THE MAHARASHTRA STATE CO.OP MARKETING FEDERATION LTD, MUMBAI V. ACIT CIR 13(3), MUMBAI

ITA 8289/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3615 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR MANJUNATH KARKIHALLI
• Assessee Lawyers: BANSI G KALE
• Keywords: Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, M UMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA(AM) . . , !' !' !' !' , !# !# !# !# ! !! ! $ $ $ $ ./I.T.A. NO.8289/M/2010 ( % % % % & & & & / ASSESSMENT YEAR :2007-08) THE MAHARASHTRA STATE CO.OP MARKETING FEDERATION LTD., KANMOIOR HOUSE, NARSI NATHA ST. MASJID, MUMBAI. % % % % / VS. ACIT, CIRCLE 13(3), R.NO.427, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI. ' !# ./ ( ./PAN/GIR NO. : AAAAT6218 L ( ') /APPELLANT ) .. ( *+') / RESPONDENT ) ') , ! / APPELLANT BY : SHRI BANSI G KALE *+') - , ! / RESPONDENT BY : DR MANJUNATH KARKIHALLI % - .# / DATE OF HEARING : 18.4.2013 /0& - .# / DATE OF PRONOUNCEMENT : 18.4.2013 !1 / O R D E R PER B.R.MITTAL, JM: THE ASSESEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2007-08 AGAINST ORDER DATED 14.10.2010 OF LD CIT(A. 2. GROUND NO.1 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) ERRED IN F ACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.14,81,953/-, WITHOUT CONSIDERING THE APPELLANTS SUBMISSION THAT THE INTEREST CREDITED TO INTEREST SUSPENSE ACCOUNT IS INTEREST CHARGED ON UNRECOVERABLE/DISPUT ED DEBTORS. THIS INTEREST IS CHARGED UNILATERALLY BY THE APPELLANT A S A MEASURE TO RECOVER THE OUTSTANDING AMOUNT. THERE IS NO CONTRACTUAL OBL IGATION ON THE APPELLANT TO CHARGE THE INTEREST ON THESE DEBTORS A ND IS NEITHER LEGALLY I.T.A. NO.8289/M/2010 ASSESSMENT YEAR :2007-08) 2 ENFORCEABLE NOR IT WOULD GIVE APPELLANT THE RIGHT T O CLAIM THE AMOUNT. THUS THE SAID INTEREST IS NEITHER ACCRUED NOR A REA L INCOME OF THE APPELLANT. 2. AT THE TIME OF HEARING, LEARNED A.R SUBMITTED T HAT ABOVE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION DATED 31 ST JULY 2012 OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 I N I.T.A NOS. 5874/M/2008 & 6325/M/2009. HE SUBMITTED THAT THE FACTS OF THE ASS ESSEE FOR ASSESSMENT YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF ASSESSMENT YEARS 2005-06 AND 2006-07. LD DR HAS NOT DISPUTED ABOVE CONTENTION OF LD AR. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF LD REPRESE NTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW AS WELL AS ORDER OF THE TRIBUN AL DATED 31 ST JULY 2012 (SUPRA). WE OBSERVE THAT AO MADE THE ADDITION OF INTERESTS OF RS. 14,18,953/- TOWARDS ACCRUAL OF INTEREST INCOME ON DISPUTED DEBTORS, THE INTEREST O F WHICH HAS BEEN TAKEN BY THE ASSESSEE TO THE INTEREST SUSPENSE ACCOUNT WITH DEBI T OF THE EQUAL AMOUNT IN THE ACCOUNTS OF THE RESPECTIVE DEBTORS. THE TRIBUNAL CO NSIDERING THE FACTS OF THE CASE AT PARA 7 HELD THAT INTEREST INCOME ON DOUBTFUL DEBTS CANNOT BE TAXED ON ACCRUAL BASIS. HOWEVER AS AND WHEN THE AMOUNT OF INTEREST IS ACTUA LLY REALIZED, THE SAME WILL BE SUBJECTED TO TAXATION AT THE RELEVANT POINT OF TIME . PARA 7 OF THE ORDER OF TRIBUNAL READS AS UNDER: 7. THERE IS NO DISPUTE ON THE FACT THAT THE AMOUNT OF INTEREST RELATED TO THE DISPUTED DEBTORS OVER THE YEARS. ONCE THE AMOUN T ITSELF IS DOUBTFUL OF RECOVERY, THERE CANNOT BE ANY QUESTION OF CONSIDERI NG THE INTEREST ON SUCH DOUBTFUL DEBTS ON THE BASIS OF ACCRUAL. THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT V. EICHER LTD. [(2010) 320 ITR 4 10 (DEL.)] HAS HELD TO THIS EXTENT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. GIRIRAJ UDYOG (P) LTD. [(2005) 273 ITR 495 (ALL.)]