DCIT, Hisar V. M/s Laxmi Pipes Ltd., Hansi

ITA 5664/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3797 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI DELHI BENCH D : NEW DELHI DELHI BENCH D : NEW DELHI DELHI BENCH D : NEW DELHI BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM BEFORE SHRI R.P.TOLANI, JM AND SHRI B.K.HALDAR, AM ITA NO.5664/DEL/2010 ITA NO.5664/DEL/2010 ITA NO.5664/DEL/2010 ITA NO.5664/DEL/2010 ASSESSMENT YEAR : 2007 ASSESSMENT YEAR : 2007 ASSESSMENT YEAR : 2007 ASSESSMENT YEAR : 2007- -- -08 0808 08 DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF DY.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, HISAR. HISAR. HISAR. HISAR. VS. VS. VS. VS. M/S LAXMI PIPES LIMITED, M/S LAXMI PIPES LIMITED, M/S LAXMI PIPES LIMITED, M/S LAXMI PIPES LIMITED, BHIWANI ROAD, HAN BHIWANI ROAD, HAN BHIWANI ROAD, HAN BHIWANI ROAD, HANSI. SI.SI. SI. PAN : AAACH5857R. PAN : AAACH5857R. PAN : AAACH5857R. PAN : AAACH5857R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.MONGA, DR. RESPONDENT BY : SHRI GAUTAM JAIN, ADVOCATE. ORDER ORDER ORDER ORDER PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : PER R.P.TOLANI, JM : THIS IS REVENUES APPEAL. SOLE GROUND RAISED IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.41,67,488/- MADE ON ACCOUNT OF MISCELLANEOUS BALANCES WRITTEN OFF BY THE ASSESSEE. 2. LEARNED DR RELIED ON THE ORDER OF THE AO AND CONT ENDS THAT LEARNED CIT(A) HAS ERRED IN GIVING THE RELIEF. LEA RNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, VEHEMENTLY CONTENDS THE BAD DEBTS WRITTEN OFF BY THE COMPANY WERE NOT NEW AND CO MING FROM EARLIER YEARS WHICH HAS NOT BEEN DISPUTED BY THE AO . THE AMOUNTS HAVE BEEN ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNT. THIS AMOUNT REPRESENTED AMOUNTS NOT RECOVERABLE FROM GOVERNMENT DEPARTMENTS ON ACCOUNT OF DEDUCTIONS ALLOW ED TO ITA NO.5664/DEL/2010 2 THE GOVERNMENT DEPARTMENTS. RELIANCE IS PLACED ON VA RIOUS ACCOUNTS OF THE GOVERNMENT AGENCIES FILED IN THE PAP ER BOOK. BESIDES, THE REASONS WERE DULY EXPLAINED BEFORE THE AO VIDE LETTER DATED 25.8.2009. WHILE DISALLOWING THE CLAI M, THE AO HAS MERELY STATED THAT THE EXPLANATION TENDERED BY THE A SSESSEE COMPANY WAS NOT PLAUSIBLE. THE LEARNED COUNSEL CONT ENDS THAT WHEN THE ASSESSEES CLAIM IS SUPPORTED BY DOCUMENTARY EVIDENCE, THE SUMMARY OBSERVATION OF THE AO THAT THE ASSESSEES EXPLANATION WAS NOT PLAUSIBLE WAS UNTENABLE. LEARN ED CIT(A) HAS RIGHTLY ALLOWED THE DEDUCTION. RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF TRF LIMITED VS. CI T 323 ITR 397 FOR THE PROPOSITION THAT IT IS SUFFICIENT C OMPLIANCE OF AMENDED SECTION 36(1)(VII) W.E.F. 1.4.1989 TO WRITE OFF THE BAD DEBTS IN THE BOOKS OF ACCOUNT AND IT WAS NOT NECESS ARY TO ESTABLISH THAT THE DEBTS IN FACTS HAD BECOME IRRECOV ERABLE. 3. ASSESSEES CASE IS ON A STRONGER FOOTING AS THES E ARE DEBTS COMING FROM EARLIER YEARS AND ON ACCOUNT OF DEDUCTION S ETC., THE AMOUNTS HAVE BEEN WRITTEN OFF. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE RELEVANT MATERIAL ON RECORD. WE SEE NO INFIRMITY IN THE ORDER OF LEARNED CIT(A). (I) THE BAD DEBTS ACTUALLY WRITTEN OFF WERE COMING F ROM EARLIER YEARS. (II) IT HAS NOT BEEN DISPUTED THAT AOS FINDING THA T THE EXPLANATION OF THE ASSESSEE IS NOT PLAUSIBLE CANNOT BE ITA NO.5664/DEL/2010 3 UPHELD INASMUCH AS THERE IS NO COMMENT ABOUT COMPLIANCE OF SECTION 36(1)(VII). (III) THE PERUSAL OF PAPER BOOK, ASSESSEES EXPLANA TION AND HONBLE SUPREME COURT JUDGMENT IN THE CASE OF TRF LTD. (SUPRA) ENDORSES THE DECISION TAKEN BY THE LEARNED CIT(A). 5. IN VIEW OF THE ABOVE POSITION, WE UPHOLD THE ORD ER OF LEARNED CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2011. SD/- SD/- (B.K.HALDAR) (B.K.HALDAR) (B.K.HALDAR) (B.K.HALDAR) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) (R.P.TOLANI) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 17.06.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR