ITO 13(3)(1), MUMBAI V. MARSON HOLDINGS, MUMBAI

ITA 6213/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0980 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA; NARESH BALODIA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI J.SUDHAKAR REDDY, AM & SHRI V.DURGA RAO , JM ITA NO.6213/MUM/2009 : ASST.YEAR 2006-2007 THE INCOME TAX OFFICER WARD 13(3)(1) MUMBAI. VS. M/S.MARSON HOLDINGS KANMOOR HOUSE, NARSI NATHA STREET MUMBAI 400 009. PA NO.AAAFM4873B. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI O.P.SHARMA & NARESH BALODIA RESPONDENT BY : --- NONE --- O R D E R PER V.DURGA RAO, JM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORD ER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) XXIV, MUMBAI DATED 25.09.2009 RELATES TO THE ASSESSMENT YEAR 2006-2007. NONE APPE ARED ON BEHALF OF THE ASSESSEE, INSPITE OF NOTICE. THEREFORE, WE PROCEED TO DISPOSE OFF THIS APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REP RESENTATIVE. 2. ONLY GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.50,18,930 ON ACCOUNT OF BAD DEBTS. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ADV ANCING LOANS AND TRADING IN SHARES AND SECURITIES. IN THE COURSE OF BUSINESS TH E ASSESSEE ADVANCED LOAN OF RS.50,18,930 TO M/S.SHAAN INTERWELL (I) LTD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS CALLED UPON TO FURNISH THE DETAILS OF THE SAME. ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED THAT THE A SSESSEE HAD SERVED SEVERAL NOTICES TO M/S.SHAAN INTERWELL (I) LTD. AND THEREAFTER A SU IT NO.1803 WAS FILED ON 30.09.1999 AND ANOTHER SUIT NO.1807 WAS FILED ON 12 .10.1999 IN CITY CIVIL COURT FOR THE RECOVERY OF THE SAID AMOUNT. THE PARTY WAS ALSO NOT RESPONDED THE ABOVE SUITS. FINALLY, THE ASSESSEE WRITTEN OFF THE AMOUNT AS UNRECOVERABLE IN THE BOOKS OF ACCOUNT. NOT CONVINCED BY THE EXPLANATION OFFERED B Y THE ASSESSEE, THE ASSESSING ITA NO.6213/MUM/2009 M/S.MARSON HOLDINGS. 2 OFFICER DISALLOWED THE SUM OF RS.50,18,930 AND ADDE D THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IN FIRST APPEAL, THE LEARNED CIT(A ) OBSERVED THAT THE TWIN CONDITIONS OF WRITE OFF OF BAD DEBT ARE FULFILLED B Y THE ASSESSEE BECAUSE THE ASSESSEE HAS LENT THE MONEY IN THE ORDINARY COURSE OF ITS BU SINESS WHICH IS MONEY LENDING, AND SUBSEQUENTLY, THE PARTY TO WHOM THE MONEY WAS L ENT HAS DEFAULTED AND CIVIL SUIT HAS BEEN FILED BY THE ASSESSEE FOR RECOVERY AN D EVEN THE CHEQUES ISSUED BY M/S.SHAAN INTERWELL TOWARDS INTEREST PAYMENTS HAVE ALSO BOUNCED AND MORE OVER IT HAS BECOME VERY DIFFICULT FOR THE ASSESSEE TO LOCAT E THE PARTY. IN THE OPINION OF THE LEARNED CIT(A), ALL THESE FACTS CLEARLY SHOWS THAT THE ASSESSEE HAS MADE A BONAFIDE ATTEMPT TO RECOVER THE SAME BUT HAS NOT SUCCEEDED. BY FOLLOWING THE JUDGEMENTS OF THE HONBLE BOMBAY HIGH COURT IN DCIT VS. OMAN INTERNATIONAL BANK SAOG [(2009) 313 ITR 128 (BOM.)] AND CIT VS. STAR CHEMICALS (BOM.) PVT. LTD. [(2009) 313 ITR 126 (BOM.)] , THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSES SEE. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US . 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE, PERUSED THE RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. WE FIND THAT THE JUDGEMENTS OF THE HONBLE BOMBAY HIGH COURT IN DCIT VS. OMAN INTERNATIONAL BANK SAOG [(2009) 313 ITR 128 (BOM.)] AND CIT VS. STAR CHEMICALS (BOM.) PVT. LTD. [(2009) 313 ITR 126 (BOM.)] RELIED UPON BY THE LEARNED CIT(A) ARE SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE . MORE RECENTLY, THE HONBLE SUPREME COURT IN T.R.F.LTD. VS. CIT [(2010) 323 ITR 397 (SC)] HAS HELD THAT AFTER 1.4.1989 THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAS, IN FACT, BECOME BAD IN THE PREVIOUS YEAR BUT SIMPLE WRITE OFF OF TRADING DEBT IS SUFFICIENT FOR ALLOWING DEDUCTION U/S.36(1)(VII). ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE CLAIMED DEDUCTION OF BAD DEBTS BY WRITING IT OFF IN THE BOO KS OF ACCOUNT. IN VIEW OF THE AFORE NOTED PRECEDENTS, IT IS CLEAR THAT THE LEARNE D CIT(A) WAS JUSTIFIED IN DELETING THIS ADDITION. WE, THEREFORE, UPHOLD THE VIEW TAKEN BY THE LEARNED FIRST APPELLATE AUTHORITY ON THIS SCORE. ITA NO.6213/MUM/2009 M/S.MARSON HOLDINGS. 3 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY, 2010. SD/- SD/- ( J.SUDHAKAR REDDY ) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : 29 TH JULY, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED. 4. THE CIT(A) - XXIV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.