARILY DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT GIVING ANY COGENT 8 ITA NO. 329&348 /RAN/20 1 7 REASONS WHATSOEVER. ACCORDINGLY, LD AR PRAYED FOR ALLOWING THIS GROUND OF APPEAL. 13 . CONTRA, LD. DR RELIED ON THE ORDER OF BOTH THE LO WER AUTHORITIES. 14 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE AO ON PERUSAL OF THE COMPUTATION OF INCOME OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS DEDUCTED AN AMOUNT OF RS.55,07,182/ - AS PROVISION FOR BAD AND DOUBTFUL DEBTS WRITTEN BACK DURING THE YEAR. THE AO FURTHER OBSERVED THAT IF THE PROVISION HAS BEEN MADE ON PREVIOUS YEAR AND WRITTEN BACK DURING THE YEAR THEN WHY THE AMOUNT OF RS.55,07,182/ - WAS DEDUCTED FROM THE COMPUTATION OF INCOME. ACCORDINGLY, THE A O MADE THE ADDITION. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE FAILED TO SUBSTANTIATE AS TO HOW IT IS BAD AND DOUBTFUL DEBTS AND WITHOUT ASCERTAINING LIABILITY, THE DEDUCTION HAS BEEN EFFECTED AND CONFIRMED THE ACTION OF AO. LD. AR BEFORE US HAS SUB MITTED THAT ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. THE SUBMISSION OF LD. AR BEFORE US IS THAT T HE BAD DEBTS HAVE BEEN RIGHTLY CLAIMED AS DEDUCTION IN THE YEAR IN WHICH IT HAS BEEN ACTUALLY WRITTEN OFF AND NOT IN THE YEA R IN WHICH THE PROVISION FOR THE SAME WAS MADE. WE ARE OF THE OPINION THAT THE CIT(A) HAS TO VERIFY AND EXAMINE THE ISSUE . WE SUPPORT OUR VIEW WITH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT, 323 ITR 397(SC), WHEREIN THE HONBLE SUPREME COURT HAS HELD AS UNDER : - 9 ITA NO. 329&348 /RAN/20 1 7 4. THIS POSITION IN LAW IS WELL - SETTLED. AFTER 1 - 4 - 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUSTOMER'S ACCOUN T IS CREDITED, THUS, CLOSING THE ACCOUNT OF THE CUSTOMER. IN THE CASE OF COMPANIES, THE PROVISION IS DEDUCTED FROM SUNDRY DEBTORS. AS STATED ABOVE, THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER, IN FACT, THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING OFFICER. HENCE, THE MATTER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ABOVE - MENTIONED ASPECT ONLY AND THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. 5. SUBJECT TO ABOVE, THE CIVIL APPEALS FILED BY THE ASSESSEE ARE DISPOSED OF WITH NO ORDER AS TO COSTS. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF CIT(A) , WHO SHALL VERIFY AND EXAMINE THE ISSUE AS TO WHETHER THE CLAIM OF ASSESSEE IS IN THE YEAR IN WHICH IT HAS BEEN ACTUALLY WRITTEN OFF AND NOT IN THE YEAR IN WHICH THE PROVISION FOR THE SAME WAS MADE . THE ASSESSEE SHALL COOPERATE IN THE SUBMITTING THE INFORMATION FOR EARLY DISPOSAL OF THE CASE. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. 15 . IN REGARD TO SECOND AND THIRD GROUND IN RESPECT OF PROVISION FOR WARRANTY CHARGES, THE LD. AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HAD SOLD HIGHER QUANTITY OF ENGINES IN THE PRECEDING YEAR FOR WHICH NO WARRANTIES WERE PR OVIDED IN THE EARLIER YEAR, COMPARED TO THE AY 2010 - 11. IN THE YEAR UNDER CONSIDERATION THE ABSOLUTE NUMBER OF BS - II & BS - III ENGINES SOLD AND WHICH ENJOYED WARRANTY, WAS MUCH HIGHER COMPARED TO EARLIER YEAR. IT IS FOR THIS REASON THAT THE INCREASE IN PROV ISION FOR WARRANTIES WAS PROPORTIONATELY HIGHER THAN THE INCREASE IN ABSOLUTE 10 ITA NO. 329&348 /RAN/20 1 7 SALES TURNOVER. THE AFORESAID FACTS WERE DULY EXPLAINED IN THE WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER. HOWEVER, THE CIT(A) WITHOUT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE ACTION OF AO AND PRAYED FOR ALLOWING OF THIS GROUND OF APPEAL. 16 . CONTRA, LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 17 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(A) WHILE DEALING WITH THE DISPUTED ISSUE HAS OBSERVED THAT ANY PROVISION DEBITED TO PROFIT AND LOSS ACCOUNT IS NOT DEDUCTABLE TILL IT IS AN ASCERTAIN LIABILITY AND SUSTAINED THE ADDITION MADE BY THE AO. THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD ARE AS UNDER : - GROUND NO. 9 TO 13 RELATES TO ADDITION OF RS. 9,35,46,058/ - . I HAVE GONE THROUGH THE ORDER OF THE AO AS WELL AS THE SUBMISSION OF THE ASSESSEE (SPIRAL BINDING PAGE 62 TO 68). ANY PROVISION DEBITED TO P & L A/C IS NOT DEDUCTABLE TILL IT IS AN ASCERTAIN LIABILITY. AT PAGE 67 THE ASSESSEE HIMSELF HAS SHOWN TOTAL WARRANTY AT RS. 23,28,51,000/ - WHICH IS NOT THE ACTUAL EXPENDITURE. THE ACTUAL EXPENDITURE IS ONLY RS. 6,45,00,000/ - DURING THE PERIOD UNDER CONSIDERATION. TAKING TOGETHER THE EXPENSES OF F.Y. 2008 - 09 THE AO ARRIVED AT ACTUAL EXPENDITURE AT RS. 7,11,78,000/ - . THEREFORE HE FOUND EXCESS PROVISION OF RS. 6,99,30,000/ - AND FURTHER FOUND RS. 2,36,16,058/ - EXCESS PROVISION ON THE BASIS OF PERCENTAGE. HAD IT NOT BEEN GONE THERE, THE TOTAL EXCESS PROVISION WOULD BE REMAIN SAME AT RS. 9,35,46,058/ - WHICH HAS CORRECTLY ASCERTAINED BY THE AO. ACCORDINGLY ADDITION OF RS. 9,35,46,058/ - IS HEREBY CONFIRMED. ON PERUSAL OF THE ABOVE OBSERVATIONS OF THE CIT(A), WE FOUND THAT ASSESSEE IN HIS SUBMISSION HAS HIMSELF S HOWN THE TOTAL WARRANTY EXPENSES WHICH IS NOT THE ACTUAL EXPENDITURE, THEREFORE, THE EXCESS PROVISION HAS BEEN DISALLOWED BY THE AO AND CONFIRMED BY THE CIT(A). HOWEVER, LD. AR 11 ITA NO. 329&348 /RAN/20 1 7 BEFORE US SUBMITTED THAT ONE MORE OPPORTUNITY MAY BE GRANTED TO REPRESENT ITS C ASE BEFORE THE CIT(A). ACCORDINGLY, IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE REMIT THIS ISSUE TO THE FILE OF CIT(A) WHO SHALL VERIFY AND EXAMINE THE ISSUE IN DETAIL AND PASS A SPEAKING ORDER. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE IN SUBMITTING THE I NFORMATION AND EARLY DISPOSAL OF THE CASE. A CCORDINGLY, WE ALLOW TH IS GROUND OF APPEAL OF ASSESSEE FOR STATISTICAL PURPOSES. 1 8 . THE FOURTH GROUND RELATES TO NON - GRANTING OF DEPRECIATION ON THE INTANGIBLE ASSETS. LD.AR OF THE ASSESSEE SUBMITTED THAT THE AS SESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE AMOUNTS TREATED AS CAPITAL EXPENDITURE TOWARDS ACQUISITION OF INTANGIBLE ASSETS IN THE EARLIER YEAR. TO SUPPORT HIS CLAIM, LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. PRUTHVI BROKERS & SHAREHOLDERS PRIVATE LIMITED, 252 CTR 151 AND PRAYED THAT THE ASSESSEE BE GRANTED CLAIM OF DEPRECIATION. 19 . CONTRA, LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 20 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD. LD. AR BEFORE US SUBMITTED THAT THIS TRIBUNAL IN CASE OF ASSESSEE ITSELF IN ITA NOS.347/RAN/2017 FOR THE ASSESSMENT YEAR 2008 - 2009 HAS DECIDED THE ISSUE AND REMITTED THE MATTER BACK TO THE FILE OF CIT(A) FOR VERIFICATION AND EXAMINATION OF T HE CLAIM OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 - 2009. 12 ITA NO. 329&348 /RAN/20 1 7 THE OBSERVATIONS OF THE TRIBUNAL IN ITA NO.34/RAN/2017, ORDER DATED 22.05.2018 ARE AS UNDER: - WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE RAISED BY THE ASSESSEE IS WITH RESPECT TO NON - GRANT OF CLAIM OF DEPRECIATION. WE FIND THAT THIS GROUND DOES NOT EMANATE FROM THE ASSESSMENT ORDER AND THE AO HAS ACCEPTED THE RETURN OF INCOME AND THE ASSESSEE HAS RAISED THIS GROUND AS AN ADDITIONAL GROUND BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, FINDINGS OF AO AND PROVISIONS OF LAW, CONCLUDED THAT APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE AND DISMISSED THE APPEAL. HOWEVER, T HE ADDITIONAL GROUND RAISED BY THE ASSESSEE, IN OUR OPINION, HAS TO BE DISCUSSED BY THE CIT(A). IN ABSENCE OF THE SAME, WE IN THE INTEREST OF JUSTICE AND FAIRPLAY, REMIT THIS ISSUE TO THE FILE OF CIT(A), WHO SHALL VERIFY AND EXAMINE THE CLAIM OF THE ASSESS EE AND PASS A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. WE RESPECTFULLY FOLLOWING THE JUDICIAL DECISION OF THE TRIBUNAL, RESTORE THE ISSUE TO THE FILE OF CIT(A) WHO SHALL VERIFY AND EXAMINE THE CLAIM OF THE ASSESSEE AND PASS A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 2 1 . IN THE RESU LT, APPEAL OF THE REVENUE IS DISMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 / 11 /201 8 SD/ - SD/ - (N.S.SAINI) (PAVAN KUMA R GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 30 / 11 /2018 PRAKASH KUMAR MISH RA , SR. PS 13 ITA NO. 329&348 /RAN/20 1 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.