ITO, Thrissur V. Peninsula Chits P.Ltd, Thrissur

ITA 411/COCH/2010

• Counselvise Citation: 41121914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2011
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: C V VARGHESE
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORESHRI N.R.S. GANESAN, JM I.T.A NO. 411/COCH/2010 ASSESSMENT YEAR: 2006-07 I.T.O., WARD-1(1), RANGE-I, TRICHUR. VS. THE PENINSULA CHITS (P) LTD., IRINJALAKUDA, THRISSUR. [PAN:AABCT 8008K] (REVENUE-APPELLANT) (ASSESSEE- RESPONDENT) REVENUE BY MS. S.VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI C.V.VARGHESE, CA DATE OF HEARING 2/11/2011 DATE OF PRONOUNCEMENT 2/11/2011 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, KOCHI DATED 15.03.2010 AND PERTAINS TO THE ASSESSMENT YEA R 2006-07. 2. THE ONLY ISSUE FOR CONSIDERATION IS THE DELETION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS WRITTEN O FF. MS. S. VIJAYAPRABHA, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT( A) ALLOWED THE CLAIM OF ASSESSEE ON THE BASIS OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF TRF LTD. VS. CIT ON THE GROUND THAT THE ASSESSEE NEED NOT PROVE THAT THE DEBT HAS BECOME BAD. REFERRING TO THE PROVISION OF S. 36(1)(VII) OF THE ACT, THE LD. DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT SUBJECT TO THE PROVISIONS OF S. 36(2), THE AMOUNT OF BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRREOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR TH E PREVIOUS YEAR, CAN BE ALLOWED AS BAD DEBT. THEREFORE, THE DEBT HAS TO BE BAD DEBT FOR T HE PURPOSE OF WRITING OFF. A DEBT WHICH HAS NOT BECOME BAD, CANNOT BE WRITTEN OFF. THEREFO RE, THE LD. DEPARTMENTAL I.T.A. NO. 411/COCH/2010 2 REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS TO ESTABLISH THAT THE DEBT HAS BECOME BAD. MOREOVER, THE AUTHORITIES BELOW HAS NOT EXAMINED WH ETHER THE ASSESSEE HAS WRITTEN OFF THE BAD DEBT IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE. AT THE BEST, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXMIANATION OF THE ISSUE. 3. SHRI C.V. VARGHESE, THE LD. CHARTERED ACCOUNANT- REPRESENTATIVE WAS ALSO HEARD. IT IS NOW WELL-SETTLED BY THE JUDGMENT OF THE APEX COU RT IN THE CASE OF TRF LTD. THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT T HE DEBT HAS BECOME BAD. THE SUPREME COURT HAS CATEGORICALLY HELD THAT ONCE THE DEBTS HA VE BEEN WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, IT HAS TO BE ALLOWED AS BAD DEBT SUBJECT TO THE CONDITIONS OF 36(2) OF THE ACT. 4. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORD ER. THE ASSESSING OFFICER AFTER REFERRING TO THE DECISION OF THE CHANDIGARH BENCH O F THE TRIBUNAL IN THE CASE OF INDUSTRIAL CABLES (I) LTD. VS. ACIT (2005) 97 ITD 267 (CHD.) F OUND THAT MERE WRITING OFF THE DEBT IS NOT SUFFICIENT AND THE ASSESSEE HAS TO PROVE THE G ENUINENESS OF THE ASSESSEES CLAIM THAT THERE IS NO CHANCE TO RECOVER THE AMOUNT IN VIEW O F THE JUDGMENT OF THE APEX COURT IN THE CASE OF TRF LTD. VS CIT (SUPRA), IT IS NOT NECESSARY FOR THE ASSESSEE TO PR OVE THAT THE DEBT HAS BECOME BAD. 5. THE ASSESSING OFFICER HAS NOT IN ANY WAY DOUBTED THAT THE ASSESSEE HAS NOT WRITTEN OFF THE DEBTS AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE QUESTION OF VERIFICATION BY REMANDING THE ISSUE BAC K TO THE FILE OF THE ASSESSING OFFICER WOULD ARISE ONLY IN CASE THE ASSESSING OFFICER DOUB TED THE CLAIM OF THE ASSESSEE WITH REGARD TO THE WRITING OFF THE DEBT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SINCE THE AO HAS NOT DOUBTED THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAS NOT WRITTEN OFF THE DEBTS AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE, IT IS NOT NECESSARY TO REMAND THE MATTER AGAIN. BY RESPECTFULLY FOLLOWING THE JUDGME NT OF THE APEX COURT IN THE CASE OF TRF LTD. VS. CIT , THE ORDER OF THE CIT(A) IS UPHELD. I.T.A. NO. 411/COCH/2010 3 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 2 ND NOVEMBER, 2011. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 2ND NOVEMBER, 2011 GJ COPY TO: 1. THE PENINSULA CHITS (P) LTD., IRINJALAKUDA, THR ISSUR. 2. THE INCOME TAX OFFICER, WARD-1(1), RANGE-1, TRIC HUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I, 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .