M/s. Jullundur Motor Agency (Delhi) Ltd., New Delhi V. Addl.CIT, New Delhi

ITA 5404/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0767 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Bad and doubtful debts
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NOS.6074/DEL/2014 & 484/DEL/2016 ASSESSMENT YEARS : 2009-10 & 2011-12 DCIT, CIRCLE-13(2), NEW DELHI. VS. JULLUNDUR MOTOR AGENCY (DELHI) LTD., 2E/5, JHANDEWALAN EXTN., NEW DELHI. PAN: AAACJ2490G ITA NO.5404/DEL/2014 ASSESSMENT YEAR : 2009-10 JULLUNDUR MOTOR AGENCY (DELHI) LTD., 2E/5, JHANDEWALAN EXTN., NEW DELHI. PAN: AAACJ2490G VS. DCIT, CIRCLE-13(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : MS ADITI GUPTA, CA DEPARTMENT BY : SHRI F.R. MEENA, SR. DR DATE OF HEARING : 18.09.2018 DATE OF PRONOUNCEMENT : 19.09.2018 ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 2 ORDER PER BENCH: THIS BATCH OF THREE APPEALS COMPRISES OF TWO CROSS APPEALS FOR THE ASSESSMENT YEAR 2009-10 AND ONE APPEAL BY THE REVEN UE FOR THE ASSESSMENT YEAR 2011-12. FOR THE SAKE OF CONVENIENCE, WE HAVE CLUBBED THESE APPEALS FOR DISPOSAL. ASSESSMENT YEAR 2009-10 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APP EAL IS AGAINST THE TAXABILITY OF COMMISSION RECEIVED IN ADVANCE IN RES PECT OF PURCHASES ACCOUNTED FOR IN THE NEXT FINANCIAL YEAR. 3. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE DECLARED ADVANCE COMMISSION RECEIVED AMOUNTING TO RS.37.75 L AC WHICH WAS NOT OFFERED FOR TAX. THE ASSESSING OFFICER OPINED THAT SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, SUCH COM MISSION RECEIVED WAS LIABLE TO BE TAXED. THE LD. CIT(A) ACCEPTED THE AS SESSEES CONTENTION TO THE EXTENT OF COMMISSION INCOME OF RS.32,37,000/- WHICH WAS BROUGHT FORWARD FROM THE ASSESSMENT YEAR 2008-09 AND OFFERED TO TAX DURING ASSESSMENT ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 3 YEAR 2009-10. THE REMAINING AMOUNT WAS HELD TO BE CHARGEABLE TO TAX. BOTH THE SIDES ARE IN APPEAL ON THEIR RESPECTIVE ST ANDS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT SIMILAR ISSU E CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY SUCCEEDING, VIZ., ASSESSMENT YEAR 2010-11. A COPY OF SUCH ORDER DATED 07.02.2018 IN ITA NO.5878/DEL/2015 HAS BEEN PLACED ON RECORD. RELEVANT DISCUSSION HAS BEEN MADE IN PARA 8 BY WHICH IT HAS BEEN HELD THAT THE ADVANCE COMMISSION RECEIVED IN RESPECT OF PURCHASES ACCOUNTED FOR IN THE SUCCEEDING YEAR SHOULD NOT BE BROUGHT TO TAX IN THE YEAR OF RECEIPT. THE FACTS AND CIRCUMSTANCES OF THE INSTANT GROUND ARE, ADMITTEDLY, SIMILAR. IN VIEW OF THE FOREGOING AND RESPECTFULLY FOLLOWING TH E PRECEDENT, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION OF RS.32.37 LAC AND ERRED IN SUSTAINING THE REMAINING ADDITION. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED AND THAT BY THE REVENUE IS DISM ISSED. 5. GROUND NO.2 OF THE DEPARTMENTAL APPEAL IS AGAINS T THE DELETION OF ADDITION OF RS.18,35,530/- OUT OF ADDITION OF RS.19 ,53,086/- MADE BY THE ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 4 ASSESSING OFFICER ON ACCOUNT OF REBATES AND WRITE O FFS. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE DEBITED A SUM OF RS.19,53,086/- UNDER THE HEAD REBATE AND WRITTEN OFF EXPENSES. IN THE ABSE NCE OF THE ASSESSEE FURNISHING NECESSARY DETAILS, THE ASSESSING OFFICER MADE AN ADDITION FOR THIS SUM. THE ASSESSEE CONTENDED BEFORE THE LD. CI T(A) THAT THE AMOUNT OF RS.19,53,086/-, EXCEPT FOR A SUM OF RS.1,17,556/-, REPRESENTED WRITTEN OFF BALANCES OF DEBTORS. A DETAIL OF SUCH DEBTORS WRIT TEN OFF WAS FURNISHED TO THE LD. CIT(A), WHO SENT THE SAME TO THE ASSESSING OFFICER FOR REMAND REPORT. CONSIDERING THE REMAND REPORT, THE LD. CIT (A) DELETED THE ADDITION TO THE EXTENT OF RS.18,35,530/-. REMAINING ADDITIO N OF RS.1,17,556/- WAS UPHELD, WHICH REPRESENTED PROVISIONS FOR RESERVE A ND DOUBTFUL DEBTS WRITTEN OFF. THE ASSESSEE ACCEPTED THE CONFIRMATIO N OF ADDITION TO THE EXTENT OF RS.1,17,557/- AND THE REVENUE HAS ASSAILE D THE DELETION OF ADDITION OF RS.18,35,530/-. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS FOUND THAT THE AMOUNT REC EIVABLE FROM DEBTORS WAS, ADMITTEDLY, WRITTEN OFF DURING THE YEAR FOR WHICH N ECESSARY DETAILS WERE ALSO PRODUCED BEFORE THE LD.CIT(A) AND, IN TURN, BE FORE THE ASSESSING ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 5 OFFICER IN REMAND PROCEEDINGS. THE HON'BLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 323 ITR 397 (SC), HAS HELD THAT CLAIM FOR BAD DEBT HAS TO BE ALLOWED ON A MERE WRITE OFF AND THERE IS NO FURTHER NEED TO PROVE THAT THE AMOUNT OF DEBT BECAME BAD DURING THE YEAR. IN VIEW OF THE ABOVE BINDING PRECEDENT, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION TO THE EXTENT OF RS.18,35,530/- 7. LAST GROUND OF THE DEPARTMENTAL APPEAL IS AGAINS T THE DELETION OF ADDITION OF RS.11,27,955/-. ON GOING THROUGH THE A UDIT REPORT FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE PAID SALES-TAX OF RS.11,27,955/- ALONG WITH SURCHARGE AND SUCH SAL ES-TAX PAID DURING THE YEAR WAS DEBITED UNDER THE HEAD REPAIRS AND RENEWA LS. IN THE ABSENCE OF ANY EXPLANATION, THE ASSESSING OFFICER MADE AN ADDI TION FOR THE SAID SUM. THE LD. CIT(A) DELETED THE ADDITION AFTER NOTICING THAT THE SALES-TAX WAS RAISED BY THE SALES-TAX AUTHORITIES WHICH WAS PAID DURING THE YEAR AND CHALLANS OF SUCH PAYMENT WERE ALSO PRODUCED. HE, TH EREFORE, HELD THAT IT WAS A PAYMENT OF SALES-TAX AND NOT ANY PENALTY ETC. , WHICH WAS ALLOWABLE IN THE YEAR OF PAYMENT IN TERMS OF SECTION 43B OF T HE ACT. ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 6 8. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) DELETED THE ADD ITION BY NOTICING THAT RS.11,27,955/- WAS THE AMOUNT OF SALES-TAX PAID BY THE ASSESSEE DURING THE YEAR IN RESPECT OF SALES-TAX ASSESSMENTS COMPLETED AND SUCH AMOUNT WAS NOT OF A PENAL NATURE. THE LD. DR COULD NOT CONTRO VERT THE FINDINGS RECORDED BY THE LD. CIT(A) WITH ANY COGENT EVIDENCE . SINCE THE SAID SUM REPRESENTED THE PAYMENT OF SALES-TAX MADE DURING TH E YEAR, THE SAME, IN OUR CONSIDERED OPINION, WAS RIGHTLY ALLOWED BY THE LD. CIT(A). WE, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND THAT OF THE REVENUE IS DISMISSED. ASSESSMENT YEAR 2011-12 10. THE DEPARTMENT HAS FILED THIS APPEAL ON THE SOL ITARY EFFECTIVE GROUND READING AS UNDER:- THAT THE LD.CIT (APPEALS) HAS ERRED IN DELETING TH E DISALLOWANCE OF RS.30,68,760/- MADE BY THE A.O. ON ACCOUNT OF INTER EST EXPENSES AS ASSESSEE HAS NOT CAPITALIZED PROPORTIONATE INTERES T COST ALLOCABLE TO CAPITAL WORK IN PROGRESS OF RS.2,55,73,000/-. ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 7 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE GROUND REPR ODUCED ABOVE DOES NOT ARISE OUT OF THE IMPUGNED ORDER. IN FACT, THE ASSE SSING OFFICER MADE TWO ADDITIONS, NAMELY, ONE U/S 14A TO THE TUNE OF RS.1, 83,397/- AND ANOTHER ON ACCOUNT OF ADVANCE COMMISSION AMOUNTING TO RS.68,65 ,000/-, WHICH THE LD. CIT(A) DEALT WITH IN THE IMPUGNED ORDER. THERE IS N O REFERENCE WHATSOEVER TO SUBJECT MATTER ENCAPSULED IN THE GROUND EXTRACTE D ABOVE. THE LD. DR ALSO FAIRLY ADMITTED THAT THIS GROUND DOES NOT ARIS E FROM THE IMPUGNED ORDER. UNDER THESE CIRCUMSTANCES, WE DISMISS THE G ROUND TAKEN ABOVE AS NOT ARISING FROM THE IMPUGNED ORDER. 12. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.201 8. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 19 TH SEPTEMBER, 2018. DK ITA NOS.5404 & 6074/DEL/2014 & 484/DEL/2016 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.