LOTUS LABORATORIES PVT. LTD., MUMBAI V. ITO 9(2)(2), MUMBAI

ITA 626/MUM/2011

• Counselvise Citation: 62619914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 18-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: R S KHANDELWAL
• Keywords: Bad and doubtful debts

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 626 /MUM/2011 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2007-08) LOTUS LABORATORIES PVT. LIMITED, 102, A.S. DIAS BUILDING, 268/272, DR. CAWASJI HORMUSJI STREET, MUMBAI 400 002. ) ) ) ) / VS. INCOME TAX OFFICER 9(2)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. #+ !./ PAN : AAACL0708A ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) +, / 0 ! / APPELLANT BY : SHRI R.S. KHANDELWAL -.+, / 0 ! / RESPONDENT BY : SHRI O.P. SINGH !)$ / / // / DATE OF HEARING : 18-07-2013 12* / / DATE OF PRONOUNCEMENT : 04-09-2013 '3 / O R D E R PER P.M. JAGTAP, A.M . : .. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. DY. CIT 20, MUMBAI DTD. 10-11-2010 FOR A.Y. 2007- 08. 2. THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE ADDITION OF RS. 19,44,270/- MADE BY THE A.O. AND CONFIRMED BY THE L D. CIT(A) ON ACCOUNT OF OPENING STOCK. ITA 626/MUM/2011 2 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF PHARMA PROD UCTS. DURING THE YEAR UNDER CONSIDERATION, NO MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE. HOWEVER, EXPORTS WERE STATED TO HAVE BEEN MADE OF THE PRODUCTS MANUFACTURED IN THE EARLIER YEAR. IN THE P&L ACCOUN T, THE ASSESSEE HAD DECLARED SUCH SALES AS WELL AS SALE OF DEPB AGGREGA TING TO RS. 22.88 LACS AND AFTER CLAIMING VARIOUS EXPENSES TOTALING TO RS. 31. 67 LACS, THE NET LOSS OF RS. 8.79 LACS WAS DECLARED IN THE RETURN OF INCOME FILE D FOR THE YEAR UNDER CONSIDERATION ON 23-10-2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN OPENING STOCK OF FINISHED GOODS OF RS. 19,44,270/- BUT THERE WAS NO SUCH CLOSING ST OCK SHOWN IN THE IMMEDIATELY PRECEDING YEAR. IN THIS REGARD, THE EX PLANATION OFFERED BY THE ASSESSEE WAS THAT GOODS WORTH RS. 19,44,270/- WERE SOLD IN THE IMMEDIATELY PRECEDING YEAR TO PROTECH BIOSYSTEMS P. LTD. FOR FU RTHER EXPORT BUT SINCE THE EXPORT ORDER WAS CANCELLED BY THE PROTECH BIOSYSTEM S P. LTD., THE EXPORTS COULD NOT TOOK PLACE. IT WAS SUBMITTED THAT THE GO ODS SOLD TO PROTECH BIOSYSTEMS P. LTD. THUS WERE RETURNED BACK DURING T HE YEAR UNDER CONSIDERATION ON IST APRIL, 2006 AND THE SAME WERE SUPPLIED TO ANOTHER CONCERN M/S POLYGON FOR EXPORT ON 18-4-2006. IT WA S CONTENDED THAT THE GOODS RETURNED BY PROTECH BIOSYSTEMS P. LTD. WERE T REATED AS OPENING STOCK BY THE ASSESSEE OF THE YEAR UNDER CONSIDERATION AND THE SALE THEREON WAS ALSO DULY DECLARED AS INCOME. THE A.O., HOWEVER, FOUND THAT THE NEW ORDER FOR EXPORT OF GOODS WAS PLACED BY POLYGON ON 6-3-2006. ACCORDING TO HIM, IT WAS BEYOND IMAGINATION THAT THE SAID ORDER WAS ACCEPTED BY THE ASSESSEE WHEN IT WAS NOT EVEN AWARE OF THE REJECTION OF GOODS. HE A LSO WAS NOT CONVINCED WITH THE TREATMENT GIVEN BY THE ASSESSEE TO THE REJECTED GOODS AS OPENING STOCK WITHOUT ROUTING THE SAME THROUGH THE P&L ACCOUNT. IN THIS REGARD, THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE REJECT ED GOODS HAVING BEEN RECEIVED AFTER THE END OF THE IMMEDIATELY PRECEDING YEAR, THE SAME WERE STRAIGHT-AWAY TAKEN IN THE OPENING STOCK WAS NOT FO UND ACCEPTABLE BY THE ITA 626/MUM/2011 3 A.O. HE HELD THAT THE ASSESSEE WAS AWARE OF THE RE JECTION OF GOODS BY PROTECH BIOSYSTEMS P. LTD. IN THE EARLIER YEAR ITSELF AND T HE SAME SHOULD HAVE BEEN ROUTED THROUGH THE P&L ACCOUNT OF THAT YEAR, WHICH WAS THE RIGHT COURSE. ACCORDINGLY, HE DID NOT ACCEPT THE OPENING STOCK OF RS. 19,44,270/- SHOWN BY THE ASSESSEE AND MADE AN ADDITION TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ADDITION OF RS. 19,44,270/- MADE BY THE A.O. BY REJECTING ITS CLAIM OF OPENING STOCK WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A) AND THE SUBMISSIONS MADE BEFORE THE A.O. ON THIS ISSUE WERE REITERATED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A). IT WAS FURTHER CONTENDED ON BEHALF OF THE ASSESSEE THAT EVEN IF TH E GOODS RETURNED HAD BEEN TAKEN INTO P&L ACCOUNT OF EARLIER YEAR, THE EFFECT ON PROFIT WOULD HAVE BEEN THE SAME, BUT THE A.O. FAILED TO APPRECIATE THIS PO SITION. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE A.O. ON THIS ISSUE OBSERVI NG THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THAT THE G OODS SUPPLIED TO PROTECH BIOSYSTEMS P. LTD. WERE ACTUALLY RETURNED BY THE SA ID PARTY OR RECEIVED BY THE ASSESSEE. HE HELD THAT THERE WAS NO MATERIAL TO ES TABLISH THE RETURN OF SUCH GOODS TO THE ASSESSEE AND SUPPLY OF THE SAME TO ANO THER PARTY DURING THE YEAR UNDER CONSIDERATION. 5. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATT ENTION TO THE P&L ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION PLACED AT PAGE 1 OF HIS PAPER BOOK TO POINT OUT THAT THE GOODS WORTH RS . 19,44,270/- SUPPLIED BY THE ASSESSEE TO PROTECH BIOSYSTEMS P. LTD. FOR EXPO RT PURPOSE IN THE EARLIER YEARS WERE DULY DECLARED BY THE ASSESSEE IN THE P&L ACCOUNT FOR THAT YEAR. HE SUBMITTED THAT AFTER THE SAID SALE, THE ASSESSEE WAS LEFT WITH NO CLOSING STOCK OF FINISHED GOODS IN A.Y. 2006-07 AND THE GOO DS WERE SUPPLIED IN THE YEAR UNDER CONSIDERATION TO M/S POLYGON ONLY FROM T HE GOODS RETURNED BY PROTECH BIOSYSTEMS P. LTD. WHICH WERE SUPPLIED IN T HE EARLIER YEAR. HE ITA 626/MUM/2011 4 SUBMITTED THAT SINCE THE SAID GOODS WERE RETURNED B ACK ON 1-4-2007, THE ASSESSEE INCLUDED THE RETURNED GOODS AS THE OPENING STOCK. HE CONTENDED THAT HAD THE ASSESSEE ACCOUNTED FOR THE SALES RETUR NED IN THE EARLIER YEAR AND INCLUDED THE SAME IN THE CLOSING STOCK AS SUGGESTED BY THE A.O., THE EFFECT WOULD HAVE BEEN THE SAME AS WAS ACHIEVED BY THE ASS ESSEE BY INCLUDING THE SAME DIRECTLY IN THE OPENING STOCK. AS REGARDS THE SUPPLY OF GOODS TO PROTECH BIOSYSTEMS P. LTD. IN THE EARLIER YEAR, THE RETURN OF GOODS SO SUPPLIED BY THE SAID PARTY AND FURTHER SUPPLY OF THE GOODS SO RETUR NED TO M/S POLYGON, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SUFFICIENT EVIDENCE WAS PRODUCED BY THE ASSESSEE BEFORE THE A.O. AS WELL AS THE LD. CIT (A) TO ESTABLISH THESE FACTS. HE TOOK US THROUGH THE COPIES OF THE RELEVANT DOCUM ENTS PLACED IN HIS PAPER BOOK AND POINTED OUT THAT THE BILL RAISED BY THE AS SESSEE ON PROTECH BIOSYSTEMS P. LTD. ON 27-2-2006 (COPY PLACED AT PAG E 3 OF THE PAPER BOOK) WAS SUFFICIENT TO SHOWS THAT 102330 BOXES OF LORPIL S TABLETS WERE SUPPLIED BY THE ASSESSEE FOR RS. 19,44,270/- DURING THE EARLIER YEAR. HE ALSO INVITED OUR ATTENTION TO COPY OF THE LEDGER ACCOUNT OF THE SAID PARTY TO SHOW THAT THE SAID SALE MADE ON 27-2-2006 WAS DULY ACCOUNTED FOR BY TH E ASSESSEE IN ITS BOOKS OF ACCOUNT. HE ALSO INVITED OUR ATTENTION TO THE C OPY OF LETTER WRITTEN BY PROTECH BIOSYSTEMS P. LTD. TO THE SUPDT. OF CENTRAL EXCISE, PUNE DIVISION, PUNE (COPY PLACED AT PAGE 7 OF THE PAPER BOOK) TO POINT OUT THAT A REQUEST WAS MADE BY THE SAID PARTY TO THE EXCISE DEPARTMENT TO PERMIT THEM TO TAKE BACK THE CONTAINER LYING AT JNPT PORT AS A RESULT O F CANCELLATION OF THE ORDER BY THE PURCHASER. HE SUBMITTED THAT THE SAID PERMI SSION WAS GRANTED BY THE SUPDT. OF CENTRAL EXCISE ON 27-3-2006 AS PER THE CO PY OF LETTER PLACED AT PAGE 9 OF THE PAPER BOOK AND SINCE THE ASSESSEE HAD MEAN WHILE RECEIVED ANOTHER ORDER FOR SUPPLY OF THE SAME GOODS FROM M/S POLYGON , THE GOODS RETURNED WERE EXPORTED BY THE ASSESSEE AT THE INSTANCE OF M/ S POLYGON AS IS EVIDENT FROM THE COPIES OF CORRESPONDING BILLS PLACED AT PA GE 15 & 18 OF THE PAPER BOOK. HE CONTENDED THAT THERE WAS THUS SUFFICIENT EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE EXPORT OF G OODS WAS MADE DURING THE ITA 626/MUM/2011 5 YEAR UNDER CONSIDERATION FROM THE GOODS RETURNED BY ANOTHER PARTY WHICH WERE SUPPLIED IN THE IMMEDIATELY PRECEDING YEAR AND THERE WAS NO REASON FOR THE AUTHORITIES BELOW TO REJECT THE CLAIM OF THE AS SESSEE OF THE GOODS RETURNED MERELY BECAUSE THE SAID RETURNED GOODS WERE DIRECTL Y INCLUDED BY THE ASSESSEE IN THE OPENING STOCK WITHOUT ROUTING THE S AME THROUGH P&L ACCOUNT. HE CONTENDED THAT THE FINAL EFFECT OF THE TRANSACTI ONS, WHETHER ROUTED THROUGH P&L ACCOUNT OR DIRECTLY INCLUDED IN THE OPENING STO CK, WAS THE SAME AND THE ADDITION ON THIS ISSUE THUS IS NOT SUSTAINABLE. 6. THE LD. D.R. STRONGLY RELIED ON THE ORDERS OF TH E AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. HE SU BMITTED THAT THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE TO THE R ETURNED GOODS AS OPENING STOCK WAS NOT CORRECT AND THERE WAS ALSO NO EVIDENC E TO ESTABLISH THAT THE GOODS RETURNED WERE EXPORTED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS EXPLAINED BY THE L D. COUNSEL FOR THE ASSESSEE, 102330 BOXES OF LORPILS TABLETS WERE SUPPLIED BY TH E ASSESSEE TO PROTECH BIOSYSTEMS P. LTD. UNDER INVOICE DATED 27-2-2006 (C OPY PLACED AT PAGE 3 OF THE PAPER BOOK) FOR RS. 19,44,270/- FOR THE PURPOSE OF EXPORT AND THE SAID SALE WAS DULY ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AS IS EVIDENT FROM THE COPY OF P&L ACCOUNT PLACED AT PAGE 1 OF ASSESSEES PAPER BOOK. THE EXPORT ORDER RECEIVED BY M/S PROTECH BIO SYSTEMS P. LTD., HOWEVER, WAS CANCELLED BY THE CONCERNED BUYER AND CONSEQUENT LY A REQUEST WAS MADE BY PROTECH BIOSYSTEMS P. LTD. TO THE EXCISE DEPTT. TO ALLOW THEM TO TAKE BACK THE CONTAINER LYING AT JNPT PORT VIDE LETTER DATED 17-3-2006 (COPY PLACED AT PAGE 7 OF THE ASSESSEES PAPER BOOK). THE SAID REQ UEST WAS ACCEPTED BY THE EXCISE DEPTT. VIDE LETTER DATED 27-3-2006 (COPY PLA CED AT PAGE 9 OF ASSESSEES PAPER BOOK) AND THEREAFTER THE GOODS RETURNED BY PR OTECH BIOSYSTEMS P. LTD. WERE EXPORTED BY THE ASSESSEE AS PER THE ORDER OF P OLYGON DURING THE YEAR ITA 626/MUM/2011 6 UNDER CONSIDERATION (COPIES OF INVOICES ARE PLACED AT PAGE 15 & 18 OF THE ASSESSEES PAPER BOOK). THE SAID EXPORT WAS ALSO S UPPORTED BY THE COPIES OF BILLS AND OTHER DOCUMENTS, THE COPIES OF WHICH ARE PLACED ON RECORD IN THE PAPER BOOK FILED BY THE ASSESSEE. HAVING REGARD TO ALL THESE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE, WE FIND THAT THE INITIAL SALE OF GOODS MADE BY THE ASSESSEE IN THE EARLIER YEAR, THE RETURN OF GOODS SO SOLD AND FRESH EXPORT OF THE GOODS SO RETURNED IN THE YEAR UNDER CONSIDERATI ON WAS DULY SUPPORTED BY DOCUMENTARY EVIDENCE AND THERE WAS NO JUSTIFIABLE R EASON TO DOUBT OR DISPUTE THE RETURN OF GOODS SO SOLD BY THE ASSESSEE MERELY BECAUSE THE SAID GOODS WERE DIRECTLY ENTERED BY THE ASSESSEE IN THE OPENIN G STOCK OF THE YEAR UNDER CONSIDERATION INSTEAD OF ROUTING THE SAME THROUGH P &L ACCOUNT OF THE EARLIER YEAR. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR T HE ASSESSEE, THE EFFECT OF BOTH THESE TREATMENTS WOULD HAVE BEEN THE SAME AND WHEN THE EXPORT OF GOODS MADE BY THE ASSESSEE IN THE YEAR UNDER CONSID ERATION WAS DULY DECLARED BY IT AS INCOME AND THE SAID EXPORT WAS PO SSIBLE ONLY OUT OF RETURNED GOODS WHICH WERE SUPPLIED IN THE EARLIER YEAR IN TH E ABSENCE OF ANY STOCK OF FINISHED GOODS AVAILABLE WITH THE ASSESSEE, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE OF THE RETURNED GOODS INCLUDED IN THE OPENING STOCK SHOULD BE ACCEPTED. IN THAT VIEW OF THE MATTER, WE DELETE TH E ADDITION MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON THIS ISSUE AND A LLOW GROUND NO. 1 OF ASSESSEES APPEAL. 8. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS. 2,93,595/- MADE BY THE A.O. AND CONFIRMED BY THE LD . CIT(A) BY DISALLOWING THE ASSESSEES CLAIM FOR WRITE OFF OF OPENING STOCK . 9. THE OPENING STOCK OF RS. 2,93,595/- REPRESENTING PACKING MATERIAL SUCH AS ALUMINUM FOIL, CORRUGATED BOXES AS WELL AS OBSOLETE RAW MATERIAL WAS WRITTEN OFF BY THE ASSESSEE. THE CLAIM OF THE ASSE SSEE OF HAVING WRITTEN OFF THE STOCK AS OBSOLETE RAW MATERIAL, PACKING MATERIA L ETC. WAS NOT ACCEPTED BY THE A.O. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE. ITA 626/MUM/2011 7 HE ALSO OBSERVED THAT THE SAME MIGHT HAVE BEEN DISP OSED OF BY THE ASSESSEE WITHOUT ACCOUNTING FOR THE PROCEEDS REALIZED. ACCO RDINGLY THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF OPENING STOCK WRITTEN OFF WAS DISALLOWED BY THE A.O. ON APPEAL, THE LD. CIT(A) CONFIRMED TH E DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE FOR THE SAME REASONS AS GIVEN BY THE A.O. 10. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR AT TENTION TO THE SCHEDULE -9 OF THE BALANCE SHEET PLACED AT PAGE 2 OF THE ASSESS EES PAPER BOOK TO POINT OUT THAT THE CLOSING STOCK OF RS. 2,93,595/- WAS AV AILABLE WITH THE ASSESSEE AS ON 31-3-2006. HE CONTENDED THAT THE SAID STOCK C OMPRISING OF STOCK OF OLD PACKING MATERIAL AS WELL AS RAW MATERIAL WHICH HAD BECOME OBSOLETE AFTER EXPIRY OF SHORT LIFE WAS WRITTEN OFF BY THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION AS THE BUSINESS WAS ALREADY CLOSED AN D THE SAME SHOULD BE ALLOWED AS DEDUCTION AS RIGHTLY CLAIMED BY THE ASSE SSEE. 11. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT NO EVIDENCE WHATSOEVER HAS BEEN PRODUCED BY THE ASSESSEE EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE THE TRIBUNAL IN SUPPORT OF ITS CLAIM OF HAVI NG WRITTEN OFF OF THE STOCK OF PACKING MATERIAL AND RAW MATERIAL AND IN THE ABSENC E OF THE SAME, THE CLAIM OF THE ASSESSEE ON THIS ISSUE CANNOT BE ALLOWED. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE MATERIAL AVAILABLE ON RECORD, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE DIS ALLOWANCE MADE BY THE A.O. ON ACCOUNT OF ASSESSEES CLAIM OF HAVING WRITT EN OFF OF THE OPENING STOCK OF PACKING MATERIAL AND RAW MATERIAL IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTIATE THE SAME. GRO UND NO. 2 OF ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. ITA 626/MUM/2011 8 13. THE ISSUE RAISED IN GROUND NO. 3 OF ASSESSEES APPEAL RELATES TO THE DISALLOWANCE OF RS. 2,27,709/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ASSESSEES CLAIM FOR SUNDRY BA LANCES WRITTEN OFF. 14. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD WRITTEN OFF THE SUNDRY BALANCES OF RS. 2,27,709/-. DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE ASSESSEE, HOWEVER, FAILED TO SATISF ACTORILY ESTABLISH THAT THE CONDITIONS STIPULATED IN SECTION 36(2) OF THE INCOM E TAX ACT, 1961 WERE SATISFIED IN ORDER TO CLAIM THE DEDUCTION ON ACCOUN T OF BAD DEBT WRITTEN OFF. THE A.O., THEREFORE, DISALLOWED THE CLAIM OF THE AS SESSEE ON ACCOUNT OF BAD DEBT WRITTEN OFF. ON APPEAL, THE LD. CIT(A) CONFIR MED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT AVAILABLE ON RECORD. THE LD. COUNSEL FOR T HE ASSESSEE HAS DRAWN OUR ATTENTION TO THE DETAILS OF SUNDRY BALANCES WRITTEN OFF GIVEN AT PAGE 49 OF THE ASSESSEES PAPER BOOK AND A PERUSAL OF THE SAME SHO WS THAT THE SAID BALANCES MAINLY REPRESENTED AMOUNTS RECEIVABLE ON ACCOUNT OF VARIOUS TAXES SUCH AS SALES TAX, CENTRAL EXCISE TAX AND SERVICE TAX ETC. THESE BALANCES THUS DO NOT REPRESENT TRADE DEBTS AND THE SAME THEREFORE CANNOT BE ALLOWED AS BAD DEBTS WRITTEN OFF U/S 36(2) OF THE ACT. AS REGARDS THE A LTERNATIVE CONTENTION OF THE ASSESSEE THAT THE SAID AMOUNTS HAVING BECOME IRRECO VERABLE AS A RESULT OF CLOSURE OF THE BUSINESS OF THE ASSESSEE, DEDUCTION SHOULD BE ALLOWED ON ACCOUNT OF LOSS INCURRED TO THE BUSINESS, WE DIRECT THE A.O. TO CONSIDER THIS ALTERNATIVE CLAIM OF THE ASSESSEE ON MERIT IN ACCOR DANCE WITH LAW AFTER VERIFYING THE RELEVANT FACTS. GROUND NO. 3 OF ASSE SSEES APPEAL IS ACCORDINGLY TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA 626/MUM/2011 9 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4 5 &) %4 / 63 #$ 7 / 89 ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPT. 2013. . '3 / 12* :')5 04-09-2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; :') DATED 04-09-2013 $.&).!./ RK , SR. PS '3 / -&6; <;* '3 / -&6; <;* '3 / -&6; <;* '3 / -&6; <;*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. = () / THE CIT(A)- 20, MUMBAI 4. = / CIT 9, MUMBAI 5. ;$@ -&&) , , / DR, ITAT, MUMBAI I BENCH 6. A% B / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER, !.; -& //TRUE COPY// C C C C/ // /!8 !8 !8 !8 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI