VBC Ferro Alloys Limited, Hyderabad V. Dy.CIT, Circle-3(3), Hyderabad

ITA 356/HYD/2013

• Counselvise Citation: 35622514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 21-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Bad and doubtful debts; Revised return; Provision of bad debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.356/HYD/13 : ASSESSMENT YEAR 2004 - 05 M/S. VBC FERR O ALLOYS LIMITED, HYDERABAD (PAN - AAACV 7258 A) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI V.SIVA KUMAR RESPONDENT BY : SHRI KIRAN KATTA DR DATE OF HEARING 17 .0 9 .2014 DATE OF PRONOUNCEMENT 19.09.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - 9, MUMBAI DATED 12.2.2013 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF RS.88,45,831 ON ACCOUNT OF BAD AND DOUBTFUL DEBTS WRITTEN OFF. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFAC TURE OF FERRO CHROME AND FERRO SILICON. THE RETURN OF INCOME WAS ORIGINALLY FILED BY THE ASSESSEE ON 29.12.2004 DECLARING A TOTAL INCOME OF RS.4,89,29,014. IN THE PROFIT & LOSS ACCOUNT FILED ALONGWITH THE SAID RETURN, A SUM OF RS.36,821 WAS DEBITED BY THE ASSESSEE, BEING NET OF BAD DEBTS WRITTEN OFF AMOUNTING TO RS.88,45,831 AND EXCESS PROVISION MADE IN THE EARLIER YEARS WRITTEN BACK AMOUNTING TO RS.88,09,010. IN THE COMPUTATION OF TOTAL INCOME FILED ALONGWITH THE ORIGINAL RETURN OF I TA NO .356/H YD/20 13 M/S. VBC FERRO ALLOYS LIMITED, HYDERABAD 2 INCOME, A SUM OF RS. 88,09,010 WAS DEDUCTED BY THE ASSESSEE FORM THE NET PROFIT AS PER THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF EXCESS PROVISION OF BAD DEBTS MADE EARLIER NOW WRITTEN BACK. SUBSEQUENTLY ON 7.11.2005, THE ASSESSEE COMPANY FILED A REVISED RETURN DECLARING INCOME OF RS.4,00,19,163, AFTER CLAIMING THE DEDUCTION OF RS.88,45,831 TOWARDS BAD DEBTS WRITTEN OFF. THE SAID CLAIM OF THE ASSESSEE AS MADE IN THE REVISED RETURN, HOWEVER WAS NOT ALLOWED BY THE ASSESSING OFFICER HOLDING THAT IT AMOUNTED TO A DOUBLE DEDUCTION. 3. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SI DES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT A SUM OF RS.36,821 ONLY WAS DEBITED BY THE ASSESSEE TO THE PROFIT & LOSS ACCOUNT BEING THE NET AMOUNT OF BAD DEBTS WRITTEN OFF AMOUNTING TO RS.88 ,45,831 AND THE EXCESS PROVISION ON ACCOUNT OF BAD DEBTS MADE EARLIER AND NOW WRITTEN BACK AMOUNTING TO RS.88,09,010. HE HAS CONTENDED THAT IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE, HOWEVER, REDUCED THE AMOUNT OF EXCESS PROVISION WRITTEN BACK ONLY FORM THE PROFIT AS PER THE PROFIT & LOSS ACCOUNT AND DID NOT CLAIM ANY DEDUCTION ON ACCOUNT OF BAD DEBTS WRITTEN OFF AMOUNTING TO RS.88,45,831. HE CONTENDED THAT THE ASSESSEE, THEREFORE, FILED A REVISED RETURN CLAIMING THE SAID DEDUCTION, WHICH SHOULD BE ALLOWED. 5. AFTER HAVING CONSIDERED THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE THAT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE LIGHT OF THE RELEVANT DOCUMENTS I TA NO .356/H YD/20 13 M/S. VBC FERRO ALLOYS LIMITED, HYDERABAD 3 PLACED ON RECORD, IT WAS NOTED THAT CONFUSION HAS ARISEN ON THIS ISSUE MAINLY BECAUSE OF THE NET AMOUNT OF RS.36,821 ONLY DEBITED TO THE PROFIT & LOSS ACCOUNT, BEING THE DIFFERENCE BETWEEN THE BAD DEBTS WRITTEN OFF AND THE EXCESS PROVISION FOR BAD DEBTS MADE EARLIER NOW WRITTEN BACK. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, WAS DIRECTED BY THE BENCH TO PREPARE AND FURNISH A RECONSTRUCTED PROFIT & LOSS ACCOUNT SHOWING THEREIN SEPARATELY THE DEBIT ON ACCOUNT OF BAD DEBTS WRITTEN OFF AND THE CREDIT ON ACCOUNT OF EXCESS PROVISION FOR BAD DEBTS MADE EARLIER N OW WRITTEN BACK. ACCORDINGLY, HE HAS FURNISHED THE RECONSTRUCTED PROFIT & LOSS ACCOUNT WHICH SHOWS THAT EVEN AFTER CREDITING THE EXCESS PROVISION FOR BAD DEBTS WRITTEN OFF AMOUNTING TO RS.88,09,010 AND DEBITING THE BAD DEBTS WRITTEN OFF AMOUNTING TO RS.88, 45,831, THE NET PROFIT OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION REMAIN S THE SAME AT RS.37,26,10,828, WHICH WAS TAKEN AS THE STARTING POINT IN THE COMPUTATION OF TOTAL INCOME FILED ALONGWITH THE ORIGINAL RETURN OF INCOME. A COPY OF THE SAID COMPUTATION IS PLACED ON RECORD AT PAGE 18 OF THE ASSESSEES PAPER - BOOK WHICH SHOWS THAT THE EXCESS AMOUNT OF PROVISION FOR DOUBTFUL DEBTS WRITTEN BACK AMOUNTING TO RS.88,09,010 INTER ALIA WAS REDUCED BY THE ASSESSEE FORM THE NET PROFIT COMPUTED AS PER TH E PROFIT & LOSS ACCOUNT, AFTER DE BIT ING THE AMOUNT OF RS.88,45,831 ON ACCOUNT OF BAD DEBTS WRITTEN OFF. THUS, FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION , ONLY THE AMOUNT OF RS.88,09,010 ON ACCOUNT OF EX CESS PROVISION FOR BAD DEBTS WRITTEN BACK WAS REQUIRED TO BE REDUCED FROM THE PROFIT OF RS.37,26,10,828 COMPUTED AS PER THE PROFIT & LOSS ACCOUNT, WHERE THE SAID AMOUNT WAS CREDITED. THE AMOUNT OF RS.88,45,831 ON ACCOUNT OF BAD DEBTS WRITTEN OFF HAVING BEE N ALREADY DEBITED TO PROFIT & LOSS ACCOUNT, TO WORK OUT THE PROFIT OF RS.37,26,10,828, NO FURTHER DEDUCTION FOR THE SAID AMOUNT WAS REQUIRED TO BE ALLOWED, WHILE COMPUTING THE INCOME OF THE ASSESSEE, AS THE SAME WAS ALREADY CONSIDERED WHILE I TA NO .356/H YD/20 13 M/S. VBC FERRO ALLOYS LIMITED, HYDERABAD 4 COMPUTING THE N ET PROFIT AS PER PROFIT & LOSS ACCOUNT AND SUCH CLAIM MADE BY THE ASSESSEE IN THE REVISED RETURN OF INCOME, IN OUR OPINION, CLEARLY AMOUNTED TO DOUBLE DEDUCTION, AS RIGHTLY HELD BY THE AUTHORITIES BELOW. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED O RDER OF THE LEARNED CIT(A), CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND UPHOLD ING THE SAME , WE DISMISS THIS APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT O N 19 TH SEPTEMBER, 2014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 19 TH SEPTEMBER, 2014 COPY FORWARDED TO: 1. M/S. VBC FERRO ALLOYS LIMITED, 6 - 2 - 913/9 14, 3 RD FLOOR, PROGRESSIVE TOWERS, KHAIRATABAD, HYDERABAD - 500 004. 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 3(3), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) 9, MUMBAI COMMISSIONER OF INCOME - TAX III, HYDERABAD 5. DEPARTMENTAL REPRESENTATI VE, ITAT, HYDERABAD. B.V.S