ASHIMA LTD., Ahmedabad V. THE DCIT, CIRCLE-1, Ahmedabad

ITA 889/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80386 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wholly owned subsidiary; Bad and doubtful debts
• Section: 28

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.889/AHD/2011 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2006-07) ASHIMA LTD. TEXELLENCE COMPLEX KHOKHRA MEHMADABAD AHMEDABAD / VS. THE DCIT CIRCLE-1 AHMEDABAD ( !./)* !./ PAN/GIR NO. : AACCA 2750 L ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI S.N.SOPARKAR WITH MS.URVASHI SHODHAN, ARS ,-(+ / . / RESPONDENT BY : SHRI SUBHASH BAINS,CIT-DR ' 0 / $1 / / / / DATE OF HEARING 20/08/2014 23' / $1 / DATE OF PRONOUNCEMENT 19/09/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABA D (CIT(A) IN SHORT) DATED 14/02/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING CONCISE GROU NDS OF APPEAL:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN OMITTING TO CON SIDER GROUND NO.1 OF THE APPEAL VIDE WHICH THE APPELLANT HAD CHA LLENGED THE VALIDITY OF THE ASSESSMENT ORDER IMPUGNED BEFORE HI M. ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 2 - 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE D ISALLOWANCE OF DEDUCTION FOR BAD DEBTS AMOUNTING TO RS.117.17CRORE . 2.2.. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND/OR ALTER THE GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.6,243/- AND MADE DISALLOWANCE OF BAD DEBTS CLAIM OF RS.1,17,16,78,697/-. AGAINST THIS, THE ASSESSEE FI LED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DI SMISSED THE APPEAL. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND IN ASSESSEES APPEAL I S AGAINST THE DISALLOWANCE O DEDUCTION OF BAD DEBTS AMOUNTING TO RS.117.17CRORES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF TRF LTD. VS. CIT REPORTED AT (2010)323 ITR 397(SC). HE REITERA TED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A) AND MADE IN THE S TATEMENT OF FACTS- CUM-SYNOPSIS. 3.1. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER PASSED BY THE AUTHORITIES BELOW. ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 3 - 3.2. IN REJOINDER, LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS THE ASSESSMENT ORDER, WHEREIN THE AO HAS OBSERVED, WRITE OFF, INVOLVES A DEBIT TO THE PROFIT AND LOSS ACCOUNT. THE CHARGE HAS TO BE AGAINST THE CURRENT YEARS INCOME. WHEREAS, THE ASSESSEE BY DE BITING THE SUM OF RS.33,25,78,167/- ONLY, THAT TOO, IN THE PROFIT AND LOSS APPROPRIATION A/C. HENCE, THE SAME CANNOT BE SAID TO BE WRITTEN OFF, E VEN, THOUGH THE DEBTORS ACCOUNTS ARE DULY CREDITED. ACCORDINGLY, T HE CLAIM OF BAD DEBTS OF RS.1,17,16,78,697/- IS DISALLOWED. THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT THIS FINDING OF AO IS AGAINST THE RA TIO OF THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. VS. CIT (SUPRA), WHEREIN IT IS HELD THAT IT IS ENOUGH IF THE BAD DEB T IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. HE SUBMITTED THAT THE HONBLE APEX COURT HAS HELD THAT WHEN THE BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUSTOMERS ACCOUNT IS CR EDITED, THUS, CLOSING THE ACCOUNT OF THE CUSTOMER. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE CASE-LAWS RELIED. WE FIND THAT TH E AO HAS REJECTED THE BAD DEBTS ON THE GROUND THAT THE ASSESSEE BY DEBITI NG THE SUM OF RS.33,25,78,167/- ONLY, THAT TOO, IN THE PROFIT AND LOSS APPROPRIATION A/C. HENCE, THE SAME CANNOT BE SAID TO BE WRITTEN OFF, E VEN, THOUGH THE DEBTORS ACCOUNTS ARE DULY CREDITED. ACCORDINGLY, T HE CLAIM OF BAD DEBTS OF RS.1,17,16,78,697/- IS DISALLOWED. HOWEVER, THE LD.CIT(A) OBSERVED THAT THE APPELLANT RELIED UPON THE DECISION OF HON BLE APEX COURT IN THE CASE OF TRF LTD.(SUPRA) IN WHICH THE HONBLE COURT DIRECTED THE AO TO VERIFY WHETHER THE DEBT HAS BEEN WRITTEN OFF IN THE ACCOUNTS OF THE ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 4 - ASSESSEE OR NOT. HOWEVER, HE OBSERVED THAT THE AC COUNTS OF THE ASSESSEE CULMINATE IN P&L ACCOUNT AND BALANCE SHEET. THE CL AIM OF BAD DEBTS IS NOT REFLECTED IN P&L ACCOUNT WHEREAS ANY ACCOUNT RE LATING TO EXPENSE OR LOSS HAS TO BE DEBITED TO P&L ACCOUNT. SINCE THERE IS NO DEBIT OF BAD DEBTS IN THE APPELLANTS P&L ACCOUNT IT CANNOT BE SAID THAT THE CLAIM WAS WRITTEN OFF IN THE ACCOUNTS. ACCORDINGLY, THE LD.C IT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT APP ELLANT DID NOT FULFILL THE CONDITION OF SECTION 36(1)(VII) OF THE IT ACT AND H E CONFIRMED THE DISALLOWANCE MADE BY THE AO. DURING THE COURSE OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWA RDS PAGE NOS.72 & 73 OF THE PAPER-BOOK (ANNEXURE-B). IT IS SUBMITTED B Y THE ASSESSEE- COMPANY THAT DURING THE AY 2006-07, IT HAS WRITTEN OFF AN AMOUNT OF RS.117.17 CRORES AS BAD DEBT PERTAINING TO TWO OF I TS DISTRIBUTORS, M/S.ARGUS CLOTH CO.LTD. AND NIAGARA DISTRIBUTORS LT D. TO GIVE EFFECT TO THE AWARD OF THE ARBITRATOR IN THE MATTER OF DISPUT ES WITH THESE TWO DISTRIBUTORS. THE LD.COUNSEL FOR THE ASSESSEE AL SO DREW OUR ATTENTION TOWARDS PAGE NOS.103 TO 124 OF THE PAPER-BOOK, WHER EIN IT CONTAINED THE AWARD PASSED BY THE ARBITRATOR. THE LD.COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TOWARDS AUDIT REPORT ALONG WITH AUDITED ACCOUNTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION TO BUTT RESS HIS ARGUMENT THAT THE DEBTS WERE WRITTEN OFF IN THE ACCOUNTS OF THE A SSESSEE. IT WAS CONTENDED BY THE LD.COUNSEL FOR THE ASSESSEE THAT T HE FINDING OF LD.CIT(A) THAT THERE WAS NO BREAK-UP EXTRA-ORDINARY AND EXCEPTIONAL ITEMS IN THE AUDIT REPORT IS EX-FACIE INCORRECT. H E DREW OUR ATTENTION TO THE SCHEDULE-18 TO THE ANNUAL REPORT OF THE ASSESSE E-COMPANY ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 5 - CONTAINING ACCOUNTING POLICIES AND NOTES FORMING P ART OF ACCOUNTS. THE NOTE NOS.14 & 15 OF PARTS OF THAT SCHEDULE REA D AS UNDER:- 14. THE COMPANY HAS UNDERTAKEN REVALUATION OF ITS FIXED ASSETS DURING YEAR AND HAS CREDITED THE SURPLUS OF REVALUED AMOUN T OVER BOOK VALUE AMOUNTING TO RS.8391.01 LACS TO REVALUATION RESERVE . MOREOVER THE COMPANY HAD DISPUTES WITH ITS DEBTORS FOR WHICH THE MATTER WAS REFERRED TO THE ARBITRATOR. AS PER THE AWARD OF THE ARBITRAT OR, THE COMPANY HAS WRITTEN OFF AN AMOUNT OF RS.11716.79 LACS WHICH, BA SED ON LEGAL OPINION HAS BEEN SET OFF AGAINST REVALUATION RESERV E AND THE NET AMOUNT OF RS.3325.78 LACS IS DEBITED TO PROFIT AND LOSS ACCOUNT AS PART OF EXCEPTIONAL AND EXTRAORDINARY ITEMS. 15. THE COMPANY HAS AN INVESTMENT OF RS. 3000.00 LA CS IN ASHIMA DYECOT LIMITED, AN ASSOCIATE COMPANY. THE ACCUMULAT ED LOSS AS AT MARCH 31, 2006 HAS EXCEEDED THE NET WORTH OF THE SA ID COMPANY. HOWEVER, HAVING REGARD TO THE PROSPECTS OF LONG-TER M REVIVAL OF THE COMPANY, NO PROVISION IS CONSIDERED NECESSARY ON TH IS ACCOUNT. DECLINE IN VALUE OF THE INVESTMENTS IN NACHMO KNITE X LIMITED IS NOT PROVIDED FOR SINCE THE DECLINE, IN THE OPINION OF T HE COMPANY, IS NOT OF A PERMANENT NATURE. THE COMPANY HAS MADE PROVISION FOR DIMINUTION IN TH E VALUE OF INVESTMENT OF RS. 2200.00 LACS IN FULLY CONVER TIBLE DEBENTURES OF ITS 100% SUBSIDIARY, ASHIMA COTTONS PRIVATE LIMITED (AC PL) AS THE NET ASSET VALUE OF ACPL HAS BECOME NEGATIVE. THE SAID A MOUNT APPEARS AS PART OF EXCEPTIONAL AND EXTRAORDINARY ITEMS. 4.1. THE CONTENTION OF THE ASSESSEE IS THAT THE AB OVE NOTES CONTAIN THE COMPLETE DETAILS OF THE AMOUNT DEBITED AS EXCEPTION AL AND EXTRA-ORDINARY ITEMS IN THE PROFIT AND LOSS, HENCE THE OBSERVATION OF LD.CIT(A) IS INCORRECT. IT IS CONTENDED THAT THE BREAK-UP OF TH E SAID AMOUNT APPEARING IN TABULAR FORM IS AS UNDER:- SR.NO. PARTICULARS AMOUNT RS. 1. BAD DEBTS WRITTEN OFF IN ACCORDANCE WITH ARBITRATION AWARD 1,17,16,78,697/- ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 6 - (PLEASE REFER EXPLANATION GIVEN HERE IN BELOW) 2. LESS : REVALUATION RESERVE (PLEASE REFER EXPLANATION GIVEN HEREINBELOW) -83,91,00,530/- 3. ADD: PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT 22,00,00,000/- NET AMOUNT 55,25,78,167/- 4.2. IT IS THE CONTENTION OF THE APPELLANT THAT THE ONLY RESERVATION OF THE AO IS THAT THE APPELLANT HAS SHOWN THE AMOUNT OF BA D DEBTS WRITTEN OF UNDER THE HEAD OF EXCEPTIONAL AND EXTRA-ORDINARY IT EMS IN THE P&L A/C AND THEREBY HAS DEBITED ONLY RS.33,25,76,167/- IN T HE PROFIT AND LOSS ACCOUNT THAT TOO IN THE PROFIT AND LOSS APPROPRIATI ON ACCOUNT. ANOTHER CONTENTION OF LD.SR.COUNSEL FOR THE ASSESSEE IS THA T PROBABLY AO HAS BEEN MISGUIDED BY THE PRESENTATION OF BAD DEBT WRITTEN O FF OF RS.117.17 CRORES IN THE PROFIT AND LOSS ACCOUNT. THE FACT OF THE MA TTER IS THAT SUM OF RS.117.17 CRORES HAS BEEN CLUBBED AND GROUPED TOGET HER WITH TWO OTHER EXTRA-ORDINARY ITEMS AND ALGEBRAIC SUM OBTAINED AF TER THE AFORESAID GROUPING OF THESE THREE ITEMS HAS BEEN TAKEN TO THE PROFIT AND LOSS ACCOUNT. IT IS SUBMITTED THAT THESE GROUPINGS OF I TEMS WERE DONE PURELY FOR THE PURPOSE OF PRESENTATION OF THESE ITEMS IN T HE PROFIT & LOSS ACCOUNT, HOWEVER THE SAME CANNOT BE INTERPRETABLE TO MEAN TH AT INDIVIDUAL ITEM IS NOT PART OF THE PROFIT AND LOSS ACCOUNT AS HAVE NOT BEEN GIVEN EFFECT IN THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT-COMPANY. THIS IS MORE SO EVEN WHEN ALL THE THREE ITEMS ARE SEPARATELY SHOWN AND A RE ALLOWABLE AND, ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 7 - HENCE, WHEN THE NET ALGEBRAIC SUM THEREOF IS TAKEN TO A CONSOLIDATED PROFIT AND LOSS ACCOUNT, IT OBVIOUSLY TAKES INTO AL L THE THREE ITEMS:- AT MANY TIMES, NETTING OFF ITEMS OR PRESENTATION O F ONLY NET AMOUNT ON THE FACE OF THE BALANCE SHEET OR PROFIT & LOSS ACCOUNT IS PRESCRIBED BY THE SCHEDULE VI OF THE COMPANIES ACT ITSELF, AS THE MAIN PURPOSE OF SUCH NETTING OFF IS FOR THE PURPOSE OF ACHIEVING EFFECTIVE AND CONCISE PRESENTATION OF THESE STATEME NTS. HOWEVER, IN THE HUMBLE UNDERSTANDING OF APPELLANT, IT WOULD BE ABSOLUTELY IRRATIONAL TO CONCLUDE THAT SUCH ITEM; WHICH ARE NE TTED OFF ONLY IN ORDER TO ACHIEVE THIS OBJECT, ARE NOT GIVEN EFFECT IN ITS ENTIRETY IN THE PROFIT & LOSS ACCOUNT. THE PRESENTATION ADOPTED BY APPELLANT-COMPANY WAS O NLY TO COPY WITH AND IN ACCORDANCE WITH THE DISCLOSURE REQUIREM ENTS OF ACCOUNTING STANDARD 5 NET PROFIT & LOSS FOR THE PE RIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES, H OWEVER SUCH COMPLIANCE ON PART OF APPELLANT CANNOT CHANGE THE P RIME CHARACTER OF THE IMPUGNED DEBT OF RS.117.17 CRORES, BEING ADMISSIBLE AS PER THE PROVISIONS OF SECTION 36(1)(V II) OF THE ACT. FURTHER, SO FAR AS THE OBSERVATION OF LD.ASSESSING OFFICER WITH RESPECT TO THE CHARGE OF IMPUGNED AMOUNT OF DEBT TO THE PROFIT AND LOSS APPROPRIATION ACCOUNT IS CONCERNED, IT IS MOST RESPECTFULLY SUBMITTED THAT THE CONCEPT OF PROFIT & LOSS APPROPR IATION ACCOUNTS NO WHERE FINDS ITS PLACE IN REQUIREMENTS OF SCHEDUL E VI OF THE COMPANIES ACT AND ACCORDINGLY THE IMPUGNED BAD DEBT WAS INVARIABLY DEBITED TO THE PROFIT & LOSS ACCOUNT OF APPELLANT. 4.3. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE PROVISIONS OF SECTION 36(1)(VII) DO NOT CONTAIN THE REQUIREMENT O F WRITING OFF THE BAD DEBTS TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSE E WHAT THE SAID PROVISION MANDATES THAT THE AMOUNT OF ANY BAD DEBT OR PART THEREOF SHOULD BE WRITTEN OFF AS IRRECOVERABLE IN THE ACCOU NTS OF THE ASSESSEE FOR THE PREVIOUS YEAR. LD.COUNSEL FOR THE ASSESSEE EMP HASIZED ON THE SUBMISSIONS THAT THE PROVISION REQUIRES WRITING OFF IN THE ACCOUNTS OF THE ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 8 - ASSESSEE NOT IN THE PROFIT AND LOSS ACCOUNT, HE SUB MITTED THAT THE LEDGER ACCOUNTS OF THE PARTIES FORM PART OF THE ACCOUNTS, MAINTAINED BY THE ASSESSEE. THEREFORE, THE REQUIREMENTS OF SECTION 3 6(1)(VII) ARE DULY COMPLIED WITH. TO BUTTRESS THIS CONTENTION, HE DRE W OUR ATTENTION TO SECTION 36(1)(VII) OF THE ACT, WHICH READS AS UNDER :- SECTION 36(1)(VII) (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CL AUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 . . (VII) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), THE AMOUNT OF [ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRRECOVERABLE IN TH E ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR]: [PROVIDED THAT IN THE CASE OF [AN ASSESSEE] TO WHIC H CLAUSE (VIIA) APPLIES, THE AMOUNT OF THE DEDUCTION RELATING TO ANY SUCH DEBT OR PART THEREOF SHALL BE LIMITED TO THE AMOUNT BY WHICH SUCH DEBT OR PART THEREOF EXCEEDS T HE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE UNDER THAT CLAUSE;] [ EXPLANATION 1 : FOR THE PURPOSES OF THIS CLAUSE, ANY BAD DEBT OR PART THEREOF WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSE E SHALL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE ACCOUNTS OF THE ASSESSEE.] [ EXPLANATION 2 : FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT FOR THE PURPOSES OF THE PROVISO TO CLAUSE (VII) OF THIS SUB-SECTION AND CLAUSE (V) OF SUB-SECTION (2), THE ACCOUNT REFERRED TO THEREIN SHALL BE ONLY ONE ACCOU NT IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS UNDER CLAUSE (VIIA) AND SUCH ACC OUNT SHALL RELATE TO ALL TYPES OF ADVANCES, INCLUDING ADVANCES MADE BY RURAL BRANCHES ;] 4.4. IT WAS CONTENTED THAT ONCE THE CONDITION OF WR ITING OF BAD DEBT IS COMPLIED, THE SAME BECOMES ALLOWABLE IN VIEW OF THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. VS. CIT 223 ITR 397. WE FIND THAT THE HONBLE APEX COURT IN THE CA SE OF TRF LTD.(SUPRA), HAS HELD AS UNDER:- ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 9 - 4. THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1ST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRIT TEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. HOWEVER, IN THE PR ESENT CASE, THE AO HAS NOT EXAMINED WHETHER THE DEBT HAS, IN FACT, BEE N WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS, THE BAD DEBT ACCOUNT IS DEBITED AND THE CUSTOMER'S ACCOUNT IS CREDITED, THU S, CLOSING THE ACCOUNT OF THE CUSTOMER. IN THE CASE OF COMPANIES, THE PROV ISION IS DEDUCTED FROM SUNDRY DEBTORS. AS STATED ABOVE, THE AO HAS NO T EXAMINED WHETHER, IN FACT, THE BAD DEBT OR PART THEREOF IS W RITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEE N UNDERTAKEN BY THE AO. HENCE, THE MATTER IS REMITTED TO THE AO FOR DE NOVO CONSIDERATION OF THE ABOVE-MENTIONED ASPECT ONLY AND THAT TOO ONL Y TO THE EXTENT OF THE WRITE OFF. 4.5. IN THE LIGHT OF THE JUDGEMENT OF HONBLE SUPRE ME COURT IN THE CASE OF TRF LTD.(SUPRA), WE FIND FORCE INTO THE CONTENTI ON OF LD.COUNSEL FOR THE ASSESSEE. THEREFORE, WE HEREBY SET ASIDE THE FINDI NG OF LD.CIT(A) ON THIS ISSUE AND DIRECT THE AO TO VERIFY WHETHER THE ASSES SEE HAS WRITTEN OFF THE DEBT FROM ITS ACCOUNTS AS IRRECOVERABLE AND ALLOW T HE CLAIM ACCORDINGLY. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES IN THE TERMS INDICATED HEREINABOVE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/09/2014 71.., .../ T.C. NAIR, SR. PS ITA NO.889/AHD/ 2011 ASHIMA LTD. VS. DCIT ASST.YEAR 2006-07 - 10 - 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-VI, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 10.9.14(DICTATION-PAD 9-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..11/16.9.14 OTHER MEMBER... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S.19.9.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 19.9.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER