M/s. Getit Infomediary Ltd., New Delhi V. ACIT, New Delhi

ITA 4623/DEL/2011

• Counselvise Citation: 462320114 RSA 2011
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-12-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISAHR A
• Assessee Lawyers: T R TALWAR
• Keywords: Bad and doubtful debts

Judgement Text

ITA NO.4623/DEL/2011 1 IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI C.L. SETHI, JUDICIAL MEMBER ITA NO.4623/DEL/2011 ASSTT. YEAR: 2008-09 M/S GETIT INFOMEDIARY LTD. VS ASSTT.COMMISSION ER OF INCOME TAX, TEJ BUILDING, 8-B, CIRCLE 12(1), NEW DELHI. BAHADUR SHAH ZAFAR MARG, NEW DELHI-110002 (APPELLANT) (RES PONDENT) APPELLANT BY: SHRI T.R. TALWAR RESPONDENT BY: SHRI SALIL MISAHR A, SR. DR O R D E R PER C. L. SETHI, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST THE ORDER OF CIT(A)-XV, NEW DELHI DATED 16.8.2011 FOR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED:- 1) IN DISALLOWING BAD DEBTS OF RS.65,50,897 EQUIVA LENT TO 25% OF TOTAL BAD DEBTS AMOUNTING TO RS.2,62,03,589/ - WHICH HAVE BEEN WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR. 2) IN IGNORING THE AMENDED PROVISIONS OF LAW IN S EC 36(1)(VII) EFFECTIVE FROM 1.4.89. ITA NO.4623/DEL/2011 2 3) IN NOT FOLLOWING THE ITAT ORDERS IN THE ASSESSE ES OWN CASE FOR THE ASSESSMENT YEARS 2003-04, 2006-07 AND 2007- 08 AND DELHI HIGH COURT ORDER IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 AND ALSO THE LAW LA ID DOWN BY THE APEX COURT. 2. THE ASSESSEES CLAIM OF BAD DEBTS AMOUNTING TO R S.2,62,03,589/- HAS BEEN DISALLOWED TO THE EXTENT OF 25% BY THE ASSESSI NG OFFICER BY GIVING THE REASON THAT ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE DEBTS HAVE BECOME BAD OR THEY HAVE BEEN PROPERLY WRITTEN OFF I N THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER DISALLOWED THE SAME IN THE LI GHT OF IDENTICAL DISALLOWANCE MADE IN EARLIER YEARS. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ASSESSIN G OFFICERS ORDER BY OBSERVING THAT THE ASSESSEE HAS NOT BEEN ABLE TO PR OVE THAT THE DEBTS HAVE BECOME BAD OR HAVE BEEN PROPERLY WRITTEN OFF IN THE BOOKS OF ACCOUNT AS SO STATED BY THE ASSESSING OFFICER WHILE DISALLOWING 2 5% OF THE ASSESSEES CLAIM OF BAD DEBT. 4. HENCE, THE ASSESSEE IS IN APPEAL AGAINST THE CIT (A)S ORDER IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS.65,50,897/- BEING 25% OF TOTAL BAD DEBTS AMOUNTING TO RS.2,62,03,589/ - 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. ITA NO.4623/DEL/2011 3 6. IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION IN EARLIER YEARS I.E. ASSTT. YEARS 2003-04, 2006-07 AND 2007-08. IN THE ASSTT. YEAR 2003-04, THE ORDER OF THE TRIBUNAL, DELETING THE DISALLOWANCE, HAS BEE N UPHELD BY THE HONBLE HIGH COURT OF DELHI IN ITA 469/2008 DATED 25.08.200 8 BY OBSERVING AND HOLDING AS UNDER:- IT IS OBVIOUS THAT THE ASSESSING OFFICER, WHILE AL LOWING 25% OF THE BAD DEBTS WRITTEN OFF RELATING TO THE GO VERNMENT TELEPHONE DEPARTMENT, WAS OF THE VIEW THAT TO THAT EXTENT THE DEBTS WERE IRRECOVERABLE FROM THE SAID DEPARTME NT AND/OR THE SAID DEPARTMENT WAS INSOLVENT TO THAT EX TENT. THE LOGIC EMPLOYED BY THE ASSESSING OFFICER IS RATH ER CURIOUS. WE ARE NOT IMPRESSED BY IT. IN ANY EVENT , WE NEED NOT DWELL UPON THIS ISSUE ANY FURTHER INASMUCH AS THE TRIBUNAL HAS FOLLOWED THE DECISION OF THIS COURT IN THE CASE OF CIT V. AUTOMETERS LTD. 292 ITR 345 AND HAS OBSER VED THAT THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAS BECOME BAD IN THE RELEVANT PREVIOUS YEAR AND IT IS SUFFICIENT FOR THE PURPOSES OF CLAIMING DEDUCTION O N ACCOUNT OF BAD DEBTS THAT THE CONCERNED DEBT HAD BE EN WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF THE AS SESSEE. THE FACT THAT THE ASSESSEE HAD WRITTEN OFF THE SAID BAD DEBTS IN ITS BOOKS IS NOT CONTROVERTED. 7. SIMILARLY, IN THE ASSTT. YEAR 2006-07 AND 2007-0 8, THE DISALLOWANCE OF 25% OF BAD DEBT HAS BEEN DELETED BY THE TRIBUNAL AFTER FOLLOWING THE EARLIER DECISION OF THE TRIBUNAL PASSED IN ASSTT. Y EAR 2003-04, AND ALSO RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TRF LIMITED VS CIT 190 TAXMAN 391 (SC) WHEREIN THE VIEW OF THE HONBLE ITA NO.4623/DEL/2011 4 DELHI HIGH COURT IN THE CASE OF CIT VS AUTO METERS LTD. 292 ITR 345(DEL) WAS CONFIRMED AND UPHELD. 8. IN THE PRESENT CASE, THE ASSESSEE HAS WRITTEN OF F BAD DEBTS AMOUNTING TO RS.2,62,03,589 RECEIVABLE FROM GOVERNMENT TELEPH ONE DEPARTMENTS AND OTHERS BY DEBITING THE SAME TO THE PROFIT & LOSS AC COUNT. THE ASSESSING OFFICER HAS HIMSELF ALLOWED 75% THEREOF AS ADMISSIB LE DEDUCTION. THE ASSESSING OFFICER HAS FAILED TO POINT OUT ANY MATER IAL IN SUPPORT OF HIS ALLEGATION THAT THE BAD DEBTS HAVE NOT BEEN PROPERL Y WRITTEN OFF IN THE BOOKS THOUGH HE HIMSELF HAS STATED IN PARA 2 PAGE 1 OF TH E ASSESSMENT ORDER THAT ON PERUSAL OF THE P & L A/C ACCOUNT IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED BAD DEBTS WRITTEN OFF AMOUNTING TO RS.2,62, 03,589 DURING THE YEAR. AND HE ALSO FOUND THAT FROM THE LIST FURNISHED BY T HE ASSESSEE, IT WAS SEEN THAT BAD DEBTS BELONG TO GOVERNMENT TELEPHONE DEPAR TMENTS AND OTHERS. 9. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, IT IS CLEAR THAT THE ISSUE INVOLVED IN THIS APPEAL IS FULLY COVERED BY THE DEC ISION OF THE TRIBUNAL AS WELL AS OF JURISDICTIONAL DELHI HIGH COURT IN THE A SSESSEES OWN CASE ON SIMILAR SET OF FACTS OF THE CASE. WE, THEREFORE, D ELETE THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS.65,50,897 AND ALLOW THE GROUN D RAISED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.4623/DEL/2011 5 ORDER PRONOUNCED IN THE OPEN COURT ON 26TH DECEMBE R, 2011. SD/- SD/- ( G.D. AGRAWAL ) ( C.L. SETH I ) VICE PRESIDENT JUDICIAL MEMBER DT. 26TH DECEMBER, 2011 GS COPY FORWARDED TO: 1. M/S GETIT INFOMEDIARY LTD., NEW DELHI. 2. ACIT, CIRCLE 12(1), NEW DELHI. 3. CIT(A)-XV, NEW DELHI. 4. CIT 4. DR BY ORDER DY. REGISTRAR