. ADVERTING TO THE FACTS OF THE INSTANT CASE , IT IS OBSERVED THAT THE ASSESSEES CONTENTION BEFORE THE A.O. THAT THIS INT EREST RELATED TO `DISPUTED DEBTORS OVER THE YEARS HAS NOT BEEN CONT ROVERTED BY THE ASSESSING OFFICER. IT, THEREFORE, SHOWS THAT THE DE BTORS ON WHICH THE INTEREST INCOME HAS BEEN TAXED BY THE A.O. ON ACCRU AL BASIS, WERE IN FACT DISPUTED. THE RATIO DECI DENDI LAID DOWN IN THE ABO VE CASES SQUARELY APPLIES TO THE FACTS OF THE INSTANT CASE. WE, THERE FORE, HOLD THAT THE INTEREST INCOME ON DOUBTFUL DEBTS CANNOT BE TAXED O N ACCRUAL BASIS. THE ACTION OF THE AUTHORITIES BELOW IN THIS REGARD IS V ACATED. HOWEVER IT IS MADE CLEAR THAT AS AND WHEN THE AMOUNT OF INTEREST IS ACTUALLY REALIZED, THE SAME WILL BE SUBJECTED TO TAXATION AT THE RELEV ANT POINT OF TIME. THIS GROUND IS ALLOWED. I.T.A. NO.8289/M/2010 ASSESSMENT YEAR :2007-08) 3 4. IN VIEW OF ABOVE GROUND NO. 1 OF APPEAL IS ALLOW ED. 5. IN GROUND NO. 2 OF APPEAL, ASSESSEE HAS DISPUTED THE ORDER OF LEARNED C.I.T(A) IN CONFIRMING THE DISALLOWANCE OF TRANSPORTATION AN D HAMALI CHARGES OF RS.15,37,516/-. 6. THE ASSESSING OFFICER HAS DISALLOWED THE SAID CL AIM OF THE ASSESSEE ON ACCOUNT OF TRANSPORTATION AND HAMALI CHARGES OF RS. 15,37,516/ - DEBITED BY THE ASSESSEE TO THE PROFIT AND LOSS ACCOUNT ON THE GROUND THAT ASSESSEE DID NOT FURNISH REQUISITE DETAILS. IN THE FIRST APPEAL, LEARNED C.I.T(A) ALSO CONFIRMED T HE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT SIMILAR ISSUE WAS CONSIDERED BY HIM IN ASSESSMENT YEAR 2005-06 VIDE ORDER DATED 3.6.2008 AND THE MARTIAL FACTS CONTINUE TO BE THE SAME IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, ASSESSEE IS IN FUR THER APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING, LEARNED A.R SUBMITTED TH AT AT THE TIME OF ASSESSMENT PROCEEDING, A.O DID NOT ASK FOR REQUISITE DETAILS A ND HENCE ASSESSEE COULD NOT FURNISH THE SAME. IN REPLY TO A QUERY BY THE BENCH, AS TO W HETHER THE REQUISITE DETAILS WERE FURNISHED BEFORE LEARNED C.I.T(A), LEARNED A.R SUBM ITTED IN THE NEGATIVE. IT IS ALSO A FACT THAT AT THE TIME OF HEARING OF THIS APPEAL, THE BRE AK UP OF THE SAID EXPENSES AND/OR THE DETAILS IN REGARD TO THE SAID CLAIM IS NOT PLACED B EFORE US. 8. THE LEARNED DR SUBMITTED THAT THE CLAIM HAS BEEN DISALLOWED BECAUSE ASSESSEE COULD NOT FURNISH REQUISITE DETAILS BEFORE THE AUTH ORITIES BELOW AS WELL AS BEFORE THE TRIBUNAL IN PAPER BOOK. 9. CONSIDERING ABOVE FACTS, WE DO NOT SEE ANY REAS ON TO INTERFERE IN ORDER OF LEARNED C.I.T(A) AND CONFIRM THE DISALLOWANCE MADE BY THE AUTHORITIES BELOW. 10. WE MAY STATE THAT SIMILAR ISSUE CAME UP FOR CON SIDERATION BEFORE THE TRIBUNAL IN THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE ASSE SSEE REQUESTED FOR ONE MORE OPPORTUNITY TO BE GRANTED TO ASSESSEE TO ADDUCE SUC H EVIDENCES BEFORE THE A.O AND THE TRIBUNAL RESTORED THE MATTER TO THE A.O FOR HIS FRE SH CONSIDERATION. SINCE THIS IS THE THIRD YEAR AND THE ASSESSEE HAS FAILED TO PLACE BEFORE TH E AUTHORITIES BELOW THE REQUISITE I.T.A. NO.8289/M/2010 ASSESSMENT YEAR :2007-08) 4 DETAILS IN RESPECT OF THE CLAIM MADE ON ACCOUNT OF TRANSPORTATION AND HAMALI CHARGES, WE DO NOT FIND PRUDENT TO RESTORE THIS ISSUE TO THE FILE OF A.O FOR HIS FRESH CONSIDERATION AS THE ASSESSEE IS REPEATEDLY NOT PLACING THE REQU ISITE DETAILS BEFORE THE DEPARTMENT TO JUSTIFY THE CLAIM. HENCE, GROUND NO.2 OF APPEAL IS REJECTED. 11. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLO WED IN PART. 2 .3 % 2. - 1 . 5 - . 67 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2013 . !1 - /0& #! 8 9%3 18 TH APRIL, 2013 0 - : SD/- SD/- ( !' , /RAJENDRA ) ( . . /B.R.MITTAL) !# / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 9% DATED 18 / 04/2012 . % . ./ PARIDA , SR. PS !1 !1 !1 !1 - -- - *.; *.; *.; *.; : *.% , , / DR, ITAT, MUMBAI 6. :? @ / GUARD FILE. !1% / BY ORDER, +;. +;. +;. +;. *. *.*. *. //TRUE COPY// 6 (ASSTT. REGISTRAR) , / ITAT, MUMBAI