ACIT CC 22 & 30, MUMBAI V. WELSPUN SYNTEX LTD, MUMBAI

ITA 5925/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4481 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 05-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: MITESH SHAH
• Keywords: Bad and doubtful debts; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER / I .T A NO. 5925/MUM/2013 ( / ASSESSMENT YEAR : 2004 - 05 THE ACIT,CC - 22, AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. WELSPUN SYNTEX LTD., B WING WELSPUN HOUSE, 9 TH FLOOR, TRADE WORLD, KAMALA MILL COMPOUND, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI - 400 013 ./ ./ PAN/GIR NO. AAACW 0489L ( / APPELLANT ) .. ( / RESPONDENT ) / A PPELLANT BY: SHRI SHRIKANT NAMDEO / RESPONDENT BY: SHRI MITESH SHAH / DATE OF HEARING : 0 5 . 01 . 201 6 / DATE OF PRONOUNCEMENT : 05 . 0 1 .201 6 / O R D E R PER N.K. BILLAIYA, AM: WITH T HIS APPEAL THE REVENUE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. CIT(A) - 3 9 , MUMBAI DATED 16 . 07 .2013 PERTAINING TO ASSESSMENT YEAR 200 4 - 0 5 . 2. THE GRIEVANCE OF THE REVENUE RELATES TO THE DELETION OF ADDITION OF RS. 1,69,66,000/ - MADE BY THE AO ON ACCOUNT OF PROVISION OF BAD AND DOUBTFUL DEBTS NOT ADDED BACK BY THE ASSESSEE. ITA. NO. 5925/M/13 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF POLYSTER YARN. RETURN FOR THE YEAR WAS FILED ON 30.10.2004 DECLARING TOTAL LOSS AT RS. 4,16,98,616/ - . THE ASSESSMENT WAS COMPLET ED U/S. 143(3) OF THE ACT ACCEPTING THE RETURNED LOSS. 3.1. SUBSEQUENTLY THE COMPLETED ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S. 148 OF THE ACT. THE REASON FOR REOPENING THE ASSESSMENT RELATED TO THE CLAIM OF BAD AND DOUBTFUL DEBTS AMOUNTING TO R S. 1,69,6,000/ - AS THE DEBT WAS NOT WRITTEN OFF. 3.2. DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE CLAIM SHOULD NOT BE DENIED AS IT WAS ONLY A PROVISION FOR DOUBTFUL DEBTS AND THE DEBT HAS NOT BEEN WRITTEN OFF AS BEING IRRECOVERABLE DURING THE PREVIOUS YEAR. AFTER CONSIDERING THE REPLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF BAD DEBTS AND COMPLETED THE REASSESSMENT PROCEEDINGS. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS EXPLAINED THAT THE DEBT BELONGED TO M/S. SUPER SYNCOTEX INDIA LTD., RAJASTHAN FOR GOODS SUPPLIED IN FINANCIAL YEAR 2002 - 03, AS THE PARTY COULD NOT MAKE THE PAYMENT, THE DEBT HAD BEEN WRITTEN O FF AS IRRECOVERABLE. 4.1. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS THE LD. CIT(A) AT PARA - 7 OF HIS ORDER OBSERVED THAT: AS PER THE BALANCE SHEET IT IS SEEN THAT THE SAID SUM IS REDUCED FROM THE AMOUNT OF SUNDRY DEBTORS (SCHEDULE - 9) AS PROVISION FOR DOUBTFUL DEBTS. IT THEREFORE FOLLOWS THAT THE APPELLANT HAS WRITTEN OFF THE EXACT AMOUNT OF DEBT OF M/S. SUPER SYNCOTEX INDIA LTD BY DEBIT TO THE PROFIT & LOSS ACCOUNT AND ITA. NO. 5925/M/13 3 REDUCING THE SAME FROM THE SUNDRY DEBTORS IN THE BALANCE SHEET WHICH MEANS THAT THE AMOUNT OF THE PARTICULAR SUNDRY DEBTOR IS NOT AN ASSET ANYMORE IN THE BALANCE SHEET. 4.2. THE LD. CIT(A) WAS CONVINCED WIT H THE WRITE OFF AND ALLOWED THE SAME AS A BAD DEBIT. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE T HE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE REASONS GIVEN BY THE LD. CIT(A) FOR ALLOWING THE APPEAL AS MENTIONED ELSEWHERE. IT IS AN UNDISPUTED FACT THAT THE ASSETS OF THE ASS ESSEE HAVE BEEN REDUCED BY THE AMOUNT OF WRITE OFF. IT IS ALSO AN ADMITTED FACT THAT THE DEBTOR M/S. SUPER SYNCOTEX INDIA LTD NO MORE PART OF THE BALANCE SHEET. THE MANDATE OF THE PROVISIONS OF SEC. 36(1)(VII) OF THE ACT HAS BEEN FULFILLED. THE LD. CIT( A) HAS GIVEN A WELL REASONED AND RESEARCHED FINDINGS. WE, THEREFORE, DECLINE TO INTERFERE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 5 TH JANUARY , 201 6 . SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 5 TH JANUARY , 201 6 . . ./ RJ , SR. PS ITA. NO. 5925/M/13 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI