ACIT (OSD), MUMBAI V. S.M. DYECHEM, LTD, MUMBAI

ITA 6750/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8031 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.6750/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR :2006-07 THE ACIT-8(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. S.M. DYECHEM LTD., 136, GREAT WESTERN BUILDING, NAGINDAS MASTER ROAD EXTN. FORT, MUMBAI-400 001 #) ! ./ %* ./ PAN/GIR NO. : AAACS 7371K ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI PANKAJ KUMAR ,-)+ / . / RESPONDENT BY: NONE / 01! / DATE OF HEARING :04.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :08.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-18, MUMBAI DT.26.7.2011 PERTAINING TO A.Y.2 006-07. ITA NO. 6750/M/2011 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION OF RS. 1,73,21, 046/- OUT OF DISALLOWANCE OF DEBIT BALANCES WRITTEN OFF OF RS. 2 ,27,88,192/-. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEB ITED AN AMOUNT OF RS. 2,27,88,192/- IN THE PROFIT AND LOSS ACCOUNT AS DE BIT BALANCES WRITTEN OFF. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF WRITE OFF. THE ASSESSEE ONLY SUPPLIED THE NAMES OF THE PARTIES WIT HOUT GIVING ANY JUSTIFICATION FOR THE WRITE OFF OF DEBIT BALANCES. THE AO PROCEEDED BY MAKING AN ADDITION OF RS. 2,27,88,192/-. 4. BEFORE THE LD. CIT(A), THE ASSESSEE CLAIMED THAT THE AMOUNT WRITTEN OFF INCLUDED ADVANCE TAX FOR A.Y. 1991-92 A MOUNTING TO RS. 1,73,21,046/- WHICH HAS BEEN OFFERED AS INCOME IN A .Y. 2010-11 WHEN THE SAID ADVANCE TAX WAS REFUNDED BY THE DEPARTMENT . ACCEPTING THIS CONTENTION OF THE ASSESSEE, THE LD. CIT(A) DIRECTED THE AO TO VERIFY THE FACT THAT THE AMOUNT OF RS. 3,04,44,971/- BEING REF UND OF TAX HAS BEEN OFFERED FOR TAXATION IN A.Y. 2010-11 AND IF FOUND C ORRECT ALLOW THE WRITE OFF OF RS. 1,73,21,046/-. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STATED THAT THE ADVANCE TAX WRITTEN OFF BY THE ASSESSEE COULD NOT BE CONSIDERED AS BUSINESS EXPENDITURE AND THEREFORE THE FINDING OF THE LD. CI T(A) IS ERRONEOUS. 7. AS NONE APPEARED ON BEHALF OF THE ASSESSEE INSPI TE OF THE FACT THAT ON EARLIER OCCASION I.E. ON 21.1.2014, ADJOURNMENT WAS TAKEN BY ITA NO. 6750/M/2011 3 ASSESSEES COUNSEL WHO WAS WELL WITHIN THE KNOWLEDG E OF THE SUBSEQUENT DATE OF HEARING I.E. TODAY, WE PROCEED EX-PARTE. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. UNDOUBTEDLY, THE LD. CIT(A) HAS ADMITTED THE CLAIM OF WRITE OFF OF ADVANCE TAX FOR A.Y. 1991-92. BY ANY STRETCH OF IM AGINATION, ADVANCE TAX CANNOT BE CONSIDERED AS BUSINESS EXPENDITURE BE CAUSE INCOME TAX IS A PERSONAL EXPENDITURE. IRRESPECTIVE OF THE FACT THAT THE ASSESSEE MAY HAVE SHOWN THE REFUND AS ITS INCOME IN A.Y. 2010-11, THI S CANNOT CHANGE THE COLOR OF THE WRITE OFF OF ADVANCE TAX. WE, THEREFO RE FIND THE FINDINGS OF THE LD. CIT(A) ERRONEOUS. THE INCOME TAX CANNOT B E ALLOWED AS WRITE OFF. WE, ACCORDINGLY REVERSE THE FINDINGS OF THE L D. CIT(A) AND ALLOW REVENUES APPEAL. 9. BEFORE CLOSING, IN THE INTEREST OF JUSTICE, IF T HE ASSESSEE HAS SHOWN THE REFUND OF INCOME TAX AS ITS INCOME AS CLAIMED B Y IT IN A.Y. 2010-11, THE ASSESSEE IS FREE TO TAKE ANY REMEDIAL MEASURES AS PER THE PROVISIONS OF LAW. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014 '4 / 3( ! 5 6'7 8.8.2014 3 / & SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 6' DATED : 8 TH AUGUST, 2014 . . ./ RJ , SR. PS ITA NO. 6750/M/2011 4 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 8(0 8(0 8(0 8(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :& ,0 , , / DR, ITAT, MUMBAI 6. &; < / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// = == = / > > > > % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI