M/s Gandhi Bapulal Pannalal, Indore V. The ITO 5(3), Indore

ITA 582/IND/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7881 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : AABFG2230R I.T.A.NO. 582 /IND/201 2 . A.Y. : 2008 - 09 M/S. GANDHI BAPULAL PANNALAL, ITO, 5(3), INDORE. VS INDORE. APPELLANT RESP ONDENT APPELLANT BY : SHRI H.P.VERMA, SHRI GIRISH AGARWAL, ADVOCATES RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 24 . 1 2 .2012 DATE OF PRONOUNCEMENT : 24 . 1 2 .201 2 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 25.7.2012 FOR THE ASSESSMENT YEAR 2 008-09. 2. THE ASSESSEE IS AGGRIEVED FOR ADDITION OF RS. 53,59 0/- AS INTEREST INCOME. FROM THE RECORD, I FOUND THAT D URING COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICE R HAS -: 2: - 2 FOUND THAT THE ASSESSEE HAS GIVEN LOAN AT RS. 8.61 LAKHS WITHOUT CHARGING INTEREST. THE ASSESSING OFFICER AL SO FOUND THAT THE ASSESSEE HAD RECEIVED THE LOAN OF RS. 4.14 LAKHS ON WHICH NO INTEREST HAD BEEN PAID. DIFFERENCE OF LOAN GIVEN AND LOAN TAKEN WAS COMPUTED BY THE ASSESSING OFFICER AN D AFTER APPLYING INTEREST RATE OF 12 % AN ADDITION WAS MADE . I DO NOT FIND ANY JUSTIFICATION FOR THE NOTIONAL ADDITION MA DE BY THE ASSESSING OFFICER IN RESPECT OF INTEREST INCOME, WH ICH WAS NEITHER RECEIVED NOR ACCRUED IN FAVOUR OF THE ASSES SEE. IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAD CLAIMED A NY INTEREST EXPENDITURE AND THE INTEREST BEARING LOAN HAS BEEN DIVERTED FOR NON BUSINESS PURPOSES WITHOUT CHARGING ANY INTE REST. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO D ELETE THE ADDITION OF INTEREST OF RS. 53,590/-. 3. THE ASSESSEE IS ALSO AGGRIEVED FOR ADDITION OF RS. 57,668/- MADE ON ACCOUNT OF BAD DEBTS WRITTEN OFF O WING TO QUALITY ISSUES ON THE COTTON SUPPLIED. IN THIS REGA RD, I FOUND THAT DUE TO QUALITY DIFFERENCE IN RESPECT OF MATERI AL SUPPLIED, THE CREDITOR HAS DEDUCTED A SUM OF RS. 57,668/- OUT OF THE PAYMENT DUE AND WHICH WAS CLAIMED BY THE ASSESSEE A S BAD -: 3: - 3 DEBTS. GENUINENESS OF THE TRANSACTION IS NOT IN DOU BT AND THE DEBT HAS ACTUALLY BEEN WRITTEN OFF IN THE PROFIT AN D LOSS ACCOUNT BY DEBITING BAD DEBT ACCOUNT. ACCORDINGLY, I DO NOT FIND ANY MERIT IN THE DISALLOWANCE OF RS. 57,668/- ON ACCOUNT OF BAD DEBTS. 4. THE ASSESSING OFFICER HAS ALSO MADE AN AD HOC DISALLOWANCE AT 20% OF THE EXPENDITURE INCURRED ON TRAVELLING, VEHICLE EXPENSES, TELEPHONE EXPENSES ETC. NO COGENT REASON WAS GIVEN FOR SUCH DISALLOWANCE. KEEPING IN VIEW TH E TOTALITY OF FACTS AND CIRCUMSTANCES, I DIRECT THE ASSESSING OFF ICER TO RESTRICT THE DISALLOWANCE AT 10% OF SUCH EXPENDITUR E ON ACCOUNT OF PERSONAL USE. I DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL IS ALLOWED IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH DECEMBER, 2012. SD/- (R. C. SHARMA) ACCOUNTANT MEMBER DATED : 24 TH DECEMBER, 2012. CPU* 26