Sparrowhawk International Channels India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6278/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8009 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 17-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIMA BERNWAL
• Assessee Lawyers: VIKASH GOYAL
• Keywords: Business income; Opportunity of being heard; Bad and doubtful debts; Corroborative evidences; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G : NEW DELHI BEFORE SHRI R.S. SYAL, AM & MS SUCHITRA KAMBLE, JM ITA NO.6278/DEL/2012 ASSESSMENT YEAR : 2008-09 SPARROWHAWK INTERNATIONAL CHANNELS INDIA PVT. LTD., 602, ANTRIKSH BHAWAN, KG MARG, NEW DELHI. PAN; AAACH6943E VS. DCIT, CIRCLE-9(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIKASH GOYAL, CA DEPARTMENT BY : MS ANIMA BERNWAL, SR. DR DATE OF HEARING : 17.05.2016 DATE OF PRONOUNCEMENT : 18.05.2016 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 31.10.2012 IN RELATION TO THE ASSESSMENT YEAR 2008-09. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST NOT ALLOWING BAD DEBTS AMOUNTING TO RS.1,24,14,060/- ON THE GROUND THAT TH IS DEDUCTION WAS NOT CLAIMED IN THE RETURN OF INCOME. THE FACTS APROPOS THIS ISSUE ARE THAT THE ITA NO.6278/DEL/2012 2 ASSESSEE CLAIMED DEDUCTION AMOUNTING TO RS.1.24 CRO RE ON ACCOUNT OF BAD DEBTS, WHICH WAS NOT ALLOWED BY THE AO ON THE GROUN D THAT THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME. THE LD. CIT(A) U PHELD THE ADDITION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND FROM THE REPRODUCTION OF THE ASSESSEES SUBMISSION IN THE ASSESSMENT ORDER THAT A PROVISION WAS MADE FOR BAD DEBTS DURING THE FINANCIAL YEAR 2003-04 AMOUNTING T O RS.31.61 LAC AND DURING THE FINANCIAL YEAR 2004-05 AMOUNTING TO RS.9 2.52 LAC, WHICH WERE NOT CLAIMED AS DEDUCTION. THIS AMOUNT REPRESENTED SUBSCRIPTION RECEIVABLE FROM MEN. COPIES OF ACCOUNT FOR FINANCI AL YEARS 2003-04 AND 2004-05 ALONG WITH TAX COMPUTATIONS WERE ENCLOSED B EFORE THE AO SHOWING THAT NO DEDUCTION WAS CLAIMED IN RESPECT OF SUCH AMOUNTS IN EARLIER YEARS. THIS SHOWS THAT THE AMOUNT IN QUEST ION REPRESENTS THE REVENUES CREDITED TO THE PROFIT & LOSS ACCOUNT IN E ARLIER YEARS WHICH WERE NOT REALIZED AND WRITTEN OFF DURING THE YEAR F OR WHICH NO DEDUCTION WAS EVER CLAIMED IN THE PAST. THE HONBLE SUPREME COURT IN THE CASE OF 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 BECOME BAD IN ITA NO.6278/DEL/2012 3 THE PREVIOUS YEAR AND A SIMPLE WRITE OFF IS SUFFICI ENT TO CLAIM DEDUCTION U/S 36(1)(VII). IN VIEW OF THE FACT THAT THE ASSES SEE HAS ACTUALLY WRITTEN OFF THE AMOUNT OF BAD DEBTS IN ITS BOOKS OF ACCOUNT FOR THE INSTANT YEAR, BUT, OMITTED TO CLAIM DEDUCTION IN THE RETURN OF INCOME, NO DISALLOWANCE CAN BE MADE, WHICH IS OTHERWISE LEGALLY ADMISSIBLE TO T HE ASSESSEE. AS REGARDS THE AOS POINT OF VIEW ABOUT NOT ALLOWING D EDUCTION DUE TO ABSENCE OF SUCH A CLAIM IN THE RETURN OF INCOME, WE FIND THAT THE HONBLE SUPREME COURT IN GOETZE (INDIA) LTD. VS. CIT (2006) 284 ITR 323 (SC) HAS HELD THAT THOUGH THE AO HAS NO POWER TO ENTERTA IN CLAIM MADE OTHERWISE THAN BY WAY OF REVISED RETURN, BUT, THE P OWERS OF THE APPELLATE AUTHORITIES ARE NOT AFFECTED BY IT. IN VIEW OF THI S JUDGMENT OF THE HONBLE SUPREME COURT, IT IS CLEAR THAT THE TRIBUNAL HAS PO WER TO CONSIDER THE CLAIM MADE BEFORE THE AO OTHERWISE THAN THROUGH THE RETURN OF INCOME. TAKING A HOLISTIC VIEW OF THE MATTER, WE ARE INCLIN ED TO ALLOW DEDUCTION ON ACCOUNT OF BAD DEBTS AMOUNTING TO RS.1.24 CRORE WHI CH IS OTHERWISE AVAILABLE TO THE ASSESSEE IN TERMS OF T.R.F LTD. (SC) (SUPRA) . 4. THE ONLY OTHER GROUND TAKEN BY THE ASSESSEE IN I TS APPEAL IS AGAINST DISALLOWANCE OF EXPENSES AMOUNTING TO RS.77,42,445/ -. THE FACTS OF THIS ITA NO.6278/DEL/2012 4 GROUND ARE THAT THE ASSESSEE CLAIMED CERTAIN EXPENS ES AMOUNTING TO RS.77.74 LAC, WHICH WERE DISALLOWED BY THE AO ON TH E GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED ON. THE LD. CIT(A) C ONFIRMED THE ADDITION BY NOTICING THAT NO EVIDENCE WAS FILED IN SUPPORT O F SUCH EXPENSES. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE WAS E ARLIER INTO BUSINESS. DUE TO CERTAIN CHANGE IN THE GOVERNMENT POLICY, ITS BU SINESS ACTIVITIES COULD NOT TAKE PLACE DURING THE YEAR. NOTWITHSTANDING TH E CARRYING ON OF THE MAIN ACTIVITY, THE ASSESSEE RECEIVED SOME AMOUNT A S DECODER RENT, WHICH WAS OFFERED AS `BUSINESS INCOME IN THE YEAR IN QUE STION AS WAS BEING DONE IN THE PAST. THIS SHOWS THAT THE ASSESSEES B USINESS WAS CONTINUING DURING THE YEAR, ALBEIT PARTLY. THAT BEING THE POS ITION, THERE CAN BE NO REASON TO DISALLOW THE EXPENSES CLAIMED IN THE PROF IT & LOSS ACCOUNT ON THE REASON OF DISCONTINUATION OF BUSINESS. SINCE T HE NECESSARY DETAILS ABOUT THE INCURRING OF EXPENSES AND THE SUPPORTING EVIDENCE, ETC., ARE NOT READILY AVAILABLE, WE DEEM IT APPROPRIATE TO SET AS IDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING THE DEDUCTIBILITY OR ITA NO.6278/DEL/2012 5 OTHERWISE OF EXPENSES ON MERITS, AFTER ALLOWING A R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.05.201 6. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 18 TH MAY, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.