M/s. Navyug Cottn Company, Nanded V. The Income Tax Officer, Ward-1, Nanded

ITA 440/PUN/2023

AI Insights

The case involves M/s. Navyug Cottn Company appealing against the order of the CIT(A) which confirmed the additions made by the Assessing Officer (AO) regarding bad debts and certain expenses claimed by the assessee. The primary contention was the addition of Rs.1,25,300 debited as bad debts, which the AO added back to the income on grounds that the assessee failed to provide details of legal actions taken for recovery. The Tribunal, referencing the amendment to section 36(1)(vii) of the Income-tax Act, 1961, found that the requirement to prove a debt had turned bad was no longer necessary and thus deleted the addition. Additionally, the Tribunal addressed the disallowances made on various expenses, adjusting the percentages of disallowance based on the business and personal use of the vehicles and other factors.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124132 (ITAT-PUNE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 15-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 16-04-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.440/PUN/2023 नधा रण वष / Assessment Year : 2013-14 M/s. Navyug Cottn Company, Vazirabad, Opp Marwadi Dharam Shala, Nanded-431601 Maharashtra PAN : AABFN1727C Vs. ITO, Ward-1, Nanded Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 24-02-2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2013-14. 2. The first issue raised in this appeal is against the confirmation of addition of Rs.1,25,300/- debited by the assessee in its Profit and loss account as bad debts. The Assessing Officer (AO) made addition by observing that the assessee could not furnish details of legal action Assessee by : None Revenue by : Shri Suresh Gaikwad Date of hearing 16-05-2023 Date of pronouncement 17-05-2023 ITA No. 440/PUN/2023 M/s. Navyug Cottn Company 2 taken for recovery of the debt. No relief was allowed in the first appeal, against which the assessee has approached the Tribunal. 3. I have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of assessee despite notice. I am, therefore, proceeding to dispose the appeal ex parte qua the assessee. 4. It is seen that the amount of debt claimed as bad was duly debited by the assessee in its Profit and loss account. The view point of the AO that the assessee could not substantiate the debt turning bad, in my considered opinion, is no more relevant in the backdrop of the amendment to section 36(1)(vii) w.e.f 01-04-1989 providing for allowing deduction on simple write off dispensing with the requirement of separately proving that the debt actually became bad. I, therefore, order to delete the addition. 5. The other ground is against the confirmation of addition of certain expenses. The assessee claimed deduction towards Petrol and Diesel expenses, Car expenses, Interest on car expenses, Depreciation on cars, Travelling expenses etc. The AO made 25% disallowance out of these expenses towards personal use. In addition, the assessee also claimed Telephone expenses and Entertainment expenses. The AO ITA No. 440/PUN/2023 M/s. Navyug Cottn Company 3 disallowed 20% on ad hoc basis. Both these additions came to be affirmed in the first appeal. 6. Having regard to the facts of the instant case, it is seen that the assessee is a firm which has deployed vehicles for business use. In the absence of the assessee furnishing any details about the exclusive use of vehicles, some amount of expenses needs to be attributed towards personal use. Considering the entirety of the facts and circumstances of the case, I am of the considered opinion that it would be just and fair if 10% of the expenses claimed as deduction, in respect of which the AO made disallowance at 25%, is sustained. As regards the other expenses, namely, Telephone expenses and Entertainment expenses of which 20% was disallowed by the AO, I hold that 10% disallowance is sufficient. I order accordingly. 7. In the result, this appeal is partly allowed. Order pronounced in the Open Court on 17 th May, 2023. Sd/- ( R.S.SYAL) VICE PRESIDENT पुणे Pune; िदनांक Dated : 17 th May, 2023 सतीश ITA No. 440/PUN/2023 M/s. Navyug Cottn Company 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT concerned DR, ITAT, ‘SMC’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 16-05-2023 Sr.PS 2. Draft placed before author 17-05-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *