DCIT 17(1), MUMBAI V. AMAR INTERNATIONAL, MUMBAI

ITA 357/MUM/2010

• Counselvise Citation: 35719914 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 14-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: PARAS S SAVLA
• Keywords: Bad and doubtful debts
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 357/MUM/2010 (ASSESSMENT YEAR: 2004-05) D C I T -17(1) M/S. AMAR INTERNATIONAL 1ST FLOOR, PIRAMAL CHAMBERS AMAR HOUSE, 14/16, NEAR SHARDA PAREL, MUMBAI 400012 VS. TALKIES, MMGS MARG, DADAR (E) MUMBAI 400014 PAN - AAAFA 2660 E APPELLANT RESPONDENT CO NO. 152/MUM/2010 (ASSESSMENT YEAR: 2004-05) M/S. AMAR INTERNATIONAL D C I T -17(1) AMAR HOUSE, 14/16, NEAR SHARDA 1ST FLOOR, PIRAMAL CHAMBERS TALKIES, MMGS MARG, DADAR (E) VS. PAREL, MUMBAI 400012 MUMBAI 400014 PAN - AAAFA 2660 E CROSS OBJECTOR APPELLANT IN APPEAL REVENUE BY: SHRI P.K. B. MENON ASSESSEE BY: SHRI PARAS S. SAVLA DATE OF HEARING: 10.10.2011 DATE OF PRONOUNCEMENT: 21.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. REVENUE APPEAL IS AGAINST THE ORDER OF THE CIT(A) X XIX, MUMBAI DATED 28.10.2009. ASSESSEES CROSS OBJECTION IS IN SUPPOR T OF THE ORDER OF THE CIT(A)S ORDER. 2. REVENUE HAS RAISED THE FOLLOWING TWO GROUNDS: - I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUC TION U/S. 80HHC ON DEPB WITHOUT TAKING INTO CONSIDERATION AME NDED PROVISIONS OF SECTION 28(III)(D) OF THE I.T. ACT, 1 961. ITA NO. 357 & CO NO. 152/MUM/2010 M/S. AMAR INTERNATIONAL 2 II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING BAD DEBTS OF RS.3,14,3 89 THOUGH THEY ARE NOT WRITTEN OFF FROM BOOKS OF ACCOUNTS AND WHICH ARE CONSIDERED FOR REDUCING INTEREST COST. 3. THE ISSUE IN GROUND NO. 1 IS WITH REFERENCE TO THE CLAIM OF DEDUCTION UNDER SECTION 80HHC ON DEPB. THE A.O. DID NOT CONSI DER THE RECEIPTS OF SALE OF LICENCE PREMIUM AS EXPORT INCENTIVES OF ` 51,55,992/- AND REDUCED THE DEDUCTION UNDER SECTION 80HHC. IT IS THE ARGUME NT THAT SALE OF PREMIUM ON IMPORT LICENCE (DEPB/BFRC) SHOULD HAVE BEEN TREA TED AS EXPORT INCENTIVES AND SHOULD HAVE REDUCED FROM THE COST O F PURCHASE. THE LEARNED CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF TOP MAN EXPORTS IN ITA NO. 5769/MUM/2006. 4. IT WAS FAIRLY ADMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KA LPATARU COLOURS AND CHEMICALS 328 ITR 451 WHEREIN THE DECISION OF THE S PECIAL BENCH IN THE CASE OF TOPMAN EXPORT WAS CONSIDERED. IN VIEW OF TH IS THE A.O. IS DIRECTED TO CONSIDER THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS 328 ITR 451 AND ANY OTHER JUDGEMENTS OF HON'BLE BOMBAY HIGH COURT OR THE HON'BLE APEX COURT , AS MAY BE CITED ON BEHALF OF THE ASSESSEE AND DETERMINE THE DEDUCTION UNDER SECTION 80HHC AFRESH. THEREFORE THE ORDER OF THE CIT(A) IS SET AS IDE TO THAT EXTENT AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. GROUND I S CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 5. THE ISSUE IN GROUND NO. 2 IS WITH REFERENCE TO THE ALLOWANCE OF BAD DEBT OF ` 3,14.389/-. IT WAS MENTIONED IN THE GROUND THAT THE BAD DEBTS WERE NOT WRITTEN OFF FROM THE BOOKS OF ACCOUNT AND ARE C ONSIDERED FOR REDUCING THE INTEREST COST. THE LEARNED D.R. RELIED ON THE O RDER OF THE A.O. WHEREAS THE LEARNED A.R. SUBMITTED THAT THESE AMOUNTS RELAT E TO EXPORTS MADE DURING F.Y. 2001-02 AND THE EXPORT PROCEEDS HAS NOT BEEN RECEIVED. IT WAS SUBMITTED THAT THE EXPORT SALES HAVE BEEN RECORDED THREE YEARS EARLIER THAN THE YEAR IN WHICH THE AMOUNT WAS WRITTEN OFF AND TH ESE AMOUNTS HAVE BEEN CLAIMED IN THE P & L ACCOUNT AND THEREFORE THE GROU ND TO THE EXTENT THAT ITA NO. 357 & CO NO. 152/MUM/2010 M/S. AMAR INTERNATIONAL 3 THEY ARE NOT WRITTEN OFF IS NOT CORRECT. IT WAS FUR THER SUBMITTED THAT ONCE THE AMOUNTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNT, F OLLOWING THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME COURT IN THE CAS E OF TRF LTD. VS. CIT 232 ITR 397 THE AMOUNT OF BAD DEBT IS TO BE ALLOWED AS DEDUCTION. 6. WE HAVE CONSIDERED THE ISSUE. AS FAR AS THE FACTS A RE CONCERNED THERE IS NO DISPUTE WITH REFERENCE TO THE AMOUNTS BEING P ART OF EXPORT SALES, WHICH HAVE NOT BEEN RECEIVED BY THE TIME THE AMOUNTS WERE WRITTEN OFF. EVEN AS SEEN FROM THE ASSESSMENT ORDER IT IS NOT THE CASE O F THE A.O. THAT THE AMOUNTS WERE NOT WRITTEN OFF IN THE BOOKS OF ACCOUN T. ASSESSEE CLAIM WAS NOT ACCEPTED FOR THE REASONS THAT; (A) ASSESSEE HAS NOT PRODUCED ANY EVIDENCE REGARDING EFFORTS MADE BY IT FOR COLLECTIO N OF THOSE AMOUNTS, (B) EVEN IF IT IS TO BE ALLOWED, IF THE ABOVE CONDITION IS FULFILLED, IT CANNOT BE ALLOWED IN THIS A.Y. BUT ONLY IN SUBSEQUENT A.Y. BE CAUSE BY A.Y. 2004-05 THREE YEAR PERIOD AS PER THE LIMITATION ACT HAS NOT EXPIRED. AS CAN BE SEEN FROM THE ABOVE REASONS, FOR REJECTING THE CLAIM OF ASSESSEE AS RECORDED BY THE A.O. IN PAGE 3 OF THE ASSESSMENT ORDER, THE ISS UE IS NOT WITH REFERENCE TO THE AMOUNT NOT BEING WRITTEN OFF FROM BOOKS OF ACC OUNT AND WHICH ARE CONSIDERED FOR REDUCING THE INTEREST COST AS RAISE D IN THE GROUND. THE GROUND ITSELF IS MISLEADING. ON THE FACTS OF THE CA SE THERE IS NO REASON WHY BAD DEBT CANNOT BE ALLOWED AS ASSESSEE HAS RECORDED EXPORT PROCEEDS WHICH HAVE NOT BEEN RECEIVED EVEN AFTER THREE YEARS. SINC E THE ASSESSEE HAS WRITTEN OFF THE AMOUNT AND CLAIMED IN THE P & L ACCOUNT AS A BAD DEBT THE CONDITIONS FOR ALLOWING THE AMOUNT UNDER SECTION 36 (1)(VII) HAVE BEEN FULFILLED. THEREFORE, FOLLOWING THE PRINCIPLES ESTA BLISHED BY THE HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. 323 ITR 397, ASSESSEE IS ENTITLED FOR DEDUCTION AS CLAIMED. THERE IS NO NEED TO DISTURB T HE FINDINGS OF THE CIT(A). REVENUE GROUND IS ACCORDINGLY DISMISSED. REVENUE AP PEAL IS PARTLY ALLOWED. 7. THE CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF T HE CIT(A) ON THE ISSUE OF DEPB. THERE IS NO NEED TO CONSIDER THE ALT ERNATE GROUND RAISED IN THE C.O. HOWEVER, SINCE THE ISSUE IS RESTORED IN TH E REVENUE APPEAL ON THE ISSUE OF DEPB (GROUND NO.1) THE C.O. IS ALSO CONSID ERED ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 357 & CO NO. 152/MUM/2010 M/S. AMAR INTERNATIONAL 4 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED AND THE CROSS OBJECTION OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIX, MUMBAI 4. THE CIT XVII, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.