ACIT, CIRCLE - 1, NASHIK, Nashik V. M/S COPPER SEMIS PVT. LTD., Nashik

ITA 593/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7553 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI G.S. PANNU, AM I.T.A. NO. 593/PN/2009: A.Y. 2005-06 ASSTT. CIT CIR. 1, NASIK APPELLANT VS. M/S. COPPER SEMIS PVT. LTD., 93/5 MIDC SATPUR, NASIK PAN AAACC 9204 D RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY: SHRI NIKHIL PATHAK ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A)-II NASIK DATED 26-2-2009 FOR T HE ASSESSMENT YEAR 2005-06 ON THE GROUND THAT THE CIT( A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE OF DEDUCTION OF THE BAD DEBTS OF RS. 17,75,282/- U/S 36(1)(VII) OF THE ACT. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFAC TURE AND TRADE OF NON-FERROUS WIRES, SEMIS, ETC. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED BAD DEBTS O F RS. 17,75,282/- ON ACCOUNT OF PROVISION FOR BAD DEB TS WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. ON APPEAL , THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. THIS HAS BEEN O PPOSED BY THE REVENUE BEFORE US ITA NO. 593/PN/09 COPPER SEMIS P. LTD. A.Y. 2005-06 2 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IT IS THE CLAIM OF THE ASSESSEE THAT TH E BAD DEBTS WHICH WERE PROVIDED FOR IN THE EARLIER YEARS WERE A CTUALLY WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION AND ALLOWABLE AS DEDUCTION. THUS, THE CLAIM MADE BY THE ASSESSEE WAS NOT ON ACCOUNT OF PROVISION BUT IT IS ON ACCOUNT OF ACT UAL WRITING OFF OF THE BAD DEBTS. THE ASSESSEE MADE NECESSARY E NTRIES IN THE JOURNAL BY DEBITING PROVISION FOR BAD AND DOUBT FUL DEBTS AND CREDITING THE BAD DEBTS I.E. REVERSING THE ENTR IES MADE IN THE EARLIER YEARS. THUS, THE ACCOUNTING ENTRIES PAS SED BY THE ASSESSEE AMOUNTED TO ACTUAL WRITING OFF OF BAD DEBT S AND THE SAME ARE ALLOWABLE U/S 36(1))(VII) OF THE ACT. IN THIS VIEW OF THE MATTER, THE CIT(A) WAS JUSTIFIED IN DIRECTING THE A SSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. IN ANY CASE, WE FIND THAT THE ISSUE RAISED IN THIS APPEAL STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE SUPREME COU RT IN THE CASE OF T.R.F. LTD. VS. CIT (2010) 230 CTR (SC) 14 WHEREIN IT HAS BEEN HELD AS UNDER: AFTER 1 ST APRIL 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRI TTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 4. SO, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD (SU PRA), WE FIND THAT THE CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF BAD DEBTS. ITA NO. 593/PN/09 COPPER SEMIS P. LTD. A.Y. 2005-06 3 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY 2011. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 23 RD FEBRUARY 2011 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT(A)-II NASIK (4) CIT I NASIK (5) THE D.R. A BENCH, PUNE TRUE COPY BY ORDER ASSTT. REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE