JIMTEX P. LTD, MUMBAI V. DCIT CEN CIR 19,

ITA 7021/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8962 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 04-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 11-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Keywords: Business income; Bad and doubtful debts
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I , MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL M EMBER ITA NO. 7021/MUM/2010 ASSESSMENT YEAR : 2002-03 ITA NO. 7022/MUM/2010 ASSESSMENT YEAR : 2003-04 ITA NO. 5944/MUM/2011 ASSESSMENT YEAR : 2003-04 M/S. JIMTEX PVT. LIMITED C/O. SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265 PRINCESS STREET MUMBAI-400 002. PAN NO. AAACJ 1953 E DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -39 MUMBAI. (APPELLANT) VS. (RESPONDENT) ASSESSEE BY : SHRI S.L. JAIN DEPARTMENT BY : SHRI A.C. TEJPAL DATE OF HEARING : 12.9.2012 DATE OF PRONOUNCEMENT : 21.9.2012 O R D E R PER RAJENDRA SINGH, AM: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERE NT ORDERS DATED 27.8.2010, 27.8.2010 AND 8.8.2011 FOR T HE ASSESSMENT YEARS 2002-03, 2003-04 AND 2003-04. THE DISPUTES RAISE D IN THIS APPEAL RELATE TO ALLOWABILITY OF DEDUCTION UNDER SECTI ON 80HHC IN ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 2 RESPECT OF DEPB INCOME AND EXCISE DUTY CREDIT AND ALLOWAB ILITY OF BUSINESS LOSS. 2. APPEAL OF THE ASSESSEE IN ITA NO.7021/MUM/2010 ( ASSESSMENT YEAR 2002-03 ) :- IN THIS APPEAL THE ONLY DISPUTE RAISED BY THE ASSESSEE IS R EGARDING ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC IN RESPECT O F DEPB INCOME AND CREDIT OF EXCISE DUTY. THE FACTS IN BRIEF ARE THAT THE AO DURING ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD CRE DITED DEPB INCOME OF RS.42,87,649/- AND EXCISE DUTY DEEMED CRE DIT OF RS.92,27,672/-. THE TOTAL TURNOVER OF THE ASSESSEE WAS RS.33,94,42,813/- AND EXPORT TURNOVER WAS RS.4,77,05,3 64/-. THE ASSESSEE HAD REDUCED 90% OF DEPB INCOME AND DEEMED EXCISE CR EDIT FROM THE PROFIT OF BUSINESS AS PER EXPLANATION (BAA) AN D CLAIM OF DEDUCTION UNDER SECTION 80HHC HAD BEEN COMPUTED ACCORDINGLY . THE AO HOWEVER OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED AN Y MATERIAL TO PROVE THAT THE AMENDED PROVISIONS OF SECTIO N 80 HHC(3) WERE APPLICABLE. ACCORDINGLY HE DENIED DEDUCTION UNDER SECTION 80HHC. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTE D BEFORE CIT(A) THAT THE CLAIM OF DEDUCTION IN RESPECT OF DEPB INCOME WAS ALLOWABLE IN VIEW OF THE DECISION OF THE SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXPORTS (318 ITR (AT) 87) AS PER WHICH THE FACE VALUE OF DEPB INCOME HAD TO BE CONSIDERED AS B USINESS ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 3 INCOME UNDER SECTION 28(IIID) AND EXCESS OF SALE PRICE HAD TO BE CONSIDERED AS PROFIT UNDER SECTION 28(III)(D). AS REGARDS DEEMED EXCISE CREDIT, ASSESSEE SUBMITTED THAT THE SAME HAD TO BE CONSIDER ED AS BUSINESS INCOME UNDER SECTION 28(III)(B) AS HELD BY THE T RIBUNAL IN SEVERAL CASES INCLUDING CASE OF THE SISTER CONCERN M/S. BINAYAK TEX PROCESSORS LTD. IN ORDER DATED 25.01.2010. CIT(A) HOWEV ER DID NOT ACCEPT THE CONTENTIONS RAISED ON THE GROUND THAT THE DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF TOPMAN EXP ORTS (SUPRA), HAD BEEN REVERSED BY HON'BLE HIGH COURT OF BOMBAY IN T HE CASE OF CIT VS. KALPATARU COLOURS AND CHEMICALS (328 ITR 451). CIT (A), THEREFORE, CONFIRMED THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SE CTION 80 HHC MADE BY AO AGGRIEVED BY WHICH, ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 2.1 BEFORE US, THE LD. AR SUBMITTED THAT IN SO FAR AS D EPB INCOME WAS CONCERNED, DECISION OF THE SPECIAL BENCH OF THE TRIBUN AL IN THE CASE OF TOPMAN EXPORTS HAS BEEN UPHELD BY THE HON'BLE SU PREME COURT IN THE SAME CASE AS REPORTED IN (342 ITR 49). THE REFORE, CLAIM OF THE ASSESSEE WAS REQUIRED TO BE COMPUTED IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL (SUPRA). A S REGARDS THE DEEMED EXCISE REFUND, IT WAS SUBMITTED THAT EXPORTERS WE RE ENTITLED TO REFUND OF EXPORT DUTY PAID ON GOODS MANUFACTURED ON F ULFILLMENT OF CERTAIN CONDITIONS AND EXCISE DUTY REFUND CREDIT IN THIS CA SE WAS IN ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 4 RESPECT OF CREDIT RECEIVED AS PER EXCISE RULES. SUCH INCOME WAS OF THE NATURE OF INCENTIVE UNDER SECTION 28(III)(B) AS HELD BY THE TRIBUNAL IN ITA NO.1140 TO 1145/MUM/2008 FOR ASSESSMENT YEAR 1999-0 0 TO 2004-05 IN CASE OF SISTER CONCERN M/S. BINAYAK TEX PROCESSO RS LTD. THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE ISSUE RELATING TO EXCISE DUTY REFUND HAD NOT BEEN DECIDED BY THE TRIBUNA L. HE REFERRED TO THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN TH E CASE OF CIT VS. DRESSOR RAND INDIA (P.) LTD. (120 TAXMANN 339) (32 3 ITR 429) IN WHICH SUCH INCOME HAD BEEN HELD TO BE EXCLUDIBLE FROM TH E BUSINESS PROFIT AS PER EXPLANATION BAA. AS REGARDS DEPB INCOME L D. DR FAIRLY CONCEDED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA). 3. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWABI LITY OF DEDUCTION IN RESPECT OF DEPB INCOME AND EXCISE DUTY REFUND. AS REG ARDS DEPB INCOME, THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF TO PMAN EXPORTS (SUPRA) HAS HELD THAT FACE VALUE OF DEPB HAS TO BE TRE ATED AS INCOME UNDER SECTION 28(III)(B) AND IN CASE OF SALE, EXCESS OF SALE PRICE OVER FACE VALUE HAS TO BE CONSIDERED AS BUSINESS PROFIT UNDER SE CTION 28(IIID). THE SAID DECISION OF THE SPECIAL BENCH HAS SINCE BEEN UPHELD BY THE HON'BLE SUPREME COURT AS REPORTED IN (342 ITR 49). WE, THEREFORE, DIRECT THE AO TO COMPUTE DEDUCTION UNDER SECT ION 80HHC IN ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 5 RESPECT OF DEPB INCOME IN THE LIGHT OF THE DECISION OF SPECIAL BENCH IN CASE OF TOPMAN EXPORTS (SUPRA). AS REGARDS EXCISE DUTY REFU ND IT HAS BEEN SUBMITTED THAT THE SAME HAS ARISEN TO THE ASSESSEE A S PER EXCISE RULES AFTER FULFILLMENT OF CERTAIN CONDITIONS. THE ASSESSEE BEING AN EXPORTER WAS ENTITLED TO EXCISE DUTY REFUND WHICH HAS B EEN CREDITED TO THE P&L ACCOUNT. SUCH INCOME HAS BEEN HELD BY THE TRIBUN AL AS INCENTIVE UNDER SECTION 28(III)(B) IN CASE OF THE SISTER CONCERN OF THE ASSESSEE I.E. M/S. BINAYAK TEX PROCESSORS LTD. (SUPRA), FOLLO WING EARLIER DECISION OF THE TRIBUNAL IN CASE OF M/S. SUPER T RADING CO. IN ITA NO.4249 AND 4250/MUM/06 ORDER DATED 17.11.2009. HO WEVER, WE FIND THAT THIS HAD NOT BEEN DECIDED BY CIT(A) NOW FUL L DETAILS RELATING TO THE NATURE OF EXCISE DUTY REFUND HAS BEEN BROUGHT ON RECORD BY THE AUTHORITIES BELOW. THEREFORE, IN OUR VIEW IT WOULD B E APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF CIT(A) FOR ADJUDICATIN G THE SAME AFTER CONSIDERING THE DECISION OF THE TRIBUNAL (SUPRA), JUDGME NT OF THE HON'BLE BOMBAY COURT IN CASE OF DRESSOR RAND INDIA (P.) LTD. (SUPRA), AND OTHER JUDGMENTS AVAILABLE ON THE SUBJECT AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ISSUE IS THU S RESTORED TO CIT(A). ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 6 4. APPEAL OF THE ASSESSEE IN ITA NO.7022/M/10 (ASSESSMENT YEAR 2003-04 ):- THIS APPEAL HAS ARISEN IN PURSUANCE OF ASSESSMENT FRAMED UN DER SECTION 143(3) R.W.S. 153A. THE ONLY DISPUTE RAISED IS RE GARDING DISALLOWANCE OF CLAIM OF BUSINESS LOSS AMOUNTING TO RS.6,42 ,663/-. ASSESSEE HAS ALSO DISPUTED THE LEVY OF INTEREST UNDER SECTION 234A AND 234B. 4.1 THE FACTS RELATING TO CLAIM OF BUSINESS LOSS IS THAT THE ASSESSEE IN THE ASSESSMENT HAD CLAIMED BAD DEBT OF RS.10,98,447/- AS PER DETAILS GIVEN BELOW:- I) M/S. IAEC INDUSTRIES MADRAS LTD. RS.1,00,000/- II) M/S. MAXIMA BOILERS P. LTD. RS.1,22,663/- III) M/S. TWINKLE FIBRES LTD. RS.4,55,784/- IV) M/S. ROHIT MILLS RS.2,00,000/- V) M/S. SIO CONSTRUCTION RS. 95,000/- VI) M/S. SITSON INDIA RS.1,25,000/- TOTAL RS.10,98,447/- 4.2 THE AO HAD DISALLOWED THE CLAIM BUT IN APPEAL THE SAME WAS ALLOWED BY CIT(A). IN FURTHER APPEAL THE TRIBUNAL H AD SET ASIDE THE CLAIMS AT SL. NO.1, 2, 4, 5 AND 6 FOR FRESH CONSIDERATI ON. THE TRIBUNAL OBSERVED THAT CIT(A) IN ALLOWING THE CLAIM HAD CONSIDER ED GUIDELINES ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 7 OF BAD DEBT WHICH WERE NOT APPLICABLE IN CASE OF CLAIM O F BUSINESS LOSS. ONUS WAS ON THE ASSESSEE TO ESTABLISH THAT IT HAD MADE ITS BEST EFFORTS TO RECOVER THE ADVANCE FROM PARTIES BUT HAD FAILED TO DO SO. SINCE NO SUCH MATERIAL WAS PLACED ON RECORD, THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF AO. IN THE FRESH PROCEEDINGS THE AO ASKED THE ASSESSEE TO GIVE DETAILS AND EVIDENCE TO PROVE BUSINESS LOSS. THE ASSESSEE SUBMITTED THAT ADVANCE HAD BEEN GIVEN FOR THE PURCHASE OF SPARE PARTS FOR RUNNING THE BUSINESS. ULTIMATELY NEITHER THE SUPPL Y WAS RECEIVED NOR REFUND RECEIVED AND, THEREFORE, AMOUNT WAS WRITT EN AS UNRECOVERABLE. THE ASSESSEE FILED ONLY COPY OF ACCOUNT OF T HE PARTIES AND COPIES OF SOME OF THE LETTERS WRITTEN TO THE PARTIE S. THE AO, THEREFORE, DID NOT ACCEPT THE CLAIM AND DISALLOWED LOSS O F RS.6,42,663/- . 4.3 IN APPEAL ASSESSEE SUBMITTED THAT WRITE-OFF OF THE AMOU NT BY THE ASSESSEE WAS PRIMA-FACIE EVIDENCE OF IRRECOVERABILITY AS HELD BY HON'BLE HIGH COURT OF GUJARAT IN CASE OF SARANGPUR COT TON MANUFACTURING CO. LTD. (14 ITR 166). THE HONBLE HIGH COURT HELD THAT DEPARTMENT COULD REBUT THE PRIMA FACIE INFERENCE BY D RAWING ATTENTION TO CIRCUMSTANCES OR BY LEADING SOME EVIDENCE TO SUGGEST THA T THE POSITION TAKEN BY THE ASSESSEE WAS NOT CORRECT. ASSESSEE ALSO PL ACED RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COURT OF BOMB AY IN THE CASE OF JETHABHAI HIRJI & JETHABHAI RAMNDAS VS. CIT (120 ITR 792). THE ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 8 ASSESSEE POINTED OUT THAT THERE WAS NO EVIDENCE AVAILABLE WITH THE DEPARTMENT TO REBUT THE CLAIM AND, THEREFORE, CLAIM SH OULD BE ALLOWED. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THAT THE BURDEN WAS ON THE ASSESSEE TO ESTABLISH TH AT BEST EFFORTS HAD BEEN MADE BY THE ASSESSEE TO RECOVER THE CLAIM BUT THE ASSESSEE HAD FAILED TO DO SO. ASSESSEE COULD NOT PRODUCE ANY SUCH EVIDENCE EXCEPT SOME LETTERS WRITTEN BY THE ASSESSEE. CIT( A), THEREFORE CONFIRMED THE DISALLOWANCE. RELEVANT PORTION OF THE ORDER OF CIT(A) IS REPRODUCED BELOW:- I HAVE CONSIDERED THE SUBMISSION GIVEN BY THE APPE LLANT, ORDER OF THE AO AND THE FACTS OF THE CASE, IN BRIEF ARE THAT THE APPELLANT HAS MADE ADVANCES TO THESE PARTIES AN D WHEN THIS AMOUNT WAS NOT RECOVERED, IT WAS CLAIMED AS BUSINESS LOSS AMOUNTING TO RS.6,42,663/-. IN THE OR IGINAL ASSESSMENT ORDER THIS CLAIM OF THE APPELLANT WAS DISALLOWED BY THE AO. HOWEVER, THE LD. CIT(A) HAS ALLOWED THE CLAIM. IN THE SECOND APPEAL BEFORE THE HONBLE TRIBUNAL, IT WAS HELD THAT THE LD. CIT(A) HA S NOT FOLLOWED THE GUIDELINES LAID DOWN FOR ALLOWING THE BAD DEBTS CANNOT BE APPLIED IN THE CASE OF BUSINESS LOS S. FOR CLAIMING BUSINESS LOSS ONUS IS ONLY ON THE ASSESSEE TO ESTABLISH THAT IT HAS MADE BEST EFFORTS TO RECOVER THE ADVANCE FROM THE PARTY, BUT HE FAILED TO DO SO. IT WAS FURTHER NOTICED THAT NO EVIDENCE WAS PLACED ON RECO RD IN THIS REGARD. BY FOLLOWING THE DIRECTION OF THE HONB LE TRIBUNAL, THE AO AGAIN GAVE A SHOW CAUSE NOTICE TO THE APPELLANT COMPANY TO PRODUCE THE EVIDENCE THAT EFFO RTS WERE MADE TO RECOVER THE ADVANCE FROM THE CONCERNED PARTIES. HOWEVER, BEFORE THE AO ONLY COPIES OF SOME LETTERS WERE PRODUCED AS EVIDENCE WHICH WAS NOT ACCEPTED BY THE AO. NO FURTHER EVIDENCE WAS PRODUC ED TO SUBSTANTIATE ITS CLAIM. KEEPING IN VIEW THE FAC TS AND CIRCUMSTANCES THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT IT HAS MADE EFFORTS TO RECOVER THE A DVANCES FROM THE CONCERNED PARTIES WHICH THE ASSESSEE HAS F AILED TO PROVE WITH ANY EVIDENCE BEFORE THE AO AND EVEN ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 9 BEFORE ME. THEREFORE, THE ADDITION MADE BY THE AO IS UPHELD AND GROUND OF APPEAL IS DISMISSED. AGGRIEVED BY THE DECISION OF CIT(A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4.4 BEFORE US THE LD. AR FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND PLACED RELIANCE ON THE JUDGMENTS REFERRED TO EARLIER. THE LD. AR ALSO FILED LETTER DATED 12.5.2009 ADDRESSED TO AO IN WHICH THE POSITION REGARD ING ACTION TAKEN IN RESPECT OF DIFFERENT PARTIES HAD BEEN FILED. IN THE SAID LETTER THE ASSESSEE IN RELATION TO M/S. IAEC INDUSTRIES MADRAS LT D. AND IN CASE OF M/S. ROHIT MILLS WROTE THAT THESE COMPANIES HAD BE COME FINANCIALLY UNVIABLE AND THEREFORE, FAILED TO MAKE THE SUPPLY NOR THE ADVANCE WAS REFUNDED. IN CASE OF M/S. MAXIMA BOILERS P. L TD. IT WAS SUBMITTED THAT THE CLAIM COULD NOT BE RECOVERED ON ACCOUN T OF CERTAIN DISPUTES AND IN CASE OF M/S. SITSON INDIA IT HAD BEEN SIM PLY MENTIONED THAT THE AMOUNT COULD NOT BE RECOVERED. IT WAS ARGUED THAT THERE WAS NO MATERIAL TO SHOW THAT THE JUDGMENT EXERCISED BY THE ASSESSEE FOR WRITE-OFF OF THE AMOUNT WAS NOT PROPER. ACCORDINGLY IT WAS REQUESTED THAT THE CLAIM SHOULD BE ALLOWED. 4.5 THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. IT WAS ARGUE D THAT AS PER ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 10 FINDINGS GIVEN BY THE AUTHORITIES BELOW, THE ASSESSEE HAD NOT GIVEN ANY INFORMATION REGARDING FINANCIAL POSITION OF THE PARTIES. IT WAS POINTED OUT THAT SOME OF THE CONCERNS WERE COMPANIES AND, THEREFORE, ASSESSEE COULD HAVE EASILY OBTAINED RELEVANT INFORMATION TO SATISFY AUTHORITIES WHICH WAS NOT DONE. IT WAS ACCORDINGLY URGED THAT THE CLAIM COULD NOT BE ALLOWED ONLY ON THE BASIS OF STATEMEN T OF THE ASSESSEE WITHOUT THERE BEING ANY SUPPORTING MATERIAL. 4.6 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVA L CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWA BILITY OF BUSINESS LOSS OF RS.6,42,963/- IN RESPECT OF THE PARTIES FROM WHICH THE ASSESSEE HAD PURCHASED SPARE PARTS IN THE EARLIER YEARS. THE CLAI M HAD BEEN DISALLOWED BY THE AO IN THE ORIGINAL ASSESSMENT BUT IN APPEAL CIT(A) HAD ALLOWED THE CLAIM TREATING THE SAME AS BAD DEBT. T HE TRIBUNAL HOWEVER, SET ASIDE THE ORDER OF CIT(A) ON THE GROUND THAT IT WAS A CASE OF BUSINESS LOSS AND, THEREFORE, GUIDELINES IN RELATIO N TO CLAIM OF BAD DEBT COULD NOT BE FOLLOWED. AS PER AMENDED PROVISI ONS, THE CLAIM OF BAD DEBT HAS TO BE ALLOWED IF THE ASSESSEE HAS WRITTEN OFF THE SAME IN THE BOOKS WITHOUT HAVING TO PROVE THAT THE DEBT H AD ACTUALLY BECOME IRRECOVERABLE. THE SAME IS NOT TRUE IN RESPECT OF BUSINESS LOSS WHICH IS REQUIRED TO BE ESTABLISHED BY THE ASSESSEE BEFORE THE SAME COULD BE ALLOWED AS DEDUCTION. IN THE FRESH ASSESSMENT PRO CEEDINGS, AO HAD ASKED THE ASSESSEE TO PROVE THAT THE AMOUNT HAD B ECOME ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 11 IRRECOVERABLE. THE ASSESSEE HOWEVER COULD ONLY PRODUCE COPY OF LEDGER ACCOUNTS AND SOME LETTERS WRITTEN TO PARTIES FROM WHICH AO WAS NOT SATISFIED THAT THE AMOUNT HAD BECOME IRRECOVERABLE. ACC ORDINGLY, THE CLAIM HAD BEEN DISALLOWED WHICH HAD BEEN UPHELD BY THE CIT(A). 4.7 THE CASE OF THE ASSESSEE IS THAT AS HELD BY HON'BLE HI GH COURT OF GUJARAT IN THE CASE OF SARANGPUR COTTON MANUFACTUR ING CO. LTD. (SUPRA), THE MERE WRITE-OFF OF THE AMOUNT WAS PRIMA FACIE EVIDENCE OF IRRECOVERABILITY AND, THEREFORE, CLAIM SHOULD BE ALLOW ED. HOWEVER, THE HON'BLE HIGH COURT IN THE SAID CASE HAVE ALSO HELD THAT THE DEPARTMENT COULD REBUT THE PRIMA FACIE INFERENCE BY DRAWING ATTEN TION TO CIRCUMSTANCES OR BY LEADING SOME EVIDENCE THAT THE POSITION TAKEN BY THE ASSESSEE WAS NOT CORRECT. IN THIS CASE, THE ASSESSEE HAD WRIT TEN ONLY SOME LETTERS TO THE PARTIES FOR RECOVERY. EVEN COPY OF LETTERS IS NOT PLACED ON RECORD BEFORE US. FURTHER, NOT TO SPEAK O F ANY COURT PROCEEDINGS, NO EVIDENCE HAS BEEN PRODUCED SHOWING THA T THE ASSESSEE HAD ISSUED ANY LEGAL NOTICE TO PARTIES THREATENI NG INITIATION OF COURT CASES WHICH IS EXPECTED AS SUBSTANTIAL AMOUNTS WERE OUTSTANDING. FURTHER, THE ASSESSEE HAS FILED COPY OF LETTE R DATED 12.5.2009 GIVEN TO AO IN WHICH IT HAS BEEN CLAIMED TH AT M/S. IAEC INDUSTRIES MADRAS LTD. AND M/S. ROHIT MILLS HAD BECOME FI NANCIALLY UNVIABLE BUT NO SUPPORTING MATERIAL HAS BEEN GIVEN. IN RESPECT OF M/S. MAXIMA BOILERS P. LTD. IT WAS CLAIMED THAT THE AMOUNT WAS OUTSTANDING ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 12 DUE TO CERTAIN DISPUTES BUT AGAIN THERE WAS NO EVIDENCE TO SUPPORT THE CLAIM. IN RESPECT OF OTHER PARTIES NEITHER ANY SUCH CLAIM HAD BEEN MADE NOR ANY MATERIAL PRODUCED TO SHOW THAT THE ASSESSEE HAD MADE SINCERE AND PROPER EFFORTS TO RECOVER THE AMOUNT AND FA ILED TO DO SO. 4.8 IT HAS BEEN RIGHTLY POINTED OUT BY THE LD. DR TH AT SOME OF THE PARTIES WERE COMPANIES IN RESPECT OF WHICH ASSESSEE COULD HAVE GIVEN DETAILS WHICH HAD NOT BEEN DONE. THE CLAIM THAT AMOUNT HAD BECOME IRRECOVERABLE CAN NOT BE ALLOWED ONLY ON THE BASIS OF STATEMENT GIVEN BY THE ASSESSEE IN THE ABSENCE OF ANY SUPPORTING MATERIAL TO DRAW INFERENCE THAT THE PARTIES HAD BECOME FINANCIALLY UNVI ABLE OR THE AMOUNTS WERE LYING IN SOME DISPUTE. THEREFORE, MERELY ON THE GROUND THAT AMOUNT HAD BEEN WRITTEN OFF BY THE ASSESSEE TH CLAI M CAN NOT BE ALLOWED AS BUSINESS LOSS. EVEN THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF JETHABHAI HIRJI & JETHABHAI RAMNDAS VS. CIT (SUPRA), HAVE HELD THAT MERE FACT OF WRITE-OFF COULD NOT BE CONSIDERE D AS CONCLUSIVE FOR CLAIMING BUSINESS LOSS. THIS COULD BE CONSIDERED AS RELEV ANT FACTOR BUT THERE HAS TO BE FURTHER MATERIAL TO SHOW THAT THE ASSESSEE HAD MADE SINCERE AND PROPER EFFORTS FOR RECOVERY OF AMOUNT BUT FAILED TO DO SO. NO SUCH MATERIAL HAS BEEN PLACED ON RECORD TO SUBSTA NTIATE THE CLAIM THAT THE ASSESSEE CAME TO A REASONABLE BELIEF DURING THE YEAR THAT THE AMOUNT WERE NOT RECOVERABLE. WE, THEREFORE, SEE NO INFIRMITY ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 13 IN THE ORDERS OF AUTHORITIES BELOW DISALLOWING THE CLAI M OF BUSINESS LOSS. THE ORDER OF CIT(A) IS ACCORDINGLY UPHELD. 5. THE ASSESSEE IN THIS APPEAL HAS ALSO RAISED DISPUTES REGAR DING LEVY OF INTEREST UNDER SECTION 234A AND 234B. THE LD. AR ADMITTED THAT THE ISSUE WAS ONLY CONSEQUENTIAL. THE AO WILL THEREFORE, RE-COMPUTE INTEREST AT THE TIME OF GIVING EFFECT TO THIS ORDER. 6. ITA NO.5944/MUM/2011 (ASSESSMENT YEAR 2003-04) :- THIS APPEAL IS AGAINST THE FRESH ASSESSMENT MADE AFTER ISS UE WAS SET ASIDE BY THE TRIBUNAL IN RELATION TO CLAIM OF BUSIN ESS LOSS. THEREFORE THE DISPUTE IN THIS APPEAL IS THE SAME WHICH W E HAVE DEALT WITH EARLIER REGARDING ALLOWABILITY OF BUSINESS LOSS OF RS.6,42,663/- . THE AO HAD DISALLOWED THE CLAIM OF LOSS AND CIT(A) FOR THE REASONS GIVEN IN ITA NO7022/M/10 HAD CONFIRMED THE DISALLOWAN CE. WE HAVE ALREADY DEALT WITH THE ISSUE WHILE DECIDING THE APPEAL IN ITA NO.7022/M/10 IN EARLIER PART OF THIS ORDER AND FOR THE REASONS GIVEN IN PARAS 4.6 TO 4.8 OF THIS ORDER, WE CONFIRM THE DISALLO WANCE MADE BY AO. 7. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND REGARDING CHARGING OF INTEREST UNDER SECTION 2(20)(2). CHARGING OF INTER EST UNDER SECTION ITA NO.7021,7022 &5944/M/10-11 A.Y.02-03 &03-04 14 2(20)(2) IS NOT AN APPEALABLE ISSUE. THE GROUND RAISED IS MISCONCEIVED AND, THEREFORE, IS DISMISSED. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NOS. 7022/M/10 AND ITA NO.5944/M/11 ARE DISMISSED WHEREAS AP PEAL OF THE ASSESSEE IN ITA NO.7021/M/10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.9.2012. SD/- SD/- (VIJAY PAL RAO) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 21.9. 2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.