The Louis Berger Group Inc. , Gurgaon V. DCIT , Int. Taxation, Gurgaon

ITA 5739/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3533 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 01-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Assessee Lawyers: KHUSHHAL BATRA
• Keywords: Bad and doubtful debts
• Section: 143(3); 144C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI , ! ' $% . & , ( ) ! BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT & DR.B.R. R.KUMAR, AM * / ITA NO.5739/DEL/2019 + , , / ASSESSMENT YEAR 2014-15 THE LOUIS BERGER GROUP INC., PLOT NO.3, 5 TH FLOOR, TOWER-B, IFFCO COMPLEX, SECTOR-32, GURGAON-122001. PAN-AAACL4067F .......... -. /APPELLANT VS THE DCIT-INTERNATIONAL TAXATION, GURGAON-122001. . /0-. / RESPONDENT -.12 / APPELLANT BY : SH. GAURAV SINGHAL & SH. KHUSHHAL BATRA, CA /0-.12 / RESPONDENT BY : SH. SARAS KUMAR, SR.DR 13( / DATE OF HEARING : 09.01.2020 45 13( / DATE OF PRONOUNCEMENT: 28.02.2020 6 / ORDER PER SUSHMA CHOWLA,VP THE PRESENT APPEAL FILED BY ASSESSEE IS AGAINST OR DER OF CIT(A)-43, NEW DELHI DATED 01.04.2019 RELATING TO ASSESSMENT YEAR 2014-15 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S 144C OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY ISSUE RAISED IN THE PRESENT CASE IS AG AINST THE DISALLOWANCE OF BAD DEBTS CLAIMED U/S 36(1)(VII) OF THE ACT. THOUG H THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL WHICH ARE ARGUMENTATIVE I N NATURE BUT THE ISSUE TO BE DECIDED IS GROUND NO.2 WHICH READS AS UNDER:- ITA NO.5739/DEL/2019 ASSESSMENT YEAR 2014-15 2 2. THAT BOTH, THE LD.AO AND THE LEARNED COMMISSION ER OF INCOME- TAX (APPEALS) [LD. CIT(A)] HAVE ERRED IN LAW, BY WRONGLY INTERPRETING THE PROVISIONS OF SEC.36(1)(VII) OF THE INCOME-TAX ACT, 1961 (THE ACT, AS THE SECTION CLEARLY SPECIFY THAT WHILE COMPUTING THE I NCOME UNDER THEN HEAD PROFIT AND GAINS OF BUSINESS OF PROFESSION, DEDUCTI ON SHALL BE ALLOWED FOR AMOUNT WRITTEN OFF AS IRRECOVERABLE IN BOOKS OF ACC OUNTS OF THE APPELLANT. 3. THE PRELIMINARY ISSUE RAISED IN THE PRESENT APPE AL IS IN RELATION TO CLAIM OF DEDUCTION ON ACCOUNT OF BAD DEBTS WRITTEN OFF DURING THE COURSE OF THE YEAR IN QUESTION. THE ASSESSEE HAS WRITTEN OFF EXPENDITURE OF RS.1.49 CRORES (APPROX.). THE ASSESSEE SUBMITTED THE FOLLO WING DETAILS DURING THE ASSESSMENT PROCEEDINGS:- YEAR WISE DETAILS OF AMOUNT OF INCOME BOOKED, OUT OF WHICH PART AMOUNT WAS WRITTEN OFF AS BAD DEBTS DURING THE YEAR . INVOICE NUMBER, DATE OF INVOICE AND COPY OF INVOICE S AGAINST WHICH MAJORITY OF BAD DEBTS WERE WRITTEN OFF DURING THE Y EAR. PROJECT WISE DETAILS OF BAD DEBTS WRITTEN OFF DURIN G THE YEAR. 4. THE CLAIM OF THE ASSESSEE IS THAT THE SAID DEDUC TION IS TO BE ALLOWED IN THE HANDS OF THE ASSESSEE WHILE COMPUTING THE INCO ME. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPR EME COURT IN T.R.F.LTD. VS CIT [2010] 323 ITR 397 (SC) WHEREIN THE APEX COURT HELD THAT IT IS NOT NECESSARY FOR A TAX PAYER TO ESTABLISH THAT DEBT, H AS BECOME IRRECOVERABLE. THE ASSESSING OFFICER HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE. THE CIT(A) WAS OF THE VIEW THAT TO ALLOW THE CLAIM, THE DEBT WRITTEN OFF SHOULD BE BAD DEBTS, WHICH WAS PRIOR CONDITION OF ADMISSIBILI TY OF DEDUCTION U/S 36(1)(VII) OF THE ACT. ANOTHER POINT WHICH WAS NOT ED BY THE CIT(A) WAS THAT THE ASSESSEE HAD DONE CONTRACTUAL WORK FOR THE GOVE RNMENT ENTITIES AND HENCE, HE UPHELD THE DISALLOWANCE MADE BY THE ASSES SING OFFICER. ITA NO.5739/DEL/2019 ASSESSMENT YEAR 2014-15 3 5. THE LD. AR FOR THE ASSESSEE POINTED THAT IT HAD RAISED BILLS TO THE EXTENT OF RS.11.65 CRORES (APPROX.) AND HAD ONLY WRITTEN O FF A SUM OF RS.1.49 CRORES (APPROX.) AS BAD DEBTS. HE FURTHER POINTED OUT THA T THE MAIN GROUND ON WHICH THE SAID ADDITION WAS MADE WAS THAT THE ASSES SEE HAD NOT ESTABLISHED THAT THE DEBTS HAD BECOME BAD. 6. THE LD.DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RESPECT OF CLAI M OF DEDUCTION U/S 36(1)(VII) OF THE ACT ON ACCOUNT OF WRITE OFF OF BAD DEBTS, ST AND SETTLED IN FAVOUR OF THE ASSESSEE BY THE HONBLE SUPREME COURT IN T.R.F.LTD. (SUPRA). THE HONBLE APEX COURT HAD HELD THAT THERE IS NO REQUIREMENT T O PROVE THAT THE AMOUNT IS ACTUALLY IRRECOVERABLE BEFORE WRITING IT OFF AS BAD DEBTS. FOLLOWING THE SAID PARITY OF REASONING, WE HOLD THAT WHERE THE ASSESSE E HAD WRITTEN OFF DEBTS AS BAD DEBTS, THEN THE SAME CANNOT BE DISTURBED BY THE REVENUE AUTHORITIES ESPECIALLY WHERE THE ASSESSEE HAS ALSO FULFILLED TH E CONDITION LAID DOWN IN SECTION 36(2) OF THE ACT. WE ALLOW THE CLAIM OF TH E ASSESSEE U/S 36(1)(VII) OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 TH FEBRUARY, 2020. SD/- SD/- (DR.B.R.R.KUMAR) (SUSHMA CHOWLA) ( ) / ACCOUNTANT MEMBER ! / VICE PRESIDENT / DATED : 28 TH FEBRUARY, 2020 * AMIT KUMAR * ITA NO.5739/DEL/2019 ASSESSMENT YEAR 2014-15 4 61/+378983: COPY OF THE ORDER IS FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT 3. ;3 < = / THE CIT(A) 4. > ;3 / THE PR. CIT 5. 6. / DR, ITAT, DELHI ?$,@: GUARD FILE. 6 / BY ORDER, 083/+3 //TRUE COPY// ASSISTANT REGISTRAR, ITAT, DELHI