DCIT, New Delhi V. M/s Perfect Relations Pvt. Ltd., Delhi

ITA 6864/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4996 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADAM SINGH
• Assessee Lawyers: SEKHON
• Keywords: Bad and doubtful debts; Corroborative evidences
• Section: 2

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. I. C. SUDHIR , JM ITA NO. 6864/DEL/2015 : ASSTT. YEAR : 2012 - 13 DCIT, CIRCLE - 19(2) , NEW DELHI VS M/S PERFECT REL ATIONS PVT. LTD., S - 27, 2 ND FLOOR, STAR CITY MALL, DISTRICT CENTRE, MAYUR VIHAR, PHASE - I, DELHI - 110091 (APPELLANT) (RESPONDENT) PAN NO. AA ACP6696A ASSESSEE BY : SH. M . S. SEKHON , CA REVENUE BY : SH. PADAM SINGH, SR. DR DATE OF HEARING : 24 .0 8 .201 7 DATE OF PRONOUNCE MENT : 28 .08 .201 7 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST ORDER DATED 30.10.2015 OF LD. CIT(A) - VII , NEW DELHI . 2. THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO THE DELETION OF ADDITION OF RS.34,92,326/ - MADE BY THE AO ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE AO MADE THE IMPUGNED ADDITION OF RS.34,92,3 26/ - BY OBSERVING THAT THE ASSESSEE DID NOT FURNISH DETAILS RE LATING TO THE DEBTS WRITTEN OFF. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE COPIES OF THE LEDGER ACCOUNT ITA NO . 6864 /DE L/201 5 PERFECT RELATIONS PVT. LTD. 2 WHEREIN THE DEBTS WERE WRITTEN OFF. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD BIFURCATED THE BAD DEBTS FOR DIFFERENT FINANCIAL YEARS BUT THE AO MADE THE DISALLOWANCE ONLY FOR THE FINANCIAL YEAR 2010 - 11. THE LD. CIT(A) DELETED THE DISALLOWANCE BY OBSERVING IN PARA 3.2 OF THE IMPUGNED ORDER , AS U NDER: 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR AND THE ORDER PASSED BY THE AO. AS PER THE ASSESSMENT ORDER, THE APPELLANT COMPANY HAD CLAIMED BAD DEBTS OF RS.35,22,065/ - . THE AO HAS STATED THE APPELLANT COMPANY FAILED TO SUBSTANTIATE I TS CLAIM OF BAD DEBTS TO THE TUNE OF RS.34,92,326/ - PERTAINING TO THE F.Y. 2010 - 11 AND THEREFORE THE SAME WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. THE MAIN GROUND THEREFORE FOR THE IMPUGNED DISALLOWANCE APPEARS TO BE NON FILING O F REPLY AND SUPPORTING EVIDENCE. IT IS HOWEVER NOTED THAT THE AO, HAD ON THE BASIS OF DETAILS FURNISHED BY THE APPELLANT BIFURCATED THE BAD DEBTS FOR DIFFERENT F.YS. IN WHICH THE AFORESAID DEBTS WAS OFFERED TO TAX AND HAS DISALLOWED ONLY THE DEBTS PERTAINI NG TO F.Y. 2010 - 11. THE CONTENTION OF THE AO THAT THE APPELLANT COMPANY HAD NOT FILED ANY REPLY AND SUPPORTING EVIDENCE IS THEREFORE NOT IN ORDER. IN ANY CASE, PROVISIONS OF SECTION36(1)(VII) AND 36(2)(I) OF THE ACT MAKE IT VERY CLEAR THAT IT IS NOT NECESS ARY TO ESTABLISH THAT THE DEBTS IN FACT HAVE BECOME IRRECOVERABLE. THE REQUIREMENT IS THAT IT SHOULD HAVE BEEN TAKEN IN THE REVENUE ACCOUNT IN A PREVIOUS YEAR AND SHOULD BE ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNTS. THE AR OF THE APPELLANT COMPANY HAS SUBMITTED THAT THE ENTIRE BAD DEBTS WERE OFFERED IN THE REVENUE ACCOUNT IN THE RELEVANT PREVIOUS YEARS AND HAD BEEN WRITTEN OFF IN THE YEAR UNDER APPEAL. RESPECTIVE LEDGER ACCOUNTS ITA NO . 6864 /DE L/201 5 PERFECT RELATIONS PVT. LTD. 3 EVIDENCING THE SAME HAVE ALSO BEEN FURNISHED. THE CLAIM OF BAD DEBTS IS ACC ORDINGLY ALLOWABLE AS PER THE PROVISIONS OF THE ACT. THE DISALLOWANCE OF RS.34,92,326/ - MADE BY THE AO IS THEREFORE DELETED. THESE GROUNDS OF APPEAL ARE RULED IN FAVOUR OF THE APPELLANT. 5. NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE DETAILS FOR CLAIMING THE DEBTS WRITTEN OFF, T HEREFORE, THE AO RIGHTLY MADE THE DISALLOWANCE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 6. IN HIS RIVAL SUBMISSIONS THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE DEBTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNT , BUT THE CLAIM OF THE ASSESSEE WAS ARBITRARILY DISALLOWED BY THE AO AND THE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE AO. THE RELIANCE WA S PLACED O N THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS CIT REPORTED AT (2010) 323 ITR 397. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT (A) CATEG ORICALLY STATED THAT IN THE COPIES OF LEDGER ACCOUNT, IT WAS ESTABLISHED THAT THE DEBTS WERE WRITTEN OFF. ITA NO . 6864 /DE L/201 5 PERFECT RELATIONS PVT. LTD. 4 8. ON A SIMILAR ISSUE THE HON BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS CIT (2010) 323 ITR 397 (SUPRA) HELD AS UNDER: AFTER THE AME NDMENT OF SECTION 36(1)(VII) OF THE INCOME - TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1989, IN ORDER TO OBTAIN A DEDUCTION IN RELATION TO BAD DEBTS, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE: IT IS ENO UGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 9 . WE, THEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT, DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 10 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 28 /0 8 / 2017 ) SD/ - SD/ - ( I. C. SUDHIR ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /08 /2017 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR