ACIT, New Delhi V. M/s Modi Telecommunication Ltd., Gurgaon

ITA 35/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4177 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: R K KAPOOR
• Keywords: Opportunity of being heard; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI SHAMIM YAHYA, AM I.T. A. NO.35/DEL OF 2010 ASSESSMENT YEAR: 2006-07 ACIT, CIRCLE 51), M/S MODI TELECOMMUNICATION LTD. , NEW DELHI. VS SIGNATURE TOWER A, 14 TH FLOOR. SOUTH CITY, GURGAON. APPELLANT RESPONDENT APPELLANT BY: SMT. PRATIMA KAUSHIK RESPONDENT BY: SHRI RK. KAPOOR ORDER PER C.L. SETHI, JM: THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A ) DATED 30.10.2009 PASSED IN THE MATTER OF ASSESSMENT MADE BY THE AO U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR ASSTT. YEAR 2006 -07. 2. IN THE ASSESSMENT MADE BY THE AO, THE AO DISALLO WED THE CLAIM OF BAD AND DOUBTFUL DEBTS WRITTEN OFF AMOUNTING TO RS. 44,40,933/- OUT OF WHICH, ON AN APPEAL, THE LEARNED CIT(A) DELETED THE DISALLOWANCE TO THE EXTENT OF RS.17,71,319/- AND SUSTAINED THE BALANCE. THE CIT(A)S ORDER OF THIS ASPECT OF THE MATTER RUNS AS UNDER: 2 2.4 ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE WAS REQUESTED TO FILE NECESSARY PROOF TO SUGGEST THAT THE DEBTS IN QUESTION ARISE OUT OF THE INCOME EITHER OF THE PREVIOUS YEAR OR ANY OF EARLIER YEARS . IN RESPONSE TO THIS, LD. COUNSEL VIDE HIS LETTER DA TED 21.10.2009 SUBMITTED DETAILS OF DELHI HEAD OFFICE. HOWEVER, NO DETAILS WERE FILED IN RESPECT OF KOLKATA, LUCKNOW AND CHENNAI BRANCHES. ON AN EXAMINATION OF DETAILS PERTAINING TO HEAD OFFICE, I T WAS NOTICED THAT OUT OF RS.22,12,622/-, A SUM OFRS.4,41,303/- PERTAIN TO DEBTORS ON CAPITAL ACCOUNTS. ACCORDINGLY, THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.17,71,319/- ONLY DESERVES TO BE ALLOWED. ACCORDINGLY, THE DISALLOWANCE OF RS.4,41,303/- IS BEING SUSTAINED OUT OF DELHI HEAD OFFICE. 2.4.1 AS REGARDS BALANCE OFRS.22,28,312 PERTAINING TO KOLKATA, LUCKNOW AND CHENNAI BRANCHES, SINCE THE ASSESSEE HAS NOT FURNISHED ANY DETAILS, IT IS DIFFICULT TO ASCERTAIN AS TO WHETHER (A) THESE AMOUNTS HAS EVER FORMED PART OF THE TAXABLE INCOME OF THE PREVIOUS YEAR OR ANY OF THE EARLIER YEARS AND (B) THE AMOUNTS ARE ON REVENUE ACCOUNT OR CAPITAL ACCOUNT. THOUGH, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE COMPANY USED TO HAVE A SYSTEM TO RAISE BILLS IN ADVANCE ON QUARTERLY BAS IS AND ACCOUNT FOR THE SAME FOR THE PURPOSES OF TAX MATTERS ACCORDING TO THE DATES ON WHICH THE BILLS ARE RAISED, THIS ARGUMENT CANNOT BE ENTERTAINED IN THE ABSENCE OF NECESSARY EVIDENCE. ACCORDINGLY, NO RELIEF IN RESPECT OF BRANCH OFFICES DESERVES TO BE ALLOWED AND DISALLOWANCE OF RS.22,28,312/- IS HEREBY CONFIRMED. 3. THE ASSESSEE IS NOT IN APPEAL AGAINST THE CIT(A) S ORDER CONFIRMING THE DISALLOWANCE OF RS.22,28,312/- AND RS.4,41,303/ -. HOWEVER, THE REVENUE 3 HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A) I N GRANTING A RELIEF OF RS.17,71,319/-. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 5. IN THE PRESENT CASE, CIT(A) HAS DELETED THE ADDI TION MERELY BY OBSERVING THAT ON EXAMINATION OF DETAILS PERTAINING TO HEAD OFFICE, CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.17,71,319/- ONLY D ESERVES TO BE ALLOWED. HOWEVER, HE HAS NOT DISCUSSED AS TO WHETHER THE CON DITION OF SECTION 36(1)(VII) READ WITH SECTION 36(2) ARE SATISFIED IN THE PRESENT CASE. WHAT WAS THE NATURE OF THE DETAILS HAS NOT BEEN DELIBERA TED UPON. WE, THEREFORE, RESTORE THIS MATTER BACK TO THE AO TO EXAMINE WHETH ER THE CONDITIONS OF SECTION 36(1)(VII) READ WITH SECTION 36(2) ARE SATI SFIED IN THE PRESENT CASE. IT IS NOW SETTLED THAT IT IS NOT NECESSARY FOR ASSESSE E TO PROVE AND ESTABLISH THAT THE DEBTS HAS BECOME BAD IN THE YEAR IN WHICH IT IS CLAIMED BUT MERE WRITE OFF OF THE BAD DEBTS IN THE BOOKS IS SUFFICIENT. H OWEVER, THE AO SHALL LOOK INTO THE QUESTION AS TO WHETHER THE AMOUNT ALLOWED BY THE AO WAS INCLUDED IN THE INCOME IN THE YEAR OR IN ANY OF THE EARLIER YEARS AND THE AMOUNTS ARE ON REVENUE ACCOUNT. THE AO SHALL PROVIDE REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHALL PRODUCE ALL THE DETAILS BEFORE THE AO. WE ORDER ACCORDINGLY. 4 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON T HE 22 ND APRIL, 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (SHAMIM YAHYA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: APRIL , 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-VIII, NEW DELHI 5. DR ASSISTANT REGISTRAR