M/s. Tanech Agro Chemicals Ltd., CHENNAI V. ACIT, CHENNAI

ITA 84/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2562 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Keywords: Bad and doubtful debts; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.84/CHNY/2018 ( / ASSESSMENT YEAR: 2012-13) M/S. TANTECH AGRO CHEMICALS LTD., NO.9, GST ROAD, ST. THOMAS MOUNT, CHENNAI 600 016. VS THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI -34. PAN:AAACT2000N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE / RESPONDENT BY : SMT. S. VIJAYAPRABHA, JCIT /DATE OF HEARING : 19.06.2018 /DATE OF PRONOUNCEMENT : 27.08.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-11, CHENNAI, DATED 23.10.2017 IN ITA NO.14/CIT(A)-11/2015-16 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE 2 ITA NO.84 /CHNY/2018 ADDITION MADE BY THE LD.AO TOWARDS DISALLOWANCE OF BAD DEBTS AGAINST THE ADVANCE GIVEN TO GENERAL MANAGER (OPERATIONS) FOR MEDICAL TREATMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 27.09.2012 ADMITTING NIL INCOME. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED ON 06.08.2013 & 22.05.2014 RESPECTIVELY. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 11.03.2015 WHEREIN THE LD.AO MADE ADDITION OF RS.15,94,386/- TOWARDS DISALLOWANCE OF SALARY ADVANCE GIVEN FOR THE TREATMENT OF THE GENERAL MANAGER (OPERATIONS) WHICH WAS TREATED AS BAD DEBTS DUE TO HIS DEMISE. 4. THE LD.AO WAS OF THE VIEW THAT SALARY ADVANCE IS IN THE NATURE OF CAPITAL EXPENDITURE AND THE SAME CANNOT BE ALLOWED AS REVENUE EXPENDITURE. THEREAFTER THE LD.CIT(A) ALSO CONFIRMED THE ORDER OF THE LD.AO AGREEING WITH HIS VIEW RELYING ON FEW DECISIONS OF HONBLE HIGHER JUDICIARY. 3 ITA NO.84 /CHNY/2018 5. AFTER HEARING BOTH SIDES AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE ASSESSEE COMPANY HAS BEEN AND BEING BENEFITED BY THE SINCERE EFFORTS OF THE GENERAL MANAGER (OPERATIONS). KEEPING IN VIEW OF HIS MERITORIOUS SERVICE WHICH WAS EMINENTLY REQUIRED FOR THE EXISTENCE AND GROWTH OF THE ASSESSEE COMPANY, THE BOARD OF DIRECTORS HAS GRANTED SALARY ADVANCE FOR THE TREATMENT OF ITS GENERAL MANAGER (OPERATIONS), ON THE HOPE THAT HE WILL SOON RECOVER AND BE USEFUL FOR THE ORGANIZATION. SUCH NATURE OF EXPENSE IS NOTHING BUT EXPENDITURE INCURRED DURING THE COURSE OF THE BUSINESS OF THE ASSESSEE. CONSIDERING THESE FACTS, WE ARE OF THE VIEW THAT THE DECISION CITED BY THE LD.CIT(A) FOR UPHOLDING THE ORDER OF THE LD.AO ARE NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE FOR RS.15,94,386/- BY TREATING THE IRRECOVERABLE SALARY ADVANCE AS BAD DEBTS. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 27 TH AUGUST, 2018 AT CHENNAI. SD/- SD/- ( . ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) /JUDICIAL MEMBER / ACCOUNTANT MEMBER 4 ITA NO.84 /CHNY/2018 /CHENNAI, /DATED 27 TH AUGUST, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF