Ramesh Murlidhar Joshi, Nashik V. I.T.O. Ward 1(4) Nasik, Nashik

ITA 842/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3290 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE; HARESHWAR SHARMA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI D. KARUNAKARA RAO, AM I.T.A. NO. 842/PN/2009: A.Y. 2007-08 RAMESH MURLIDHAR JOSHI 480/810 JOSHI SADAN OPP. KBH HIGH SCHOOL, SHARANPUR ROAD, NASIK PAN AAKPJ 5902 C APPELLANT VS. I.T.O WARD 1(4) NASIK RESPONDENT APPELLANT BY : NONE RESPONDENT BY: SHRI ABHAY DAMLE AND SHRI HARESHWAR SHARMA ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) I NASIK DATED 31-3-2010 FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF BAD DEBT OF RS. 30,00,000/-. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT CARRYING ON ANY BUSINESS ACTIVITY AND HENCE, THE CLAIM OF BAD DEBT MADE BY THE ASSESSEE C OULD NOT BE ALLOWED. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE INTEREST INCOME ON FIXED DEPOSITS WAS TAXED AS BUSI NESS INCOME IN THE EARLIER YEARS AND HENCE, THE CLAIM OF BAD DEBT WAS ALLOWABLE U/S 36(1)(VII) R.W.S. 36(2). 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE FIXED DEPOSIT OF THE ASSESSEE WAS IRRECOVERABLE ON ACCOUN T OF LIQUIDATION OF SHRIRAM SAHAKARI BANK LTD. AND HENCE , THE ITA NO. 842/PN/10 RAMESH MURLIDHAR JOSHI A.Y. 2007-08 2 ASSESSEE WAS JUSTIFIED IN CLAIMING THE DEDUCTION OF RS. 30,00,000/- ON ACCOUNT OF BAD DEBTS. 2. THE ASSESSEE HAS CLAIMED BAD DEBTS OF RS. 30,00, 000/-. THE AMOUNT REFLECTED FIXED DEPOSITS MAINTAINED BY T HE ASSESSEE WITH SHRIRAM SAHAKARI BANK LTD., NASIK. T HE SAID BANK HAS GONE INTO LIQUIDATION. THE FDS WHICH WERE MATURING DURING THE RELEVANT FINANCIAL YEARS HAVE BEEN CLAIM ED AS A BAD DEBT U/S 36(1)(VII)/36(2) OF THE ACT. THE A.O HOWE VER, HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THA T THE INVESTMENTS IN FDS CANNOT BE CALLED AS BUSINESS ACT IVITY AND THE INTEREST INCOME IS ASSESSABLE UNDER THE HEAD I NCOME FROM OTHER SOURCES. THE CIT(A) CONFIRMED THE DISALLOWAN CE. SAME HAS BEEN OPPOSED BEFORE US. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 3. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. WE FIND THAT THE ISSUE RAISED IN THIS A PPEAL STANDS COVERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT (2010) 230 CTR (SC) 14 WHERE IN IT HAS BEEN HELD AS UNDER: AFTER 1 ST APRIL 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRI TTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE, HOWEVER, IN THE PRESENT CASE, THE A.O HAS NOT EXAMI NED WHETHER THE DEBT HAS, IN FACT, BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEE N UNDERTAKEN BY THE A.O. HENCE, THE MATTER IS REMITT ED TO THE A.O FOR DE NOVO CONSIDERATION OF THE ABOVE MENT IONED ASPECT ONLY AND THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. ITA NO. 842/PN/10 RAMESH MURLIDHAR JOSHI A.Y. 2007-08 3 4. SO, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD (SU PRA), WE FIND THAT THE AUTHORITIES BELOW WERE NOT HAVING THE BENEFIT OF DECISION IN THE CASE OF T.R.F. LTD. (SUPRA) WHILE D ISALLOWING THE CLAIM OF THE ASSESSEE. KEEPING IN VIEW THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. (SUPRA), T HE MATTER IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH A DIRE CTION TO DECIDE THE ISSUE AT HAND AS PER FACT AND LAW AFTER PROVIDI NG DUE OPPORTUNITY OF HEARING TO THE ASSESSEE . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER 2010 SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 8 TH OCTOBER 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT(A)-I NASIK (4) CIT I NASIK (5) THE D.R. A BENCH, PUNE TRUE COPY BY ORDER ASSTT. REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE