Texmaco Ltd., Kolkata V. DCIT, C ircle- 6, Kolkata, Kolkata

ITA 565/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2446 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 19-03-2010
• Court: TRIBUNAL
• Department Lawyers: K HARIPRASAD
• Assessee Lawyers: R N BAJORIA
• Keywords: Bad and doubtful debts
• Section: 90

Judgement Text

, A , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA () . . , , .!'., #$ [BEFORE SRI B. R. MITTAL, JM & SRI C. D. RAO , AM] % % % % / ITA NO.565 /KOL/2010 &'( )* &'( )* &'( )* &'( )*/ // / ASSESSMENT YEAR : 2005-06 TEXMACO LTD. -VS- DEPUTY COMMISSIONER OF INCOM E-TAX, (PA NO. AABCT 0814 B) CIRCLE-6, KOLKATA (,- / APPELLANT ) (./,-/ RESPONDENT ) FOR THE APPELLANT: : 0 /SRI R. N. BAJORIA FOR THE RESPONDENT 0 /SRI K. HARI PRASAD #1 / ORDER PER B. R. MITTAL, ( . . . . . . . . , , , , ) : THE ASSESSEE HAS FILED THE APPEAL FOR ASSESSMENT YE AR 2005-06 AGAINST THE ORDER OF LD. CIT(A) DATED 17 TH FEBRUARY, 2010 ON THE FOLLOWING GROUND : 1. THE CIT(A) ERRED ON THE FACTS OF THE CASE AND I N LAW IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS OF RS.1,37,03,910/- RELATING TO APV TE XMACO LTD. AND APV EQUIPMENT LTD. ON PROPER APPRECIATION OF THE FACTS OF THE CASE AND CORRECT CONSTRUCTION OF LAW, THE CIT(A) SHOULD HAVE ALLOWED THE SAME. 2. THE ASSESSING OFFICER SHOULD BE DIRECTED TO ALLO W THE RELIEF UNDER SECTION 90 OF THE INCOME TAX ACT IN RESPECT OF WITHHOLDING TAX OF RS. 38,82,971/- DEDUCTED IN BHUTAN. 2. IN RESPECT OF GROUND NO. 1 OF THE APPEAL, THE RE LEVANT FACTS ARE THAT THE SAID AMOUNT AGGREGATING TO RS.1,37,03,910/- CONSISTS OF THE FOL LOWING : I) LOAN TO APV TEXMACO LTD. - RS.45,14,142/- II) LOAN TO APV EQUIPMENT LTD. - RS.37,42,776/- III) STORES ADVANCE TO APV TEXMACO LTD. RS.54,46, 992/- 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. DURING THE COURSE OF HEA RING, LD. AR CONCEDED THAT HE COULD NOT FURNISH THE DETAILS OF THE LOANS TO APV TEXMACO LTD. AND LOAN TO APV EQUIPMENT LTD. OF RS.45,14,142/- AND RS.37,42,776/- RESPECTIV ELY AS CLAIMED AS BAD DEBTS WRITTEN OFF IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVE R, THE LD. AR SUBMITTED THAT THE SAID AMOUNTS COMPRISED OF THE PRINCIPAL AMOUNT AND THE I NTEREST ACCRUED WHICH HAD BEEN CREDITED ON ACCRUAL BASIS BUT THE LD. AR FAIRLY CON CEDED THAT NO BREAK UP COULD BE GIVEN AS TO WHICH ASSESSMENT YEARS INTEREST AMOUNT INCLUD ED IN THE LOAN AMOUNTS AND ALSO IN WHICH ASSESSMENT YEARS THE ASSESSEE OFFERED THE INT EREST ACCRUED ON THE LOANS FOR TAXATION. 2 HOWEVER, THE LD. AR SUBMITTED THAT IN RESPECT OF TH E AMOUNT OF RS.54,46,992/-, THE VERY NOMENCLATURE INDICATES THAT THE SAID AMOUNT WAS ADV ANCED TOWARDS STORES TO APV TEXMACO LTD. IN THE ORDINARY COURSE OF BUSINESS. H E SUBMITTED THAT THE SAME NOTION IS APPEARING IN THE BALANCE SHEET. THE LD. AR SUBMIT TED THAT NO FURTHER DETAILS COULD BE GIVEN IN VIEW OF THE FACT THAT BOTH THE ABOVE COMP ANIES HAVE GONE INTO LIQUIDATION LONG BACK. 4. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE TRIBUNAL VIDE ITS ORDER DATED 31 ST DECEMBER, 2008 IN ITA NO. 986/KOL/2008, THE APPEAL FILED BY THE ASSESSEE AND IN ITA NO.1240/KOL/2008, THE APPEAL FILED BY THE DEPARTMEN T, RESTORED THE ISSUE TO THE LD. CIT(A) FOR HIS ADJUDICATION WITH A DIRECTION THAT T HE ASSESSEE TO ESTABLISH THAT THE ABOVE TRANSACTIONS WERE TAKEN PLACE PRIOR TO 1985 IN THE ORDINARY COURSE OF BUSINESS OF THE ASSESEE AT THE TIME OF ISSUE OF LOANS/STORE ADVANC E. THE LD. DR SUBMITTED THAT THE ASSESSEE COULD NOT SUBMIT ANY DETAILS TO THE LD. CI T(A) AND HENCE, THE LD. CIT(A) RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE AO. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES, ORDERS OF THE AUTHORITIES BELOW AND AL SO THE EARLIER ORDER OF THE TRIBUNAL DATED 31 ST DECEMBER, 2008 (SUPRA). WE OBSERVE THAT THE TRIB UNAL WHILE RESTORING THE ISSUE TO THE LD. CIT(A) VIDE ITS ORDER DATED 31 ST DECEMBER, 2008, COPY PLACED AT PAGES 7 TO 12 OF THE PAPER BOOK, DIRECTED THE LD. CIT(A) VIDE PARA 1 0 AS UNDER : SINCE THE TRANSACTIONS ARE TAKEN PLACE PRIOR TO 19 85, WE ARE OF THE CONSIDERED VIEW THAT THE REASONING GIVEN BY THE LD. CIT(A) IN THE IMPUGN ED ORDER, WHICH WAS STATED IN THE PRECEDING PARAGRAPHS, IS NOT JUSTIFIABLE. IN OUR C ONSIDERED OPINION, THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT THESE TRANSACTIONS WERE TAKEN PLACE PRIOR TO 1985 AND ACTUALLY TAKEN PLACE IN THE ORDINARY COURSE OF THE BUSINESS OF THE ASSESSEE AT THE TIME OF ISSUE OF LOANS/STORE ADVANCE. THEREFORE, WE SET ASIDE THE O RDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJUDICATION AFTER AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE AS SESSEE IS ALSO DIRECTED TO ESTABLISH THAT THE ACTUAL TRANSACTIONS WHICH WERE INITIALLY MADE T O THESE TWO COMPANIES ARE IN THE ORDINARY COURSE OF BUSINESS OF THE COMPANY. WE ORDE R ACCORDINGLY. 6. WE OBSERVE THAT THE ASSESSEE COULD NOT FURNISH T HE DETAILS BEFORE THE LD. CIT(A) AND ALSO CONCEDED DURING THE COURSE OF HEARING THAT THE ASSESSEE COMPANY COULD NOT ESTABLISH THAT THE TRANSACTIONS HAD ACTUALLY TAKEN PLACE IN THE ORDINARY COURSE OF THE BUSINESS OF THE ASSESSEE AT THE TIME OF GIVING LOAN S/STORE ADVANCE. SINCE, THE TRIBUNAL HAD VIDE ITS ORDER DATED 31.12.2008 (SUOPRA) DIRECT ED THAT THE ASSESSEE WAS TO ESTABLISH THAT THE TRANSACTIONS HAD TAKEN PLACE IN THE ORDIN ARY COURSE OF BUSINESS IN RESPECT OF THE AMOUNTS CLAIMED BY THE ASSESSEE AS BAD DEBT AND THE ASSESSEE COULD NEITHER FURNISH ANY DETAILS BEFORE THE LD.CIT(A) NOR BEFORE US TO ESTAB LISH THAT THE ABOVE TRANSACTIONS HAD 3 TAKEN PLACE IN THE ORDINARY COURSE OF THE BUSINESS OF THE ASSESSEE AT THE TIME OF GIVING LOAN/STORE ADVANCE, WE DO NOT FIND ANY REASON TO IN TERFERE WITH THE ABOVE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE REJECT GROUND NO. 1 OF THE APPEAL BY UPHOLDING THE ORDER OF THE LD. CIT(A). 7. IN RESPECT OF GROUND NO. 2 OF THE APPEAL, THE L D.AR CONCEDED THAT THE ABOVE GROUND IS TAKEN FOR THE FIRST TIME BEFORE THE TRIB UNAL IN THE SECOND ROUND OF APPEAL AND IT DOES NOT ARISE OUT OF THE ORDER OF THE LD. CIT(A). 8. IN VIEW OF THE ABOVE, WE AGREE WITH THE LD. DR T HAT THE ABOVE GROUND CANNOT BE ADJUDICATED BY THE TRIBUNAL WHEN THE SAME DOES NOT ARISE OUT OF THE ORDER OF THE LD.CIT(A) AND THAT TOO IN THE SECOND ROUND OF APPEA L. HENCE, WE REJECT GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010 SD/- SD/- . .. .!' !'!' !'. .. . , , , , #$ #$ #$ #$ . . . . . . . . , , , , (C. D. RAO) (B. R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( ('$ '$ '$ '$) )) ) DATED : 23 RD JULY, 2010 23 &'45 &6 JD.(SR.P.S.) #1 7 .&&8 9#8):- COPY OF THE ORDER FORWARDED TO: 1. ,- /APPELLANT - TEXMACO LTD., BIRLA BUILDING (5 TH FLOOR), 9/1, R. N. MUKHERJEE ROAD, KOLKATA-700 001. 2 ./,- / DCIT, CIRCLE-6, KOLKATA 3. &1'/ THE CIT, 4. &1' ()/ THE CIT(A), KOLKATA. 5. A&B .&' / DR, KOLKATA BENCHES, KOLKATA /8 .&/ TRUE COPY , #1'C/ BY ORDER , D 5 / DEPUTY REGISTRAR .