The ACIT, Indore V. M/s. T.K. Warehousing Pvt.Ltd., Indore

ITA 563/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2790 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Depreciation; Bad and doubtful debts

Judgement Text

PAGE 1 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AABCT1280 I.T.A.NO. 563/IND/2009 A.Y. : 2004-05 ACIT, M/S.T.K.WAREHOUSING PVT.LTD., 4(1), VS 20, MAHARANI ROAD, INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : AABCT1280 C.O.NO.01/IND/2010 (ARISING OUT OF I.T.A.NO. 563/IND/2009) A.Y. : 2004-05 M/S.T.K.WAREHOUSING PVT.LTD., ACIT, 20, MAHARANI ROAD, VS 4(1), INDORE. INDORE. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SMT.APARNA KARAN, SR. DR ASSESSEE BY : SHRI PRAKASH JAIN, C. A. DATE OF HEARING : 03.06.2010 O R D E R PER BENCH PAGE 2 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. THIS APPEAL FILED BY THE REVENUE CROSS OBJECTION FI LED BY THE ASSESSEE ARISE OUT OF ORDER OF THE LD. CIT(A)-II, I NDORE, DATED 15.09.2009, FOR THE ASSESSMENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 IS OF GENERAL NATURE AND HENCE DOES NOT REQUIRE ANY ADJUDICATION. 4. GROUND NO.2 READS AS UNDER :- ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ALLOWING RELIEF OF RS. 69,780/- OU T OF INTEREST ON LOAN MADE BY THE ASSESSING OFFICER. 5. THE FACTS, IN BRIEF, ARE THAT THE AO MADE THE IMPUG NED DISALLOWANCE U/S 36(1)(III) BY ADOPTING THE NOTIONA L INTEREST OF 12 % ON THE FUNDS GIVEN TO SISTER CONCERN. HOWEVER, THE FAC T IS THAT THE ASSESSEE CLAIMED THE INTEREST EXPENDITURE ONLY TO THE EXTENT OF RS. 16,380/-. HENCE, THERE COULD NOT BE ANY DISALLOWANCE TO THIS EXTENT AT THE VERY OUTSET. WE FURTHER FIND THAT EVEN OTHERWISE, THERE IS NO CASE OF THE AO THAT INTEREST BEARING FUNDS HAD ACTUALLY BEEN UTILIZED IN GIVING SUCH ADVANCE. HENCE, FOR THIS REASON ALSO, THERE IS NO MERIT IN THIS DIS ALLOWANCE. ACCORDINGLY, WE DISMISS THIS GROUND. THE SAME IS, THEREFORE, DIS MISSED. 6. GROUND NO. 3 READS AS UNDER :- PAGE 3 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ALLOWING THE DISALLOWANCE OF BAD DE BTS OF RS. 5,34,764/- RELATING TO CYGNUS PUBLICATION AND COMMUNICATION PRIVATE LIMITED. 7. THE FACTS, IN BRIEF, ARE THAT THE AO MADE IMPUGNED DISALLOWANCE FOR THE REASON THAT THE ASSESSEE HAD L EASED OUT PREMISES TO M/S. CYGNUS PUBLICATION AND COMMUNICATION PRIVATE L IMITED, WHO ALSO MADE CERTAIN MODIFICATIONS TO THE PREMISES. THE SAI D PREMISES HAD BEEN LEASED OUT IN EARLIER YEARS. THE ASSESSEE OFFERED T HE LEASED INCOME AS ITS INCOME IN EARLIER YEARS. HOWEVER, SUBSEQUENTLY, DUE TO PRECARIOUS FINANCIAL CONDITIONS, THE ASSESSEE WROTE OFF A SUM OF RS. 5,34,764/- IN THE YEAR UNDER CONSIDERATION AS NOT RECOVERABLE, OUT OF THE TOTAL SUM OF RS. 9,53,764/- OUTSTANDING ON SUCH PARTY. THE ASSESSEE WROTE OFF THE IMPUGNED AMOUNT AFTER TAKING INTO CONSIDERATION THE SECURITY DEPOSIT OF THE SAID PARTY WITH THE ASSESSEE AND FURNITURE AND FIXTURE/OTHER FIXED ASSETS TAKEN BY THE ASSESSEE FROM SUCH PARTY TO THE TUNE OF RS. 2,75,000/-. THE AO REJECTED THIS CLAIM OF THE ASSESSEE FOR THE REASON THAT IT WAS NOT APPARENT FROM RECORDS THAT SECURITY DEPOSIT AND COS T OF INVESTMENT MADE BY THE DEBTOR WAS NOT SUFFICIENT TO COVER THE TOTAL OUTSTANDING AMOUNT AND IN DOING SO, THE AO ALSO REJECTED THE CLAIM OF THE ASSESSEE THAT IT TOOK ONLY SUCH ASSETS FROM THE DEBTORS WHICH WERE OF ANY USE TO THE ASSESSEE. PAGE 4 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. THE LEARNED COUNSEL FOR THE ASSESSEE , ON APPEAL BY THE ASSESSEE, HELD THAT AS PER THE AMENDED PROVISIONS OF LAW, THE ASSE SSEE WAS NOT REQUIRED TO PROVE THAT HAD ACTUALLY BECOME BAD AND DELETED T HE ADDITION. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 8. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE CONT ENDED THAT THE COST OF INVESTMENT MADE BY THE DEBTORS WAS NOT ASCERTAINABLE, HENCE, THE QUANTUM OF WRITE OFF COULD NOT BE SAID T O BE CORRECTLY STATED AND THE LD. CIT(A) FAILED TO GIVE ANY FINDING ON TH IS ASPECT AND, THEREFORE, THE ORDER OF THE AO WAS LIABLE TO BE RESTORED. THE LEARNED COUNSEL FOR THE ASSESSEE , ON THE OTHER HAND, BESIDES NARRATING THE FACTS AND SUBMISSIONS MADE BEFORE THE LD. CIT(A) PLACED RELIANCE ON THE O RDER OF THE HON'BLE SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT, A S REPORTED IN 230 CTR 14, WHEREIN THE LEGAL VIEW OF THE LD. CIT(A) HA D BEEN AFFIRMED BY THE HON'BLE SUPREME COURT. 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 10. IT IS NOTED THAT OUT OF THE TOTAL OUTSTANDING AMOUN T OF RS. 9.53 LAKHS APPROXIMATELY, THE ASSESSEE HAS WRITTEN OFF O NLY A SUM OF RS. 5.34 LAKHS APPROXIMATELY, WHICH HAS BEEN ARRIVED AT AFTE R TAKING INTO CONSIDERATION THE COST OF ASSETS TAKEN BY THE ASSES SEE FROM SUCH DEBTOR AND SECURITY DEPOSIT WITH THE ASSESSEE. THE AO HAS DISALLOWED THIS CLAIM PAGE 5 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. OF THE ASSESSEE WITHOUT BRINGING ANY MATERIAL ON RE CORD TO SHOW THAT THE QUANTUM OF SUCH ASSETS WAS INCORRECT. FURTHER, FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS APPARENT THAT THE AO HAS RE JECTED THIS CLAIM MORE FOR THE REASON THAT WHETHER THE SAID DEBTOR HAD OFF ERED THE INCOME, THE AMOUNT OF BAD DEBTS WRITTEN OFF BY THE ASSESSEE, WH ICH IS NOT A CONDITION PRESCRIBED IN LAW. WE FURTHER FIND THAT GENUINENESS OF SUCH WRITE OFF IS OTHERWISE NOT IN DISPUTE. HENCE, HAVING REGARD TO T HE AMENDED PROVISIONS OF LAW AND THE FACTS OF THE CASE, WE HOLD THAT THER E IS NO MERIT IN THIS GROUND OF THE REVENUE. THE SAME IS, THEREFORE, DISM ISSED. 11. GROUND NOS. 4 & 5 READ AS UNDER :- (4) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION AT RS. 30,000/- OUT OF TELEPHONE AND MOBILE EXPENSES AT RS . 48,000/- MADE BY THE ASSESSING OFFICER. (5) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN RESTRICTING RS. 10,000/- AND RS . 28,000/- AS AGAINST OF RS. 15,000/- AND RS. 42,000/ - OUT OF VEHICLE MAINTENANCE AND CAR DEPRECIATION FOR NON BUSINESS PURPOSE MADE BY THE ASSESSING OFFICER. 12. THE IMPUGNED DISALLOWANCES HAD BEEN MADE BY THE ASS ESSING OFFICER AS INCURRED FOR NON-BUSINESS PURPOSES AND, HENCE, THE PAGE 6 OF 6 -. I.T.A.NO. 563/IND/2009 AND C.O. NO. 01/IND/2010 T.K.WAREHOUSING PRIVATE LIMITED, INDORE. DISALLOWANCE IN PRINCIPLE HAS BEEN ACCEPTED BY THE LD. CIT(A), WHO HAS MERELY REDUCED THE QUANTUM OF DISALLOWANCE. IN THIS VIEW OF THE MATTER AND HAVING REGARD TO THE FACTS, WE FIND THAT THE QU ANTUM OF DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS REASONABLE. ACCORDIN GLY, BOTH THESE GROUNDS OF THE REVENUE ARE ALSO DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 14. NOW, WE SHALL TAKE UP THE CROSS OBJECTION NO.1/IND/ 2010 FILED BY THE ASSESSEE, WHICH WAS NOT PRESSED. HENCE, THE SAME IS DISMISSED, AS NOT PRESSED. 15. TO SUM UP, THE REVENUES APPEAL AS WELL AS CROSS OB JECTION FILED BY THE ASSESSEE STAND DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 4 TH JUNE, 2010. CPU* 346