IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI A.D. JAIN, VICE PRESIDENT AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 5957/MUM/2016 (ASSESSMENT YEAR: 2012-13) M/S. ALCATEL LUCENT MANAGED SOLUTIONS INDIA DLF CYBER GREENS, 14TH & 15TH FLOOR TOWER C, PHASE-III, GURGAON HARYANA 122002 VS. DCIT, CIRCLE - 9(1) MUMBAI PAN AAHCA1341C APPELLANT RESPONDENT APPELLANT BY: SHRI SALIL KAPOOR & SHRI SHAGUN MAHAJAN RESPONDENT BY: SHRI AWUNGSHI GIMSON DATE OF HEARING: 25.09.2019 DATE OF PRONOUNCEMENT: 17.12.2019 O R D E R PER RAJESH KUMAR, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)- 16, MUMBAI DATED 21.07.2016 AND IT RELATES TO A.Y. 2012-13. 2. THE ISSUE RAISED IN GROUND NO. 1 IS GENERAL IN NATU RE AND NEEDS NO ADJUDICATION. THE ISSUE RAISED IN GROUND NOS. 2 & 3 IS AGAINST THE ORDER OF THE CIT(A) UPHOLDING THE DISALLOWANCE OF `30,66,21,626/ - MADE BY THE AO IN RESPECT OF BAD DEBTS. GROUND NOS. 2 & 3 ARE EXTRACTED BELOW FOR THE SALE OF READY REFERENCE : - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING DISALLOWANCE OF A SUM OF RS.30,66,21,626/- IN RESPECT OF BAD DEBTS AS MADE B Y THE DEPUTY COMMISSIONER OF INCOME TAX 9(1)91), MUMBAI (LEAR NED AO) WITHOUT APPRECIATING THE DETAILED WRITTEN SUBMISSIO NS FILED BY THE APPELLANT ON ALLOWABILITY OF SUCH AMOUNT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS WRONGLY INTERPRETED THE PROVISIO NS OF SECTION ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 2 36(1)(VII) READ WITH SECTION 36(2) OF THE ACT AND A LSO ERRED IN AFFIRMING THE VIEW OF THE LEARNED AO WHICH IS MISCO NCEIVED, ERRONEOUS, UNJUSTIFIED AND INCORRECT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF PROVIDING SERVICE OF OPERATIONS, MANAGEMENT AND MAI NTENANCE OF TELECOMMUNICATION NETWORKS. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED RS. 38,34 ,42,562/- AS BAD DEBTS COMPRISING `22,21,54,111/- ON ACCOUNT OF SETTLEMENT OF CLAIMS AND APPENDED A NOTE NO. 31 TO FINANCIAL STATEMENTS TO THAT EFFECT AND 17,00,00,000/- NOT ACKNOWLEDGED BY RELIANCE ENTITIES AS DEBTS. THE ASS ESSEE ALSO FURNISHED COPY OF SETTLEMENT DEED VIDE LETTER DATED 24.12.2011 WHI CH PROVIDES FOR ISSUING CREDIT NOTE TO RELIANCE ENTITIES FOR AN AMOUNT OF 3 8.44 CRORES OUT OF THE TOTAL OUTSTANDING SUM OF `80.33 CRORES. THE SETTLEMENT DE ED FURTHER STATES THAT THE ASSESSEES INVOICE COULD NOT BE CLEARED BY RELIANCE ENTITIES AS THERE WERE SOME DIFFERENCES BETWEEN THE PARTIES WITH RESPECT TO PER FORMANCE TO BE ACHIEVED AND TIME FRAME THEREOF AND ALSO DISPUTE WITH RESPECT TO CLAIM OF EQUIPMENTS MANAGED TO BE CHARGED. THE ASSESSEE ALSO FURNISHED YEAR-WISE SUMMARY OF OPENING BALANCE AND CLOSING BALANCE OF RELIANCE CO MMUNICATION LTD. AND RELIANCE TELECOM LTD. BOTH RELIANCE ENTITIES ARE SH AREHOLDERS OF THE ASSESSEE COMPANY AND ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH RELIANCE COMMUNICATION LTD. TO PROVIDE MANAGED SERVICE OF OP ERATION CUM MAINTENANCE AND MANAGEMENT OF RELIANCE NETWORK W.E.F. 09.05.200 8. THE ASSESSEE HAS ISSUED BILLS TO THE FOLLOWING RELIANCE ENTITIES FOR THE WORK EXECUTED IN A.Y. 2012- 13: - ENTITY TOTAL INVOICE VALUE (`) RCOM 58,51,60,395/- RTL 10,41,86,660/- RIL 11,40,94,665/- TOTAL 80,34,41,720/- 4. THE ASSESSEE COULD NOT REALISE THE SAID BILLS DESPI TE HECTIC FOLLOW UP WITH RELIANCE COMMUNICATION LTD. AND RELIANCE TELECOMMUN ICATION LTD. AND ULTIMATELY A SETTLEMENT AGREEMENT WAS REACHED WITH THOSE COMPANI ES THAT THOSE COMPANIES WILL NOT MAKE PAYMENT OF `38,34,42,562/- OUT OF THE TOTA L CLAIM OF `80,34,41,720/-. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT THE ASSE SSEE WAS INCORPORATED ON ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 3 27.05.2008, WHICH WAS ESTABLISHED AS A JOINT VENTUR E BETWEEN ALCATEL LUCENT INDIA LTD. HOLDING 67% IN THE SHARE CAPITAL AND RELIANCE COMMUNICATION INFRASTRUCTURE LTD. HOLDING 33% IN SHARE CAPITAL. THE AO AFTER CON SIDERING THE CONTENTION OF THE ASSESSEE CAME TO THE CONCLUSION THAT THE SAID BAD D EBTS OF `21 CRORES AND NOT INCLUDING `17 CRORES, AGGREGATING TO `38,34,42,562/ - WERE NOTHING BUT SHAM TRANSACTIONS AND COLOURABLE DEVICE ON THE GROUND TH AT THE ASSESSEE IS INFLUENCED BY ITS SHAREHOLDERS WHO HAVE SUBSTANTIAL CONTROL OVER THE SAID ENTITIES AND ACCORDINGLY ADDED TO THE INCOME OF THE ASSESSEE VIDE ORDER DATE D 24.02.2015 UNDER SECTION 143(3) OF THE ACT. 5. IN THE APPELLATE PROCEEDINGS THE LEARNED CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE CONTEN TIONS AND SUBMISSIONS MADE BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BY HO LDING AND OBSERVING AS UNDER: - 6.1.4. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. THE APPELLANT HAD NOT DENIED THE FACT THAT BOTH RELIANCE COMPANY LTD. AND RELIANCE TELECOM LTD . WERE RELATED PARTIES. EVEN THE AUDITORS OF THE COMPANY IN FORM 3 CD HAVE MENTIONED U/S 41A(2)(B), THE NAME OF M/S. RTL AND M/S. RCOM AS RE LATED PARTIES OF THE ASSESSE COMPANY. THE LD. A.O. HAD RELIED UPON THE J UDGMENT OF SUPREME COURT IN THE CASE OF SOVEREIGN SECURITIES PVT. LTD. THE HON'BLE HIGH COURT IN PARA 4 OF ITS ORDER HAS HELD AS UNDER: '4. IT IS NOT POSSIBLE TO ACCEPT THESE CONTENTIONS FOR MORE THAT REASON. THE ATTEMPT IS TO HAVE A RE-APPRECIATION AND RE -APPRAI SAL OF THE FACTUAL MATERIALS ON RECORD. IT HAS BEEN CURRENTLY FOUND BY THE ASSESSING OFFICER, COMMISSIONER OF INCOME-TAX (APPEALS) AND INCOME-TAX APPELLATE TRIBUNAL THAT THE WHOLE CLAIM WAS BASED ON FIRSTLY TERMING T HE OTHER PRIVATE LIMITED ENTITY AS A SUB BROKER. DURING THE ASSESSMENT PROCE EDINGS, IT HAS BEEN REFERRED TO AS BUSINESS LOSS. THE ATTEMPT WAS TO EN ABLE THE COMPANIES TO AVOID PAYING TAX ON PROFITS WHICH ARE TAXABLE. THAT CONCLUSION HAS BEEN ARRIVED AT BY PROBING AND PIERCING TRANSACTION AND DEALINGS. IF THE DEBTS WERE INDEED WRITTEN OFF AS BAD IN THE ACCOUNTS, THE N, THERE WAS NO REASON FOR CONFLICTING VERSIONS EMERGING FROM THE RECORD. BOTH THE AUTHORITIES HAVE FOUND THAT THE ATTEMPT WAS TO AVOID LIABILITY OF IN COME-TAX ON TAXABLE PROFIT, YOU MAY PRESENT AN APPEAL NAMELY SOVEREIGN NARIMAN BROKING (P) LTD. WHEREAS SOVEREIGN NARIMAN FINVEST LIMITED WAS ACTIN G AS THE ASSESSEE'S COMPANY 'S SUB BROKER. THAT COMPANY WAS SUPPOSED TO PAY THE ASSESSE COMPANY RS.37.93 LACS TILL MAY 2003. FROM JUNE 2003 TO AUGUST 2003 THE COMPANY MADE CERTAIN PAYMENTS AND IN AUGUST, 2003 W HEN THE AMOUNT RECEIVABLE FROM SUB-BROKER WAS RS.26.93 LACS IT FIN ALLY CONVEYED TO THE ASSESSE COMPANY THAT IT IS NOT POSSIBLE TO PAY ANY FURTHER MONEY. IT IS AT THAT STAGE THE ASSESSE COMPANY CLAIMED THAT IT WAS A BAD DEBT. THE ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 4 TRIBUNAL REFERRED TO THE FACT THAT ONE MR. HARSHAD P. CHOKSHI IS HOLDING SUBSTANTIAL SHARES IN THE ASSESSEE -COMPANY AND ALS O IN SNFPL. THIS SHOWS THAT THERE WAS A BOOK ENTRY WHEREIN THE ASSESSEE CL AIMED BAD DEBTS AS A MEANS TO REDUCE TAXABLE PROFITS. THE REASONS ASSIGN ED IN PARA 12 OF THE ORDER OF THE TRIBUNAL THEREFORE, ARE ESSENTIALLY IN THE BACKDROP OF THE PECULIAR FACTS AND CIRCUMSTANCES EMERGING FROM THE RECORD. IN SUCH CIRCUMSTANCES, WE DO NOT FIND ANY SUBSTANTIAL QUEST IONS OF LAW ARISING FOR DETERMINATION AND CONSIDERATION IN THIS APPEAL. THI S IS NOT A CASE WHERE THERE IS A CONTROVERSY OR THE DEBT WRITTEN AS BAD I N THE ACCOUNTS BEING REQUIRED TO BE ESTABLISHED AS INDEED BAD DEBT. THIS IS A CONTROVERSY WHERE THE CLAIM OF BAD DEBTS WAS RAISED TO AVOID TAX LIAB ILITY. THAT HAVING BEEN PROVED AND THE ENTIRE VERSION IS TERMED AS A MERE E YE-WASH, THAT THIS IS NOT A FIT CASE WHERE SUBSTANTIAL QUESTIONS OF LAW ARISE FOR DETERMINATION IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY MERITS AND IS D ISMISSED.' 6.1.5 WHILE DECIDING THE ISSUE, REGARDING ALLOW ABI LITY OF BAD DEBTS IN THE CASES OF RELATED PARTIES, THE HON'BLE JURISDICTIONA L HIGH COURT HAS ALSO CONSIDERED THE JUDGMENT OF HON'BLE APEX COURT IN TH E CASE OF TRF LTD. VS. CIT (SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE HIGH COURT, BAD DEBTS DISALLOWED BY THE AO IS CONFI RMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. HOWEVER, THE AO IS DIREC TED TO TAKE THE FIGURE OF BAD DEBTS FOR AN AMOUNT OF RS.30,66,21,626/- AS CLA IMED BY THE APPELLANT IN ITS PROFIT & LOSS ACCOUNT INSTEAD OF RS.3 8,34,4 2,562/-. AS A RESULT, APPELLANT WILL GET A RELIEF OF RS.7,68,20,936/-. 6. THE LEARNED A.R. SUBMITTED BEFORE THE BENCH THAT T HE ASSESSEE COMPANY IS JOINT VENTURE OF ALCATEL LUCENT INDIA LTD. HOLDING 67% SHARES AND RELIANCE COMMUNICATION INFRASTRUCTURE LTD. HOLDING 33% SHARE S AND DENIED THE OBSERVATIONS OF THE AUTHORITIES BELOW AS INCORRECT THAT RELIANCE COMMUNICATION LTD. AND RELIANCE TELECOM LTD. WERE SHAREHOLDERS OF THE ASSESSEE COMPANY. THE LEARNED A.R. SUBMITTED THAT ALL THE THREE ENTITIES, VIZ. RELIANCE COMMUNICATION LTD., RELIANCE TELECOM LTD. AND ASSESSEE ARE SEPARATE LEG AL ENTITIES OPERATING INDEPENDENTLY. THE LEARNED A.R. ALSO SUBMITTED THAT ALCATEL LUCENT INDIA LTD. IS HOLDING 67% OF SHARES OF THE ASSESSEE AND THEREFORE IT HAD SIGNIFICANT CONTROL OVER THE ASSESSEE. THE LEARNED A.R. SUBMITTED THAT DESPI TE THE DISPUTE OF `80,34,47,720/-, THE ASSESSEE COULD RECOVER SUBSTAN TIAL AMOUNT AND ONLY `38,34,42,562/- BECAME BAD AND ULTIMATELY WRITTEN OFF. WHILE REBUTTING THE OBSERVATIONS OF THE LEARNED CIT(A) AND AO REGARDING THE ADDRESS APPEARING ON THE LETTER HEAD OF THE ASSESSEE COMPANY , THE LD. AR SU BMITTED THAT WAS THAT OF RELIANCE INFRASTRUCTURE LTD. THE LEARNED A.R. STAT ED THAT THE ADDRESS OF THE ASSESSEE WAS ONE WHERE ITS REGISTERED OFFICE WAS LO CATED AND MERELY BY USING THE ADDRESS OF AN ENTITY IT CANNOT BE SAID THAT THE ASS ESSEE IS INFLUENCED BY THE ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 5 SAID ENTITY. WITHOUT PREJUDICE, THE LEARNED A.R. AR GUED THAT THE ENTITY, WHOSE ADDRESS WAS BEING USED, IS NEITHER SHAREHOLDER OF T HE ASSESSEE NOR ITS CUSTOMER. THE LEARNED A.R. ARGUED THAT RELIANCE COMMUNICATION LTD. AND RELIANCE TELECOM LTD. WERE MAJOR CUSTOMERS OF THE ASSESSEE. OUT OF THE TOTAL REVENUE REALISED BY THE ASSESSEE DURING THE YEAR, APPROXIMATELY 99% OF THE REVENUE WAS CONTRIBUTED BY RELIANCE ENTITIES. THE LEARNED A.R. SUBMITTED TH AT HAD THE SETTLEMENT NOT REACHED ,THIS WOULD HAVE CAUSED HUGE LOSS TO THE AS SESSEE IN THE FORM OF IMPACT ON ASSESSEES BUSINESS OPERATIONS DUE TO THE UNCONG ENIAL BUSINESS RELATION WITH THE RELIANCE ENTITIES. THE LEARNED A.R. SUBMITTED T HAT IT IS NOT THE CASE OF THE REVENUE THAT SERVICES IN RESPECT TO WHICH DEBT WAS DUE WERE NOT RENDERED. NEITHER IT HAS BEEN ALLEGED THAT THE CONDITIONS PRESCRIBED IN SECTION 36(1)(VIIA) AND 36(2) WERE NOT SATISFIED. THE LEARNED A.R. CONTENDED THAT MERELY BECAUSE, THE DEBTS WERE DUE FROM SISTER CONCERNS CANNOT FORM THE BASIS FOR HOLDING THE SAME WERE SHAM TRANSACTIONS. THE LEARNED A.R., LAYING MORE ST RESS ON THE FACT THAT DURING THE FOUR YEARS COMMENCING FROM A.Y. 2009-10 TO A.Y. 201 2-13, THE ASSESSEE HAS OFFERED A REVENUE OF `829 CRORES AND THE SAME HAS B EEN ACCEPTED BY THE REVENUE. THE LEARNED A.R. CONTENDED THAT ONCE THE R EVENUE FROM RENDERING SUCH SERVICES WERE ACCEPTED AS GENUINE TRANSACTIONS, ANY LOSS DUE TO NON-RECOVERY OF THE SAID AMOUNT CANNOT BE HELD TO BE NON-GENUINE AN D RE-CHARACTERISED AS A SHAM TRANSACTIONS. THE LEARNED A.R. ARGUED THAT THE AO H AS FAILED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE DEBTS, WHICH WERE WRITTEN OFF, WERE NOT GENUINE. THE LEARNED A.R. RELIED HEAVILY ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT (2010) 323 ITR 397 WHER EIN THE HON'BLE SUPREME COURT HAS HELD THAT ONCE THE DEBT IS WRITTEN OFF AS BAD T HEN THE ASSESSEE IS NOT REQUIRED TO PROVE THAT THE DEBT HAS BECOME BAD DURING THE YE AR. THE LEARNED A.R. THEREFORE PRAYED THAT THE APPEAL OF THE ASSESSEE MAY KINDLY B E ALLOWED BY SETTING ASIDE THE ISSUE THE LEARNED CIT(A). 7. THE LEARNED D.R. RELIED HEAVILY ON THE ORDERS OF TH E AUTHORITIES BELOW BY SUBMITTING THAT THE AMOUNTS WRITTEN OFF DURING THE YEAR WERE NOTHING BUT SHAM TRANSACTIONS WHICH WERE PRIMARILY DONE TO REDUCE T HE TAX LIABILITY OF THE ASSESSEE. THE LEARNED D.R. SUBMITTED THAT SINCE THE ASSESSEE AND OTHER COMPANIES ARE RELATED PARTIES AND THEREFORE THEIR CLAIM HAVE BEEN WORKED OUT IN SUCH A MANNER SO THAT THE TAX LIABILITY OF ASSESSEE IS REDUCED BY CLAIMING SUCH HUGE LOSS. SO FAR AS ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 6 THE SETTLEMENT DEED DATED 24.12.2011 WAS CONCERNED, THE LEARNED D.R. SUBMITTED THAT ALL THESE ARE INTERNAL DOCUMENTS EXECUTED BY V ARIOUS INTERESTED PARTIES AND THEREFORE NO CREDENCE CAN BE LENT TO SUCH TYPE OF D OCUMENTATIONS. THE LEARNED D.R., RELIED UP ON THE DECISION IN THE CASE OF M/S. SOVEREIGN SECURITIES PVT. LTD. VS. ITO IN ITA NO. 2715/MUM/2009 FOR A.Y. 2004-05 ORDE R DATED 10.04.2012, WHICH WAS CONFIRMED BY THE HON'BLE HIGH COURT, AS REPORTE D IN (2014) 48 TAXMANN.COM 105 WHEREIN THE DECISION THE DECISION RELIED UPON B Y THE ASSESSEE IN THE CASE OF T.R.F. LTD. VS. CIT (2010) 323 ITR 397 (SC) HAS BEE N REFERRED TO. FINALLY THE LEARNED D.R. SUBMITTED THAT IN VIEW OF THESE FACTS AND JUDICIAL PRECEDENTS, THE APPEAL OF THE ASSESSEE MAY KINDLY BE DISMISSED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE COMPANY IS INCORPORATED VIDE JOINT VENTURE DEED DATED 07.05.2008 BETWEEN ALCATE L LUCENT INDIA LTD. HOLDING 67% SHARES AND RELIANCE COMMUNICATION INFRASTRUCTUR E LTD. HOLDING 33% SHARES. THE RELIANCE ENTITIES WERE THE MAJOR CUSTOMERS OF T HE ASSESSEE AS THE ASSESSEE DERIVES REVENUE TO THE TUNE OF 99% FROM THESE ENTIT IES RELATED TO RELIANCE DURING THE FOUR YEAR COMMENCING FROM A.Y. 2009-10 TO A.Y. 2012-13 AMOUNTING TO `829 CRORES. IT IS ALSO NOT THE CASE THAT THE ASSESSEE H AS NOT RENDERED ANY SERVICE TO THE RELIANCE ENTITIES. DISPUTE AROSE BETWEEN THE ASSESS EE AND THE RELIANCE ENTITIES TO THE TUNE OF `80,34,47,720/-, WHICH WAS SETTLED VIDE DEED OF SETTLEMENT DATED 24.12.2011 WHEREIN IT HAS BEEN PROVIDED THAT RELIAN CE ENTITIES, I.E. RELIANCE COMMUNICATION LTD AND RELIANCE TELECOM LTD. WOULD P AY `42 CRORES IN INSTALMENTS BY MARCH, 2012 AND THE BALANCE WOULD NOT BE PAID BY THE RELIANCE ENTITIES AND THE ASSESSEE COMPANY SHOULD ISSUE CREDIT NOTES TO THE R ESPECTIVE PARTIES. ACCORDINGLY A SUM OF `38,34,42,562 WAS AGREED NOT TO BE PAID TO THE ASSESSEE BY RELIANCE COMMUNICATION LTD AND RELIANCE TELECOM LTD . OUT OF THE SAID AMOUNT, `9,44,67,515/- WAS ADJUSTED AGAINST CURRENT YEAR RE VENUE OF THE ASSESSEE COMPANY AND `7,68,20,936/- WAS ADJUSTED TOWARDS DEF ERRED REVENUE PERTAINING TO THE CUSTOMERS WHILE `21,21,54,111/- PERTAINED TO D EALINGS DONE PRIOR TO MARCH 31, 2011 WHICH HAS BEEN DISCLOSED SEPARATELY AS SE TTLEMENT OF CLAIM IN THE PROFIT & LOSS ACCOUNT. THE AO REJECTED THE CLAIM OF THE AS SESSEE BY MAKING DISALLOWANCE OF BAD DEBTS `38,34,42,562/- BY HOLDING THAT THE AM OUNTS WRITTEN OFF WERE SHAM TRANSACTIONS AND WAS A METHODOLOGY TO REDUCE TAX LI ABILITY IN THE HANDS OF THE ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 7 ASSESSEE. THE LEARNED CIT(A) PARTLY ALLOWED THE APP EAL OF THE ASSESSEE BY SUSTAINING THE ADDITION TO THE EXTENT OF `30,66,21, 626/- AND RELIEF WAS ALLOWED TO THE EXTENT OF `7,68,20,936/-. IN THE PRESENT CASE B EFORE US THE REVENUE HAS NOT DISPUTED THE DEALINGS BY THE ASSESSEE COMPANY WITH RELIANCE ENTITIES WHICH HAVE BEEN OFFERED BY THE ASSESSEE TO TAX. WE ARE ALSO NO T IN AGREEMENT WITH THE FINDINGS OF THE CIT(A) THAT THE SAID TRANSACTIONS W ERE SHAM TRANSACTIONS ESPECIALLY WHEN THE REVENUE OFFERED BY THE ASSESSEE HAS ACCEPT ED BY THE REVENUE AUTHORITIES. MOREOVER, THE ISSUE IS SQUARELY COVERE D BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. (SUPRA) WH EREIN THE HON'BLE SUPREME COURT HAS HELD THAT ONCE THE DEBTS ARE WRITTEN OFF AS IRRECOVERABLE, THAT IS SUFFICIENT AND ASSESSEE IS NOT REQUIRED TO PROVE THAT THE DEBT HAS ACTUALLY BECOME BAD DURING THE YEAR. THE CASE LAW RELIED UPON BY THE LE ARNED D.R. IN THE CASE OF SOVEREIGN SECURITIES PVT. LTD. (SUPRA) WHEREIN THE BAD DEBTS WERE CLAIMED BY THE ASSESSEE FOR THE AMOUNT DUE FROM THE BROKERS IN RES PECT OF SHARES DEALINGS AND SHARE BROKERAGE AND AMOUNT WAS COMPUTED AS INCOME O F THE ASSESSEE AND THE SAME WAS NOT OFFERED FOR TAX. THUS THE AO HELD THAT THE CONDITIONS OF SECTION 36(1)(VII) R.W.S. 36(2) OF THE ACT WERE NOT SATISFI ED. BUT THIS IS NOT THE CASE BEFORE US AND ACCORDINGLY THIS DECISION OF THE HON'BLE SUP REME COURT AS RELIED UP ON BY THE REVENUE IS NOT APPLICABLE TO THE CASES CASE. I N VIEW OF THESE FACTS AND CIRCUMSTANCES, IN OUR CONSIDERED VIEW THE ORDER OF THE LEARNED CIT(A) CANNOT BE SUSTAINED AS THE ASSESSEE HAS WRITTEN OFF THE BAD D EBTS AS SAME HAVE BEEN OFFERED TO TAX BY THE ASSESSEE IN THE EARLIER YEAR AND ACCE PTED BY THE REVENUE AND THEREFORE CLEARLY COVERED BY THE DECISION OF THE HO N'BLE APEX COURT IN THE CASE OF T.R.F. LTD. (SUPRA). WE, THEREFORE, RESPECTFULLY FO LLOWING THE DECISION OF THE HON'BLE SUPREME COURT SET ASIDE THE ORDER OF THE CIT(A) WIT H THE DIRECTION TO AO TO DELETE THE DISALLOWANCE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2019. SD/- (A.D. JAIN) SD/- (RAJESH KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 17 TH DECEMBER, 2019 ITA NO. 5957/MUM/2016 ALCATEL LUCENT MANAGED SOLUTIONS INDIA P. LTD. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -16, MUMBAI 4. THE PR.CIT - 9, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.