GHCL Limited, Ahmedabad V. The Dy.CIT., Circle-4, Ahmedabad

ITA 862/AHD/2010

• Counselvise Citation: 86220514 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Bad and doubtful debts

Judgement Text

, , , , A, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .% %% % . .. .&'( &'( &'( &'(, , , , %) * %) * %) * %) * % ' % ' % ' % ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. K. GARODIA, ACCOUNTANT MEMBER) ITA NO.862/AHD/2010 [ASSTT.YEAR : 2006-2007] GHC LIMITED GHCL HOUSE, OPP: PUNJABI HALL NAVRANGPURA, AHMEDABAD 380 009. PAN : AAACG 5609 C /VS. DCIT, CIR.4 AHMEDABAD. ( (( (,- ,- ,- ,- / APPELLANT) ( (( (./,- ./,- ./,- ./,- / RESPONDENT) 01 2 3 %/ ASSESSEE BY : MS.URVASHI SHODHAN * 2 3 %/ REVENUE BY : SHRI O.P. BATHEJA, SR. DR 5 2 16)/ DATE OF HEARING : 26 TH JULY, 2013 7&8 2 16)/ DATE OF PRONOUNCEMENT : 02-08-2013 %9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)- VIII, AHMEDABAD DATED 30.12.2009. 2. THE GROUND NOS.1.1 AND 1.2 OF THE APPEAL OF THE ASSESSEE ARE AS UNDER: 1.1 THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING ADDITION OF RS.2,31,654 IN RESPECT OF BAD DEBTS WRI TTEN OFF WITHOUT APPRECIATING THE FACT THAT THOSE DEBTS WERE BEYOND RECOVERY BECAUSE THE PARTIES EITHER ABSCONDED FROM MARKET OR DISCONTINUED THEIR BUSINESS. 1.2 THE LD.CIT(A) ERRED IN LAW AND ON FACT IN CONFI RMING ADDITION OF RS.2,62,763 IN RESPECT OF WRITE OFF OF BAD DEBTS OUT OF ITA NO.862/AHD/2010 -2- THE TOTAL PROVISION FOR BAD & DOUBTFUL DEBTS AMOUNT ING TO RS.123,62,763 WITHOUT APPRECIATING THE FACT THAT TH OSE DEBTS WERE NOT RECOVERABLE BECAUSE THE PARTIES WERE EITHER NOT TRACEABLE OR THE LEGAL COST TO RECOVER SUCH DEBTS WOULD EXCEED T HE RECOVERABLE AMOUNT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS WRITTEN OFF THE AMOUNT AS BAD DEBTS AND THE ISSUE I S COVERED IN ITS FAVOUR WITH THE DECISION OF THE HONBLE APEX COURT IN T.R. F. LTD. VS.CIT, 323 ITR 397 (SC). THE LEARNED DR HAS RELIED ON THE ORD ERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND T HAT THE ONLY REASON GIVEN BY THE CIT(A) FOR CONFIRMING THE DISAL LOWANCE WAS THAT THE DEDUCTION ON ACCOUNT OF BAD DEBT COULD BE ALLOWED O NLY WHEN THE ASSESSEE IS ABLE TO PROVE THAT THE DEBT HAS BECOME BAD, AND HAS BECOME BAD DEBTS DURING THE RELEVANT PERIOD. THIS ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE APEX COURT IN T.R.F. LTD. (SUPRA), AND THE REASONING GIVEN BY THE LD. CIT(A) FOR CONFIRMING THE ADDITION IS NOT SUSTAINABLE IN LAW. THE ISSUE BEIN G COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE APEX COURT CITED SUPRA, THE GROUND NO.1.1 AND 1.2 ARE ALLOWED. 5. THE GROUND NO.2.1 AND 2.2 ARE AS UNDER: 2.1 THE LD.CIT(A) ERRED IN LAW AND ON FACT IN CONF IRMING THE DISALLOWANCE OF SERVICE TAX WRITTEN OFF PERTAINING TO EARLIER YEARS HOLDING THAT THE SAID EXPENSES WERE NOT CRYSTALLIZE D DURING THE YEAR. 2.2 IT IS SUBMITTED THAT THE APPELLANT HAD TAKEN TH E CENVAT CREDIT OF SERVICE TAX AND REALIZING THE FACT THAT THE SAME IS NOT ALLOWABLE ON SERVICE TAX PORTION OF MOBILE BILLS, CHARGED THE AMOUNT TO PROFIT AND LOSS ACCOUNT DURING THE YEAR UNDER CONSIDERATIO N AND HENCE CRYSTALLIZED DURING THE YEAR. ITA NO.862/AHD/2010 -3- 6. WE HAVE HEARD PARTIES. WE FIND THAT THE ASSESSE E COULD NOT PROVE THAT THESE EXPENSES WERE CRYSTALLIZED DURING THE YE AR UNDER REFERENCE. THE MOBILE BILLS PERTAINS TO THE FINANCIAL YEAR 200 4-2005 AND THESE EXPENSES OF MOBILE BILLS CLAIMED BY THE ASSESSEE IN FINANCIAL YEAR 2004- 2005 ONLY, AND THEREFORE, WE SEE NO REASON TO INTER FERE WITH THE ORDER OF THE CIT(A), WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.2.1 AND 2.2 OF THE ASSESSEE ARE DISMISSED. 7. THE GROUND NO.3.1 IS AS UNDER: 3.1 THE LD.CIT(A) ERRED IN LAW AND ON FACT IN CONF IRMING THE DISALLOWANCE OF RS.1,00,000 WITHOUT APPRECIATING TH E FACT THAT EXPENSE HAD REALLY BEEN INCURRED AND THE APPELLANT COULD NOT BE ABLE TO COLLECT A BILL FROM THE VENDOR DUE TO COMME RCIAL REASON. 8. WE HAVE HEARD PARTIES. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDE NCE BEFORE THE AO WITH REGARD TO THE EXPENDITURE OF RS.1 LAKH CLAIMED IN RESPECT OF REPAIRING OF EFFLUENT PLANT. IN THESE FACTS AND IN THE ABSEN CE OF NECESSARY DETAILS AND EVIDENCES TO PROVE THE GENUINENESS OF THE EXPEN SES AND ALLOWABILITY THEREOF, WE HOLD THAT NO INTERFERENCE IN THE ORDER OF THE CIT(A) ON THIS ISSUE IS CALLED FOR, WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.3.1 OF THE ASSESSEES DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## #. .. .% %% % . .. .&'( &'( &'( &'( /A.K. GARODIA) %) * /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT