The DCIT, Circle-1, KAKINADA, Kakinada V. M/s Sri Sarvaraya Sugars Ltd.,

ITA 396/VIZ/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1149 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNADR
• Keywords: Depreciation; Additional evidence; Bad and doubtful debts; Revised return
• Section: 115JB

Judgement Text

ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.395&396/VIZAG/2012 ( / ASSESSMENT YEAR: 2003-04 & 2004-05) DCIT, CIRCLE - 1, KAKINADA VS. SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. [PAN: AAECS6554N ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SMT. D. KOMALI KRISHNA,DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 06.05.2016 / DATE OF PRONOUNCEMENT : 31.05.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE ARE TWO APPEALS FILED BY THE REVENUE ARE DIR ECTED AGAINST THE SEPARATE BUT, IDENTICAL ORDERS OF CIT(A), VISAK HAPATNAM DATED 31.7.2012 FOR THE ASSESSMENT YEAR 2003-04 AND 2004- 05. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE CLUBBED, HEARD ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 2 TOGETHER AND DISPOSED OFF, BY WAY OF THIS COMMON OR DER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF MANUFA CTURE OF SUGAR AND RUNNING BOTTLING UNITS OF COLD DRINKS AND BEVERAGES . THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ADMITTING NIL TOTAL INCOME UNDER THE NORMAL PROVISIONS AND TOTAL INCOME OF RS.2,29,92,979/- UNDER THE MAT PROVISIONS OF SECTIO N 115JB OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE AC T). THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICE U/S 143(2) OF THE ACT WAS ISSUED. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED T HE BOOKS OF ACCOUNTS AND OTHER DETAILS. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE USE S PLASTIC CRATES IN ITS BUSINESS ON WHICH IT HAS CLAIMED DEPRECIATION AT TH E RATE OF 50%. THE A.O. FURTHER OBSERVED THAT PLASTIC CRATES ARE COMIN G UNDER THE NORMAL BLOCK OF PLANT AND MACHINERY AND HENCE ELIGIBLE FOR DEPRECIATION @ 25%. THEREFORE, ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY THE DEPRECIATION SHALL NOT BE RESTRICTED TO 25%, AS AGA INST THE CLAIM OF 50% ON PLASTIC CRATES. IN RESPONSE TO SHOW CAUSE NOTICE , THE ASSESSEE ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 3 SUBMITTED THAT THE PLASTIC CRATES ARE COMING UNDER THE SEPARATE BLOCK OF CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS AND THE ELIGIBLE DEPRECIATION IS 50% AS PER THE RATES OF DEPRECIATIO N PRESCRIBED UNDER THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT A SIM ILAR CLAIM HAS BEEN MADE BY THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR S 2001-02 & 2002- 03, WHICH WAS DISALLOWED BY THE A.O. UNDER SIMILAR CIRCUMSTANCES. IT WAS FURTHER SUBMITTED THAT ON APPEAL BEFORE THE CIT (A), THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AND DIRECTED THE A.O. TO ALLOW 50% DEPRECIATION AS CLAIMED BY THE ASSESSEE. ON FURTHER APPEAL BY THE DEPARTMENT, THE ITAT HAS UPHELD THE ORDER PASSED BY THE CIT(A) AND AFFIRMED THE CLAIM OF DEPRECIATION. THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE PLASTIC C RATES CANNOT BE TERMED AS CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILL. WITH THESE OBSERVATIONS RESTRICTED THE CLAIM OF DEPRECIATION T O 25% AS AGAINST THE 50% CLAIM MADE BY THE ASSESSEE. 3. SIMILARLY, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE A.O. NOTICED THAT ASSESSEE HAS CLAIMED BAD DEBTS AND DEB ITED TO P&L ACCOUNT. THEREFORE, TO ASCERTAIN THE CORRECTNESS O F BAD DEBT CLAIM, ISSUED A NOTICE AND ASKED TO EXPLAIN WHY THE CLAIM OF BAD DEBTS SHALL NOT BE DISALLOWED. IN RESPONSE TO SHOW CAUSE NOTIC E, THE ASSESSEE ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 4 SUBMITTED THAT THE CLAIM OF BAD DEBTS ARE ARISED IN THE NORMAL COURSE OF BUSINESS AND THE RESULTANT INCOME HAS BEEN OFFERED IN THE PREVIOUS FINANCIAL YEARS. IT WAS FURTHER SUBMITTED THAT BAD DEBTS ARE WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND ONCE THE DEBT IS WRITT EN OFF IN THE BOOKS OF ACCOUNTS AS IRRECOVERABLE, AS PER THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, IT NEED NOT TO PROVE THAT THE DEBTS ARE RE ALLY BECOME BAD IN THE FINANCIAL YEAR. THESE DEBTS ARE BROUGHT FORWARD FRO M THE PREVIOUS FINANCIAL YEARS AND IT HAS PUT UP LOT OF EFFORTS TO RECOVER THE MONEY FROM THE DEBTORS, BUT COULD NOT RECOVER THE SAME, THEREF ORE, COME TO THE CONCLUSION THAT THESE DEBTORS ARE NOT RECOVERABLE A ND HENCE, SAME HAS BEEN WRITTEN OFF AS IRRECOVERABLE. THEREFORE, THE S AME SHOULD BE ALLOWED WHILE COMPUTING THE INCOME FROM BUSINESS. THE A.O. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT AS PER TH E PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, TO CLAIM THE BAD DEB T, THE ASSESSEE TO PROVE BEYOND DOUBT THAT THESE DEBTS ARE ARISED IN T HE NORMAL COURSE OF BUSINESS OF THE ASSESSEE AND THE INCOME FROM THESE DEBTS HAS BEEN OFFERED TO TAX FOR THE PREVIOUS FINANCIAL PERIOD. THE ASSESSEE FAILED TO OFFER ANY EXPLANATION WITH REGARD TO THE CLAIM OF B AD DEBTS. THEREFORE, THE CLAIM MADE BY THE ASSESSEE CANNOT BE ACCEPTABLE . WITH THESE OBSERVATIONS, DISALLOWED THE BAD DEBT CLAIM MADE BY THE ASSESSEE. ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 5 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT AS REGARDS THE CLAIM OF DEPRECIATION, A SIMILA R ADDITION HAS BEEN MADE BY THE A.O. IN THE PREVIOUS ASSESSMENT YEARS A ND THE CIT(A) AND ITAT, HAVE ALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT THE PLASTIC CRATES USED IN ITS BUSIN ESS ARE COMING UNDER THE SEPARATE BLOCK OF ASSETS, I.E. CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS AND ELIGIBLE FOR 50% DEPRECIATION A S PER THE RATES PRESCRIBED UNDER THE INCOME TAX ACT, THEREFORE, ITS CLAIM SHOULD BE ALLOWED. AS REGARDS THE BAD DEBTS, THE ASSESSEE SU BMITTED THAT IT HAS WRITTEN OFF THE BAD DEBTS IN THE BOOKS OF ACCOUNTS AS IRRECOVERABLE. ONCE THE DEBT HAS BEEN WRITTEN OFF, AS PER THE PROV ISIONS OF SECTION 36(1)(VII) OF THE ACT, THE ASSESSEE NOT REQUIRED TO PROVE THAT THE DEBT HAS BECOME BAD. THE ONLY REQUIREMENT IS THAT IT HA S TO WRITE OFF THE DEBTORS IN THE BOOKS OF ACCOUNTS BY DEBITING TO THE BAD DEBT WRITTEN OFF ACCOUNT. THE ASSESSEE HAS WRITTEN OFF THE DEBTS IN THE BOOKS OF ACCOUNTS, THEREFORE, ITS CLAIM SHOULD BE ALLOWED. 5. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS FU RNISHED BY THE ASSESSEE HELD THAT THE ASSESSEE USED PLASTIC CRATES IN ITS BUSINESS WHICH ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 6 ARE COMING UNDER THE SEPARATE BLOCK OF ASSETS ELIGI BLE FOR 50% DEPRECIATION. THE CIT(A) FURTHER HELD THAT THE PLAS TIC CRATES USED BY THE ASSESSEE IS COMING UNDER THE BLOCK OF CONTAINERS MA DE OF GLASS OR PLASTIC USED AS REFILLS AND WHICH ARE ELIGIBLE FOR 50% DEPRECIATION AS PER THE RATES PRESCRIBED UNDER THE INCOME TAX ACT. THE CIT(A) FURTHER HELD THAT A SIMILAR ADDITION HAS BEEN MADE BY THE ASSESS ING OFFICER, IN THE PREVIOUS FINANCIAL YEARS AND THE CIT(A) HAS ALLOWED THE CLAIM AND THE JURISDICTIONAL ITAT VIDE ITS ORDER DATED 28.1.2008 IN ITA NO.164/VIZAG/2005 HAS UPHELD THE CLAIM OF DEPRECIAT ION AS CLAIMED BY THE ASSESSEE. THE CIT(A), BY FOLLOWING THE ITAT, OR DER IN ASSESSEE OWN CASE, DIRECTED THE A.O. TO ALLOW 50% DEPRECIATION A S CLAIMED BY THE ASSESSEE. AS REGARDS THE CLAIM OF BAD DEBT, THE CIT (A) HELD THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE DURING TH E COURSE OF APPELLATE PROCEEDINGS HAS BEEN FORWARDED TO THE A.O FOR HIS C OMMENTS. THE A.O. AFTER EXAMINING THE EVIDENCE FILED BY THE ASSESSEE SUBMITTED HIS REMAND REPORT. AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REPORT OF THE A.O., T HE CIT(A) DELETED A SUM OF RS.6,87,061/- OUT OF THE TOTAL DISALLOWANCE OF RS.30,05,782/- AND CONFIRMED BALANCE AMOUNT OF RS.23,18,721/-. AGGRIE VED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 7 6. THE LD. D.R. SUBMITTED THAT THE CIT(A) ERRED IN ALLOWING 50% DEPRECIATION ON PLASTIC CRATES CLAIMED BY THE ASSES SEE. THE D.R. FURTHER SUBMITTED THAT THE LD. CIT(A) ERRED IN OBSERVING TH AT THE ASSESSEE HAS MADE A REVISED CLAIM OF DEPRECIATION BY WAY OF FILI NG A COMPUTATION BEFORE THE ASSESSING OFFICER. THE D.R. FURTHER SUBM ITTED THAT AS PER THE JUDGEMENT OF SUPREME COURT IN THE CASE OF GOETZ IND IA LTD. VS. CIT (2001) 284 ITR 323, THE ASSESSEE SHOULD HAVE MADE S UCH REVISED CLAIM OF DEPRECIATION BY FILING A REVISED RETURN, HOWEVER , THE ASSESSEE HAS FAILED TO FILE REVISED RETURN TO MAKE ANY CLAIM OF DEPRECIATION. THEREFORE, THE CIT(A) WAS COMPLETELY ERRED IN ACCEP TING THE CLAIM OF DEPRECIATION THOUGH THE ASSESSEE HAS NOT MADE ANY P ROPER CLAIM BY FILING THE REVISED RETURN. AS REGARDS THE BAD DEBT S, THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACTS NARRATED BY THE A.O. IN HIS REMAND REPORT AND SUSTAINED THE ADDITIONS MADE BY THE A.O. IN RESPECT OF BAD DEBTS. THE CIT(A) DELET ED THE BAD DEBTS BY HOLDING THAT THE ASSESSEE HAS WRITTEN OFF THE BAD D EBTS IN THE BOOKS OF ACCOUNTS AND ONCE THE BAD DEBT IS WRITTEN OFF IN TH E BOOKS, THE ASSESSEE NOT REQUIRED TO PROVE THE DEBT BECOME BAD IN THE FI NANCIAL YEAR WHICH IS CONTRARY TO THE PROVISIONS OF LAW. ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 8 7. ON THE OTHER HAND, THE LD. A.R. OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IS D EPRECIATION ON PLASTIC CRATES. THE ASSESSEE USES PLASTIC CRATES IN ITS BU SINESS ON WHICH IT HAS CLAIMED 50% DEPRECIATION. THE ASSESSEE CLAIMED THE DEPRECIATION AS PER THE RATE FIXED UNDER THE INCOME TAX ACT, UNDER WHICH A SEPARATE BLOCK IS PROVIDED FOR CONTAINERS MADE OF GLASS OR P LASTIC USED AS REFILLS AND WHICH ARE ELIGIBLE FOR 50% DEPRECIATION. THE A .O. WAS OF THE OPINION THAT PLASTIC CRATES CANNOT BE EQUATED WITH CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS. THE A.O. FURTHER WAS OF THE OPINION THAT THE PLASTIC CRATES ARE COMING UNDER THE NORMAL BLOC K OF PLANT AND MACHINERY AND HENCE ELIGIBLE FOR 25% DEPRECIATION. WE DO NOT SEE ANY MERITS IN THE FINDINGS OF THE A.O. FOR THE REASON T HAT CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS ARE ELIGIBLE FOR 5 0% DEPRECIATION AS PER THE SEPARATE BLOCK PROVIDED UNDER THE ACT. THEREFO RE, THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FO R 25% DEPRECIATION ON PLASTIC CRATES. ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 9 9. THE LD. A.R. FOR THE ASSESSEE, AT THE TIME OF HE ARING SUBMITTED THAT THE ISSUE HAS BEEN SQUARELY COVERED BY THE DEC ISION OF ITAT, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03 , WHEREIN ITAT HAS ALLOWED THE CLAIM OF 50% DEPRECIATION ON PLASTIC CR ATES. WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY THE ASSESSEE IN THE LIGHT OF THE FACTS OF THE PRESENT CASE. THE COORDINATE BENCH OF THIS TRIBUNAL, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03 HELD THAT PLASTIC CRATES ARE COMING UNDER THE SEPARATE BLOCK OF CONTAINERS MADE OF GLASS OR PLASTIC USED AS REFILLS. THE RELEVANT PORTION IS REPRODUCE D AS UNDER: AS REGARDS GROUND NO.1, THE ISSUE CENTERS ROUND TH E INTERPRETATION OF THE TERM REFILL. THE CASE OF THE ASSESSING OF FICER IS THAT PLASTIC CRATES DO NOT FALL WITHIN THE DESCRIPTION OF THE TERM REF ILL, WHEREAS THE FIRST APPELLATE AUTHORITY OBSERVED THAT THE PLASTIC CRATE S ARE USED AS REFILLS TO CARRY THE EMPTY BOTTLES FROM AND TO THE ASSESSEES FACTORY. LEARNED DR WAS NOT ABLE TO CONTRADICT THE FINDINGS OF THE CIT( A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 10. COMING TO THE CASE LAWS RELIED UPON BY THE D.R. THE LD. D.R. RELIED UPON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF GOETZ INDIA LTD. VS. CIT (2006) 284 ITR 323 AND SUB MITTED THAT THERE IS NO PROVISION UNDER THE I.T. ACT TO MAKE AM ENDMENT IN THE RETURN WITHOUT FILING A REVISED RETURN. THE HONBLE SUPREME COURT HELD THAT THE POWER OF ASSESSING AUTHORITY TO ENTER TAIN A CLAIM OTHERWISE BY A RETURN IS INVALID. WE HAVE GONE THRO UGH THE CASE LAW RELIED UPON BY THE LD. D.R., IN THE LIGHT OF THE FA CTS OF THE PRESENT ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 10 CASE. THE HONBLE SUPREME COURT, IN THE SAID CASE H ELD THAT THE ASSESSING AUTHORITY HAS NO POWER TO ENTERTAIN ANY F RESH CLAIM TOWARDS DEDUCTION OTHERWISE THAN BY WAY OF REVISED RETURN. HOWEVER, THE COURT MADE IT CLEAR THAT SUCH CLAIM DI D NOT IMPEACH ON THE POWERS OF APPELLATE AUTHORITIES. THE CIT(A) BEI NG AN APPELLATE AUTHORITY CAN ENTERTAIN NEW CLAIM FOR THE FIRST TIM E WHEN THE FACTS ARE EXISTED AT THE TIME OF ASSESSMENT. IN THE PRESENT CASE ON HAND, THE FACTS RELATING TO CLAIM OF DEPRECIATION ARE VERY MU CH AVAILABLE AT THE TIME OF ASSESSMENT. THE CLAIM MADE BY THE ASSESSEE TOWARDS HIGHER DEPRECIATION IS ARISED ON THE FACTS EXISTED AT THE TIME OF ASSESSMENT. THE CIT(A) CAN ENTERTAIN SUCH CLAIM WHILE ADJUDICAT ING THE ISSUE. THEREFORE, WE REJECT THE CASE LAW RELIED UPON BY TH E D.R. 11. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N, IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR, WE ARE OF THE VIEW THAT PLASTIC CRATES USED BY THE ASSESSEE IN ITS BUSINESS ARE COM ING UNDER THE SEPARATE BLOCK OF CONTAINERS MADE OF GLASS OR PLAST IC USED AS REFILLS ELIGIBLE FOR 50% DEPRECIATION. THEREFORE, WE DIREC T THE A.O. TO ALLOW 50% DEPRECIATION AS CLAIMED BY THE ASSESSEE. ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 11 12. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS DISALLOWANCE OF BAD DEBTS. THE A.O. DISALLOWED THE CLAIM OF BAD DEBT BY HOLDING THAT THE CLAIM OF ASSESSEE IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SEC. 36(1)(VII) OF THE ACT. THE A.O. FURTHER WAS OF THE OPINION THAT AS PER THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, TO CLA IM BAD DEBTS. THE ASSESSEE HAS TO PROVE THAT SUCH DEBT MUST HAVE BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OR IT REPRESENTS MONEY LENT IN THE ORDINARY COURSE OF BUSINESS IN THE EARL IER PERIOD. SINCE ASSESSEE FAILED TO PROVE THE DEBT AND THE RESULTANT INCOME HAS BEEN OFFERED TO TAX IN THE EARLIER PERIOD, THE ASSESSEE CANNOT CLAIM BAD DEBT. IT IS THE CONTENTION OF THE ASSESSEE THAT THESE BAD DEBTS ARE ARISED IN THE NORMAL COURSE OF BUSINESS AND THESE ARE WRITTEN OFF IN THE BOOKS OF ACCOUNTS AS IRRECOVERABLE AND ONCE THE DEBTS HAVE B EEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS, AS PER THE PROVISIONS OF SEC TION 36(1)(VII) OF THE ACT, IT NEED NOT TO PROVE THE DEBT AS REALLY BECOME BAD. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE FOR THE REASON THAT ONCE THE DEBT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS BY PASSIN G NECESSARY JOURNAL ENTRIES, THE ASSESSEE NEED NOT TO PROVE THAT THE DE BT HAS BECOME BAD IN THE FINANCIAL YEAR. THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN THE PROVISIONS OF SEC. 36(1)(VII) BY WRITTEN OFF TH E DEBTS IN THE BOOKS OF ACCOUNTS. THE CIT(A) AFTER CONSIDERING THE EXPLANAT IONS FURNISHED BY THE ITA NO.395/VIZAG/2012 SRI SARVARAYA SUGARS LTD., CHELLURU, E.G. DIST. 12 ASSESSEE AND ALSO TAKEN INTO ACCOUNT THE REMAND REP ORT OF THE A.O. ALLOWED BAD DEBT CLAIM TO THE EXTENT OF RS.6,87,061 /- OUT OF THE TOTAL BAD DEBTS CLAIM OF RS.30,05,782/-. WE DO NOT SEE AN Y ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLI NED TO UPHOLD THE ORDER PASSED BY THE CIT(A) AND REJECT THE GROUND RA ISED BY THE REVENUE. 13. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.395 & 396/VIZAG/2012 ARE DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 ST MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 31.05.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-1, KAKINADA 2. / THE RESPONDENT SRI SARVARAYA SUGARS LTD., CHEL LURU, E.G. DIST. 3. + / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM