ITO 10(2)(4), MUMBAI V. HATHWAY RAJESH MULTI CHANNEL P.LT, MUMBAI

ITA 6345/MUM/2013

• Counselvise Citation: 634519914 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY BASKAR JAKKA
• Keywords: Bad and doubtful debts; Revised return; Provision of bad debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.6345/M/2013 ASSESSMENT YEAR: 2010-11 ITO-10(2)(4), 431, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020 VS. M/S. HATHWAY RAJESH MULTI CHANNEL PVT. LTD., 41/2-PARVATI SADAN, TILAK ROAD, GHATKOPAR EAST, MUMBAI - 77 PAN: AABCR 8471Q (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI UDAY BASKAR JAKKA, SR. D.R. DATE OF HEARING : 02.06.2015 DATE OF PRONOUNCEMENT : 30.06.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 06.08.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. DESPITE SERVICE OF NOTICE, NO ONE HAS COME PRESENT ON BEHALF OF THE AS SESSEE, HENCE, THE MATTER HAS BEEN HEARD EX-PARTE. THE REVENUE THROUGH ITS GROUNDS OF APPEAL HAS CONTE STED THE DECISION OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF BAD DEBTS WRITT EN OFF. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF CABLE OPERATOR AND ISP SERVICE PROVIDER. IN EARLIER ASSESSMENT YEAR I.E. A.Y.2009-10 THE ASSESSEE HAD DEBITED PROVISION FOR DOUBTFUL DEBTS OF RS.36,00,000/- IN P&L ACCOUNT. LATER THIS PROVISION FOR DOUBTFUL DEBTS WAS ITA NO.6345/M/2013 M/S. HATHWAY RAJESH MULTI CHANNEL PVT. LTD. 2 DISALLOWED BY THE ASSESSEE BY FILING RETURN OF INCO ME. IN THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. A.Y. 2010-11 THE ASSESSEE DEBITED RS.30,00,000/- AS PROVISION FOR DOUBTFUL DEBTS IN P&L ACCOUNT. THIS A MOUNT WAS NOT DISALLOWED WHILE FILING THE RETURN OF INCOME. THE ASSESSEE DUR ING THE YEAR HAD WRITTEN OFF BAD DEBTS FOR RS.35,68,583/-. BUT THIS AMOUNT WAS N OT DEBITED IN THE P&L ACCOUNT AS IT WAS ALREADY DEBITED IN THE PREVIOUS Y EAR IN THE P&L ACCOUNT. THESE BAD DEBT OF RS.35,68,583/- WAS WRITTEN OFF IN DEBTORS ACCOUNT. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) DISALLOWED PROVISION OF BAD DEBTS FOR RS.30,00,000/- WHICH THE ASSESSEE HA D NOT DISALLOWED WHILE FILING THE RETURN OF INCOME. SIMILARLY THE BAD DEBT CLAIM WHICH THE ASSESSEE CLAIMED DURING ASSESSMENT PROCEEDINGS WAS REJECTED BY A.O., AS THE ASSESSEE HAD NOT FILED ANY REVISED RETURN, FOLLOWING GOETZE (INDIA) P. LTD. VS. CIT 284 ITR 323. 3. IN APPEAL, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT HAD WRITTEN OFF BAD DEBTS OF RS.35,68,583/- WHICH IT AD JUSTED FROM PROVISION OF BAD DEBT. THIS BAD DEBT WAS NOT CLAIMED BY THE APPELLAN T WHILE FILING THE RETURN, HENCE A.O. HAS NOT ALLOWED THIS DURING THE ASSESSMENT PRO CEEDINGS. CONSEQUENTLY IF THE APPELLANT CLAIMS BAD DEBTS, IF IT IS WRITTEN OFF IN THE BOOKS OF ACCOUNT THEN IT IS ELIGIBLE TO CLAIM DEDUCTION U/S.36(1)(VII). THIS VI EW IS SUPPORTED BY THE SUPREME COURT DECISION IN THE CASE OF T.R.F. LTD. VS. CIT 3 23 ITR 397. BUT HERE THE QUESTION ARISING IS THAT IF APPELLANT HAD NOT CLAIMED THE DE DUCTION WHILE FILING THE RETURN, IF THE CLAIMS IS MADE BEFORE THE A.O, DURING THE ASSES SMENT PROCEEDINGS CAN APPELLANT'S BAD DEBTS BE ALLOWED DURING APPELLATE P ROCEEDINGS. THIS ISSUE HAS COME INTO CONSIDERATION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS P. LTD. 349 ITR 336 RELYING ON A THREE JUDGE BENCH DECISIONS OF SUPREME COURT IN NATIONAL THERMAL POWER CO. LTD. VS . CIT 229 ITR 383, CIT VS. KANPUR COAL SYNDICATE 53 ITR 225 AND JUTE CORPORATI ON OF INDIA VS. CIT 187 ITR 688 AND DISTINGUISHING TOE JUDGE BENCH DECISION OF SUPR EME COURT IN GOETZE (INDIA)P LTD. VS. CIT 284 ITR 323 WHERE IN IT IS HELD THAT ' EVEN ASSUMING THAT THE ASSESSING OF IS NOT ENTITLED TO GRANT A DEDUCTION ON THE BASIS O F A LETTER REQUESTING AN AMENDMENT TO THE RETURN FILED, THE APPELLATE AUTHOR ITIES ARE ENTITLED TO CONSIDER THE CLAIM AND TO ADJUDICATE THE SAME. IT IS NOT NEC ESSARY THAT THE DEDUCTION BE ALLOWED ONLY IF A REVISED RETURN OF INCOME WOULD HA VE BEEN FILED'. FOLLOWING THE ABOVE DECISION, APPELLANT IS ELIGIBLE FOR CLAIM OF BAD DEBTS U/S.36(1)(VII) AS IT HAS ITA NO.6345/M/2013 M/S. HATHWAY RAJESH MULTI CHANNEL PVT. LTD. 3 WRITTEN OFF IN THE BOOKS OF ACCOUNTS THOUGH CLAIM W AS REJECTED BY THE A.O. ON THE GROUND THAT APPELLANT HAD NOT FILED THE REVISED RET URN. FOLLOWING THE DECISION OF GOETZE (INDIA)P LTD. ON EXAMINATION OF THE DETAILS, AS APPELLANT IS ELIGIBLE FOR THE CLAIM OF BAD DEBTS, APPELLANT CLAIM IS ALLOWED. THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF BAD DEBTS TO THE APPELLANT. THIS GROUND OF APPEAL IS ALLOWED. 4. A PERUSAL OF THE ABOVE FINDINGS OF THE LD. CI T(A) REVEALS THAT HE HAS ACCEPTED THE CLAIM OF THE ASSESSEE FOLLOWING THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREH OLDERS PVT. LTD. (SUPRA), WHEREIN THE HONBLE BOMBAY HIGH COURT, WHILE RELYIN G UPON THE VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND OTHER HO NBLE HIGH COURTS, HAS HELD THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE AO IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APP ELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM IS NOT BARRED. THE HONBLE BOMBAY HIG H COURT WHILE RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF JUTE CORPORATION OF INDIA LIMITED VS. CIT 1991 SUPP (2) SCC 744 = (1991) 187 ITR 688 HAS OBSERVED THAT THE POWER OF THE APPELLAT E COMMISSIONER IS COTERMINOUS WITH THAT OF THE INCOME TAX OFFICER AND AN APPELLATE AUTHORITY WHILE HEARING APPEAL AGAINST THE ORDER OF THE SUBOR DINATE AUTHORITY, HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DEC IDING THE QUESTIONS BEFORE IT, SUBJECT TO THE RESTRICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVIS ION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORD INATE AUTHORITY MAY HAVE IN THE MATTER. AN ASSESSEE IS ENTITLED TO RAISE NOT M ERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHO RITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT CANNOT, HOWEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILAB LE WHEN THE RETURN WAS ITA NO.6345/M/2013 M/S. HATHWAY RAJESH MULTI CHANNEL PVT. LTD. 4 FILED BUT COULD NOT HAVE BEEN RAISED AT THAT STAGE OR THE GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW. THE WORDS COULD NOT HAVE BEEN RAISED MUST BE CONSTRUED LIBERALLY AND N OT STRICTLY. IT IS OPEN TO THE ASSESSEE TO CLAIM A DEDUCTION BEFORE THE APPELLATE AUTHORITY WHICH COULD NOT HAVE BEEN CLAIMED BEFORE THE AO. THE HONBLE BOMBA Y HIGH COURT HAS FURTHER OBSERVED THAT THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF GOETZE (INDIA) LIMITED V. CIT (2006) 157 TAXMAN 1 , REGARDING THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED RETURN WAS LI MITED TO THE POWERS OF THE ASSESSING AUTHORITY AND THE SAID JUDGMENT DOES NOT IMPINGE ON THE POWER OR NEGATE THE POWERS OF THE APPELLATE AUTHORITIES TO E NTERTAIN SUCH CLAIM BY WAY OF ADDITIONAL GROUND. THE LD. DR HAS NOT CITED ANY DECISION CONTRARY TO T HE ABOVE PROPOSITION OF LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT. WE THEREFORE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. PRONOUNCED IN OPEN COURT ON 30.06.2015 SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30 JUNE, 2015. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.