Trio Elevators Company (India) Ltd., Ahmedabad V. The Dy. CIT., Circle-4(1)(2), Ahmedabad

ITA 792/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5132 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Keywords: Bad and doubtful debts
• Section: 6; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ITA NO. 792/AHD/2017 ( / ASSESSMENT YEAR : 2012-13) TRIO ELEVATORS COMPANY (INDIA) LTD. 404, SHIVAM COMPLEX BHUYANGDEV CROSS ROAD SOLA ROAD, GHATLODIYA AHMEDABAD / VS. THE DY.CIT CIRCLE-4(1)(2) AHMEDABAD ./ ./ PAN/GIR NO. : AACCT 4923 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BANDISH SOPARKAR, AR / RESPONDENT BY : SHRI B.P. SRIVASTAVA, SR.DR / DATE OF HEARING 31/12/2018 !'# / DATE OF PRONOUNCEMENT 01/02/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)8, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-8 /75/15-16 DATED 10/01/2017 ARISING IN THE ASSESSMENT ORDER PASSED U NDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS ' THE ACT') DATED 13/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-1 3. 2. THE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IN GROUND NOS.2 & 3 IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ADD ITION ON ACCOUNT OF ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 2 - PROVISIONS FOR DOUBTFUL DEBTS AND ADVANCES AMOUNTIN G TO RS. 54,34,757/- AND RS. 8,58,062/- RESPECTIVELY. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF SELLING, ERECTION, INSTA LLATION AND REPAIRS AND MAINTENANCE OF ELEVATORS AND ESCALATORS. THE ASSESS EE DURING THE YEAR HAS MADE PROVISIONS FOR THE DOUBTFUL DEBTS AND DOUBTFUL ADVANCES. THE DETAILS OF THE SAME STAND AS UNDER: SL.NO. PARTICULARS AMOUNT (RS. ) 1. PROVISION FOR DOUBTFUL DEBTS 54,34,757/- 2. PROVISION FOR DOUBTFUL ADVANCES 8,58,062/- 4. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS S UBMITTED THAT IT HAD ADJUSTED THE PROVISION CREATED FOR DOUBTFUL DEB TS WITH THE AMOUNT OF DEBTORS SHOWN IN THE BALANCE-SHEET AS ON 31.3.2012. THE ASSESSEE IN SUPPORT OF HIS CLAIM RELIED ON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF VIJAYA BANK VS. CIT REPORTED IN 323 ITR 166 (SC). 4.1. THE ASSESSEE FOR THE PROVISION OF DOUBTFUL AD VANCES OF RS. 8,58,062/- SUBMITTED THAT IT REPRESENTS THE ADVANCE S GIVEN TO THE STAFF, CUSTOMERS, ADVOCATES, GRATUITY AND BUSINESS ASSOCIA TES. AS SUCH, THESE ADVANCES WERE GIVEN IN THE COURSE OF THE BUSINESS A ND RECOVERY OF THE ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 3 - SAME WAS NOT POSSIBLE. ACCORDINGLY, A PROVISION IN THE BOOKS OF ACCOUNTS WAS CREATED AGAINST SUCH ADVANCES. 4.2. HOWEVER, THE ASSESSING OFFICER DISAGREED WITH THE SUBMISSION OF THE ASSESSEE AND HELD THAT THE PROVISION FOR DEBTS HAD NOT BEEN ADJUSTED AGAINST THE OUTSTANDING BALANCE OF THE INDIVIDUAL L EDGERS. THEREFORE, THE SAME CANNOT BE ALLOWED AS A DEDUCTION UNDER THE PRO VISIONS OF SECTION 36(1)(VII) OF THE ACT. 4.3. SIMILARLY, THE ASSESSING OFFICER ALSO HELD THA T THE PROVISION FOR ADVANCES HAD NOT FULFILLED THE CONDITIONS AS SPECIF IED U/S 36(2) OF THE ACT. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESS EE FAILED TO ESTABLISH THE NEXUS WITH THE BUSINESS FOR THE PROVISION CREAT ED AGAINST THE ADVANCES. THEREFORE, THE SAME CANNOT BE ALLOWED AS DEDUCTION U/S 37(1) OF THE ACT. 4.4. BECAUSE OF THE ABOVE, THE ASSESSING OFFICER DI SALLOWED THE SUM OF RS. 62,92,819/- (RS. 54,34,757/- FOR THE PROVISION OF DOUBTFUL DEBTS AND RS. 8,58,062/- FOR THE PROVISION OF DOUBTFUL ADVANC ES) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO TH E LD. CIT(A). 6. THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THA T THE PROVISION FOR BAD DEBTS HAD BEEN REDUCED FROM THE AMOUNT OF S UNDRY DEBTORS SHOWN ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 4 - IN THE BALANCE SHEET. THUS, IT HAS MET THE TERMS O F THE PROVISION OF SECTION 36(2) OF THE ACT. 6.1. SIMILARLY, THE ASSESSEE ALSO SUBMITTED THAT IT HAD PROVIDED ADVANCES GIVEN IN THE COURSE OF BUSINESS AND, WHICH ARE NOT RECOVERABLE NOW. THEREFORE, THE PROVISION MADE IN RESPECT OF TH E SAME IS ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT. 6.2. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTEN TION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSING O FFICER. 7. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. AR BEFORE US SUBMITTED THAT IN THE IDENT ICAL FACTS AND CIRCUMSTANCES IN THE OWN CASE OF THE ASSESSEE, THE HONBLE TRIBUNAL IN ITA NO. 291/AHD/2015 FOR AY 2011-12 VIDE ORDER DATE D 22/09/2017 HAS RESTORED THIS ISSUE TO THE FILE OF ASSESSING OFFICE R FOR FRESH ADJUDICATION AS PER THE PROVISIONS OF LAW. ACCORDINGLY, HE PRAY ED BEFORE US TO RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR FRE SH ADJUDICATION. 9. ON THE OTHER HAND, THE LD. DR DID NOT OBJECT IF THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER THE PROVISIONS OF LAW. ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 5 - 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT TH E ISSUE IS COVERED BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES CASE (SUPRA), WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER: 4. AT THE TIME OF HEARING BEFORE US, THE LD.COUNS EL FOR THE ASSESSEE SUBMITTED THAT THIS MATTER MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF HONBLE JURISDICTIONAL HIGH COURTS FULL BENCH DECISION IN THE CASE OF CIT VS. VODAFONE ESSAR GUJARAT LTD. IN TAX APPEAL NO.74 9 OF 2012. LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO THE SAME. IN VIEW OF ABOVE, WITH THE CONSENT OF THE PARTIES, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF HONBLE GUJARAT HIGH C OURTS FULL BENCH DECISION CITED SUPRA. THIS GROUND IS THUS AL LOWED FOR STATISTICAL PURPOSES. 10.1 RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. 11. THE SECOND ISSUE RAISED BY THE ASSESSEE IN GROU ND NO.4 IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 5,03,115/- ON ACCOUNT OF DELAY IN EMPLOYEES CONTRIBUTION OF PF A ND ESI U/S.2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. 12. FACTS OF THE CASE ARE THAT THE ASSESSEE IN TH E YEAR UNDER CONSIDERATION HAS DEPOSITED EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI, ETC., AFTER THE DUE DATE AS PRESCRIBED UNDER THE RE LEVANT ACT. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SAME UNDER THE PROVISIONS OF ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 6 - SECTION 2(24)(X) R.W.S. SEC.36(1)(VA) OF THE ACT AN D ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 12.1. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BE FORE THE LD. CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICE R. 12.2. THE LD. AR BEFORE US CONCEDED THE FACT THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. GSTRC REPORTED IN 41 TAXMANN.COM 100. 12.3. ON THE OTHER HAND, THE LD. DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 13. ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE AFORESAID AMOUNT REPRESENTS EMPLOYEES CONTRIBUTION TOWARDS EMPLOYEES PF AND ESI. IN THESE CIRCUMSTANCES, WE FIND NO LEGAL INFIRMITY IN THE ORDER OF THE CIT(A) IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GU JARAT STATE ROAD TRANSPORT CORPORATION (2014) 41 TAXMANN.COM 100 (GU J.). HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 14. GROUND NOS.1 & 5 ARE GENERAL IN NATURE WHICH RE QUIRES NO INDEPENDENT ADJUDICATION. ITA NO.792/AHD/2017 TRIO ELEVATORS CO. (INDIA) LTD. VS. DCIT ASST .YEAR - 2012-13 - 7 - 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/02/2018 SD/- SD/- (MS.MADHUMITA ROY) (WASEEM AH MED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/02/2019 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-8, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD