The ACIT, Circle-1, Ahmedabad V. Ashima Dyecot Limited, Ahmedabad

ITA 538/AHD/2006

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 56975 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 03-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# , $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) ! !! ! . ITA NO. 538/AHD./2006 : # &' - 2002-2003 ACIT, CIRCLE-1, AHMEDABAD VS- ASHIMA DYECOT PVT. LTD., ABAD (PAN : AACCA 2753K) ( () /APPELLANT) ( *() /RESPONDENT ) () + , / APPELLANT BY : SHRI VINOD TANWANI, SR.D.R. *() + , / RESPONDENT BY : SHRI VARTIK CHOKSHI, A.R. -#. + /$ / DATE OF HEARING : 18/01/2011 0'& + /$ / DATE OF PRONOUNCEMENT : 18/01/2011 1 1 1 1 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V, AHME DABAD IN APPEAL NO.CIT(A)-V/ACITCIR.1/36/2005-06 DATED 13.12 .2005 FOR THE ASSESSMENT YEAR 2002-2003 PASSED UNDER SECTION 250 R.W.S. 143(3) OF THE I.T. ACT, 1961. 2. IN THIS APPEAL THE REVENUE HAS RAISED THREE GROU NDS, WHEREIN GROUND NOS. 2 AND 3 ARE GENERAL IN NATURE AND DO NO T SURVIVE FOR ADJUDICATION. THE REMAINING LONE ISSUE RAISED BY TH E REVENUE READS AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ALLOW THE CLAIM OF BAD DEBT OF RS.37,09,900/-. 3. THE ASSESSEE IS A LIMITED COMPANY FILED ITS RETU RN OF INCOME ON 31.10.2002 SHOWING THE TOTAL LOSS OF RS.40,13,86,26 1/-. THE LD. AO ITA NO. 538-AHD-06 2 COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF TH E ACT ON 30.03.2005. DURING THE COURSE OF THE ASSESSMENT PRO CEEDINGS, THE LD. AO DISALLOWED AN AMOUNT OF RS.37,09,900/- BECAUSE T HE ASSESSEE HAD WRITTEN OFF THIS AMOUNT AS BAD DEBT IN ITS BOOKS OF ACCOUNTS. THIS BAD DEBT PERTAINS TO VARIOUS SUNDRY PARTIES. 4. THE ASSESSEE TOOK UP THE ISSUE BEFORE THE LD. CI T (A) FOR RELIEF. THE LD. CIT (A) HAD ALLOWED THE APPEAL OF THE ASSES SEE WITH THE FOLLOWING OBSERVATIONS: 5.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE ABOVE SUBMISSIONS. THE APPELLANT HAS DEARLY POINTED OUT THAT THE AMOUNT REPRESENTS DEBT RELATED TO THE BUSINESS OF T HE APPELLANT. IT REPRESENTS EXPORT REBATE CLAIMED BY THE APPELLANT A ND RATE DIFFERENCE IN RESPECT OF THE PURCHASES THE APPELLAN T HAS SUBMITTED THAT THIS AMOUNTS ARE OFFERED FOR TAX BY WAY OF RED UCTION IN THE COST AND THEREFORE SHOULD HAVE BEEN ALLOWED. IN THE CIRC UMSTANCES AS THE DEBT RELATES TO THE BUSINESS ACTIVITY OF THE AP PELLANT THE SAME IS RIGHTLY WRITTEN OFF BY THE APPELLANT AS BAD DEBT. A S PER THE REQUIREMENT OF ESTABLISHING THAT THE DEBIT HAD BECO ME BAD, IN VIEW OF THE DECISION OF THE GUJARAT HIGH COURT AND THE D ECISION OF THE ITAT MUMBAI REFERRED TO HEREINABOVE, I HOLD THAT IT IS NOT NECESSARY THAT THE ASSESSEE SHOULD ESTABLISH THAT T HE DEBT HAD BECOME BAD. IT IS NOT THE CASE OF THE ASSESSING OFF ICER THAT OTHER REQUIREMENTS OF THE SECTION 36(1) WERE NOT SATISFIE D. I ALSO FIND THAT THE CALCUTTA HIGH COURT DECISION IN THE CASE OF ROH TAS INDUSTRIES LTD REPORTED AT 120 ITR 110 SUPPORTS ITS CLAIM. ACC ORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM FO R BAD DEBT. 5. THE LD. D.R. SUPPORTED THE ORDER OF THE LD. A.O. AND THE LD. A.R. RELIED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF T.R.F. LTD. VS- C.I.T. REPORTED IN [2010] 323 ITR 397 (SC ). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE MATE RIALS ON RECORD. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS APPARENT THAT THE DECISION QUOTED BY THE LD. A.R. IN THE CASE OF T.R. F. LTD. ( SUPRA ) SQUARELY ITA NO. 538-AHD-06 3 APPLIES TO THE FACTS OF THE CASE BEFORE US. THE HON BLE APEX COURT IN THAT CASE HELD AS UNDER: AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE I NCOME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO O BTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR T HE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECO VERABLE: IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSEE. 6.1 FOLLOWING THE RATIO OF THE DECISION OF THE ABOV E CASE, WE HEREBY CONFIRM THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 2 1 + 0'& 3#!' 18 / 11 /201 1 ' 4 + . 5 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 18/11/2011 1 1 1 1 + ++ + */6 */6 */6 */6 76&/' 76&/' 76&/' 76&/' - 1. () 2. *() 3. !! / -8 4. -8 - - 5. 69 */# , , 5 6. :2 1 , ; / !< , 5 TALUKDAR/ SR. P.S .