ADDL CIT 10(1), MUMBAI V. HSBC INVEST DIRECT ACADEMY FOR INSURANCE AND FINANCE (I) LTD, MUMBAI

ITA 6273/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4071 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 27-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 6273/MUM/2011 ASSESSMENT YEAR: 2008-09 ACIT 10(1) 455, AAYAKAR BHAVAN 4 TH FLOOR, M.K. MARG, MUMBAI-400 020 VS. M/S. HSBC INVEST DIRECT ACADEMY FOR INSURANCE & FINANCE (I) LTD. DHANASINGH PROCESSOR PREMISES J.B. NAGAR ANDHERI KURLA ROAD, ANDHERI(E) MUMBAI-59 PAN: AAICS 2722 A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K. MAHAPATRA ASSESSEE BY : SHRI D.V. LAKHANI DATE OF HEARING : 27.06.2013 DATE OF PRONOUNCEMENT : 19.07.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -21, MUMBAI DATED 01.06.2011 FOR THE ASS ESSMENT YEAR 2008-09. 2. GROUND NO. 1 RELATES TO THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF BAD DEBTS OF RS.42,58,487/- AND THE SAME ALLOWED BY THE LD.CIT(A). 2.1 BRIEFLY STATED, THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF INSURANCE TRAINING AND OTHER RELATED ACTIVITY HAD WRITTEN OF IN THE P&L ACCOUNT A SUM OF RS.42,58,487/- AS BAD DEBTS. HOWEVER, IN THE ASSESS MENT FRAMED U/S 143(3), THE AO HAD DISALLOWED THE CLAIM OF BAD DEBT WRITTEN OFF AS THE ASSESSEE HAD NOT PROVIDED ANY DOCUMENTARY EVIDENCE FOR SUPPORTING THE SAID CL AIM. ON APPEAL, THE LD.CIT(A) DELETED THE IMPUGNED DISALLOWANCE/ADDITION MADE BY THE AO ON THE REASON THAT THE ASSESSEE COULD NOT HAVE SATISFIED THE AO OTHER THAN BY FURNISHING THE LEDGER COPY OF THE ACCOUNT OF THE CONCERNED PARTIES AND THE AO COU LD HAVE VERIFIED THE BALANCE IN ITA NO. 6273/MUM/2011 M/S. HSBC INVEST DIRECT ACADEMY FO R INSURANCE & FINANCE (I ) LTD ASSESSMENT YEAR: 2008-09 2 THE LEDGER ACCOUNT FROM THE ENTRIES IN THE BOOKS OF ACCOUNTS THE ULTIMATE ENTRY MADE IN THE P&L ACCOUNT. AGGRIEVED BY THE IMPUGNED DECISION, THE REVENUE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. 2.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT THE AS SESSEE WROTE OFF THE SAID SUM OF RS.42,58,487/- UNDER CONSIDERATION IN ITS BOOKS OF ACCOUNT AND CLAIMED A BAD DEBT. IT IS OBSERVED THAT THE ASSESSEE HAS FILED THE DETA ILS OF BAD DEBTS AND THE ASSESSMENT YEARS IN WHICH THE BAD DEBT HAS BEEN OFF ERED AS INCOME IN THOSE YEARS. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE HAS FILED LEDGER COPY OF ACCOUNTS OF THE BAD DEBT PARTIES DURING ASSESSMENT PROCEEDINGS. THE LEDGER COPY OF ACCOUNTS ALSO EVIDENTLY PROVES THAT THE AMOUNTS RECEIVABLE F ROM THE PARTIES ARE DEBITED IN THE CONCERNED PARTIES ACCOUNT. ALSO, IT IS NOT THE CASE OF THE REVENUE THAT THE CONDITIONS LAID DOWN IN SECTION 37(1)(VII) READ WITH SECTION 3 6(2) ARE NOT FULFILLED BY THE ASSESSEE. IN VIEW OF THAT MATTER, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD.CIT(A) DELETING THE IMPUGNED DISALLOWANCE MADE B Y THE AO ON THIS COUNT. GROUND NO. 1 IS DISMISSED. 3. GROUND NO. 2 RELATES TO TREATING OF RS.24,14,838 /- , THE INTEREST RECEIVED ON LINE OF CREDITS, AS INCOME FROM OTHER SOURCES BY TH E AO AND THE SAME TREATED AS BUSINESS INCOME BY THE LD.CIT(A). 3.1 BRIEFLY STATED, THE ASSESSEE IN SCHEDULE J OF T HE P&L ACCOUNT HAD SHOWN INTEREST INCOME EARNED ON LINE OF CREDIT AT RS.24,1 4,838/- AS BUSINESS INCOME. IN THE ASSESSMENT FRAMED U/S 143(3), THE AO TREATED THE SA ID INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS THE SAME WAS NOT DER IVED FROM THE BUSINESS ACTIVITY OF THE ASSESSEE COMPANY. ON APPEAL, THE LD.CIT(A) H AD DIRECTED THE AO TO ASSESS THE INCOME UNDER THE HEAD BUSINESS INCOME AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FINANCING /GIVING LOANS AND IT HAD GIV EN THE LINE OF CREDIT LOAN FACILITY TO VARIOUS PARTIES. AGGRIEVED BY THE IMPUGNED DECISION , THE REVENUE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. ITA NO. 6273/MUM/2011 M/S. HSBC INVEST DIRECT ACADEMY FO R INSURANCE & FINANCE (I ) LTD ASSESSMENT YEAR: 2008-09 3 3.2 HAVING HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL ON RECORD, IT IS NOT DISPUTED THAT THE ASSESSEE IS ENGAGED IN THE BU SINESS OF FINANCING/GIVING LOANS, AMONG OTHER THINGS. THE P&L ACCOUNT SCHEDULE J SHOW S THAT THE INTEREST INCOME EARNED ON LINE OF CREDIT WAS AT RS.24,14,838/-. THI S ACTIVITY THUS IS A PART OF BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE AND THERE BEING A DIRECT NEXUS BETWEEN THE INTEREST EARNED AND THE BUSINESS CARRIED ON BY THE ASSESSEE. LD.CIT(A), IN OUR OPINION, IS FULLY JUSTIFIED IN HOLDING THAT THE SAI D INTEREST EARNED ON THE LINE OF CREDIT IS A BUSINESS INCOME OF THE ASSESSEE. IN VIEW OF TH AT MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN DIRECTIN G THE AO TO ASSESS THE IMPUGNED INCOME UNDER THE HEAD BUSINESS INCOME AND THE SAME IS UPHELD. GROUND NO.2 IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.07.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.