M/s Elkay Telelinks Ltd., New Delhi V. ACIT, New Delhi

ITA 912/DEL/2011

• Counselvise Citation: 91220114 RSA 2011
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P GULATI
• Keywords: Additional evidence; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO.912/DEL/2011 ASSESSMENT YEAR: 2007-08 M/S ELKAY TELELINKS LTD., K.C. VS. ASSTT. CIT, HOUSE, 5/66 WEA PADAM SINGH CIRCLE 10(1), ROAD, KAROL BAGH, NEW DELHI NEW DELHI PAN NO.AAACE 0562 E & I.T.A. NO.1271/D/2011 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME-TAX VS. M/S ELKAY TELELINKS L TD. CIRCLE 11(1), NEW DELHI KC HOUSE, 5/66, WEA PADAM SINGH RD., KAROL BAGH, NEW DELHI PAN NO. AAACE 0562 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.P. GULATI, ADVOCATE RESPONDENT BY : SHRI ROHIT GARG, SR. DR ORDER PER RAJPAL YADAV, JM: THE ASSESSEE AND THE REVENUE ARE IN CROSS APPEALS AGAINST T HE ORDER OF LEARNED CIT(A) DATED 10.12.2010. 2. THE ASSESSEE-COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF WIRES AND CABLES. IT HAS FI LED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2007 DECLARING AN INCOME OF `1,67,70,748/ -. THE ASSESSEE HAS CLAIMED BAD DEBTS OF `49,27,165/-. THE BAD DEBT CLAIMED HAS BEEN DISALLOWED BY THE ASSESSING OFFICER. ON APPEAL, 2 LEARNED CIT(A) HAS DELETED THE ADDITION OF `25,12,32 1/- AND CONFIRMED THE BAD DEBT WRITTEN OFF AT `24,14,844/-. 2.1 IN THE PRESENT APPEALS, REVENUE IS IMPUGNING DELET ION OF BAD DEBTS TO THE EXTENT OF `25,12,321/- WHEREAS ASSESSEE IS IM PUGNING CONFIRMATION OF ADDITION TO THE EXTENT OF `24,14,84 4/-. 2.2 WITH THE ASSISTANCE OF LEARNED REPRESENTATIVE, WE H AVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS MOVED AP PLICATION UNDER RULE 29 OF THE ITAT RULES FOR ADMISSION OF ADDIT IONAL EVIDENCE. IT HAS PLEADED THAT ASSESSEE CLAIMED TOTAL BAD DEBTS OF ` 49,27,165/-. IT WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE FAILED TO BRING DEMONSTRATIVE EVIDENCE ON THE RECORD EXHIBITING THAT DEBT HAS ACTUALLY BECOME BAD, THEREFORE, IT CANNOT C LAIM DEDUCTION OF `49,27,165/-. ON APPEAL, LEARNED CIT(A) CONCUR WIT H THE SUBMISSION OF ASSESSEE TO THE EXTENT THAT AFTER 01.04.1989 ASSESSEE IS NOT SUPPOSED TO BRING DEMONSTRATIVE EVIDENCE ON THE RECORD EXHIBI TING THAT DEBT HAS BECOME BAD. IT IS SUFFICIENT COMPLIANCE OF THE PROVI SION IF THE AMOUNTS HAVE ACTUALLY BEEN WRITTEN OFF IN THE ACCOUNTS. HOW EVER, LEARNED FIRST APPELLATE AUTHORITY HAS OBSERVED THAT ONE OF THE DEBT OR IS ITI, RAIBARELI, WHICH IS A GOVERNMENT COMPANY AND ASSESSEE FA ILED TO BRING ANY EVIDENCE ON THE RECORD TO SHOW THAT THIS DEBTOR W AS EITHER FINANCIALLY NOT IN THE POSITION TO PAY THE DEBT OR H AS REFUSED OR EXPRESSED THE DESIRE NOT TO PAY THE DEBT. THEREFORE, LEARNED CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF `24,14,8 44/-. 2.3 THE ASSESSEE HAD MOVED AN APPLICATION UNDER RTI ACT WITH THE ITI LTD. WHEREBY IT SOUGHT INFORMATION ABOUT THE STAT US OF BAD DEBT REQUIRED TO BE PAID TO THE ASSESSEE. THE DEBTOR HAS INF ORMED THE ASSESSEE VIDE ITS LETTER DATED 12 TH MAY, 2011 THAT MONEY HAS NOT BEEN PAID AND IT WAS NOT HAVING ANY FUND TO MAKE SUCH PAYM ENT. THE ITI 3 LTD. HAS BEEN REFERRED TO BIFR. THE LEARNED COUNSEL FOR THE ASSESSEE SOUGHT TO PLACE ON RECORD THE LETTER OF ITI LTD. 2.4 LEARNED DR POINTED OUT THAT ASSESSEE HAS BEEN GIVEN SUFFICIENT OPPORTUNITIES BY THE REVENUE AUTHORITIES BELOW AND IT SHOULD NOT BE PERMITTED TO PLACE ON RECORD ANY FRESH EVIDENCE. WI TH REGARD TO THE DISALLOWANCE MADE ON MERIT, LEARNED DR RELIED UPON T HE ORDER OF ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND SUBMITTED THAT IN VARIOUS AUTHORITATIVE PRONOUNCEMENT S, IT HAS BEEN HELD THAT ASSESSEE IS NOT REQUIRED TO SUBMIT DEMONSTRATIVE EVIDENCE ON RECORD. EVEN WITHOUT PLACING ON RECORD THE INFO RMATION COLLECTED FROM ITI LTD. WITH THE HELP OF RTI ACT, ITS APPEAL D ESERVES TO BE ALLOWED. HE FURTHER CONTENDED THAT ASSESSEE WANTS TO PLACE THIS IN FORMATION ON RECORD IN ORDER TO ELIMINATE THE DOUBT EXPRESSED BY T HE CIT(A). HE MADE REFERENCE TO THE FOLLOWING DECISIONS:- TRF LTD. VS. CIT (2010) 323 ITR 397 (S.C.); CIT VS. MODI TELECOMMUNICATION LTD. (2010) 325 ITR 291 (DEL.); CIT VS. BRILLIANT TUTORIALS (P) LTD. (2007) 292 ITR 399 (MAD.) CIT VS. STAR CHEMICALS (BOM.) (P) LTD.(2009) 313 ITR 126 (BOM.) 2.5 ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCE S, WE ARE OF THE VIEW THAT INFORMATION COLLECTED FROM ITI LTD. W ITH THE HELP OF RTI ACT CAN UNABLE US TO ADJUDICATE THE APPEAL MORE APPROPRI ATELY. THEREFORE, WE PERMIT THE ASSESSEE TO PLACE THE LETTERS ON THE RECOR D. IN THE DECISIONS REFERRED BY THE ASSESSEE (EXTRACTED ABOVE) IT H AS BEEN HELD BY THE HONBLE HIGH COURTS AS WELL AS BY THE HONBLE S UPREME COURT THAT SECTION 36(1) (VII)) HAS BEEN AMENDED W.E.F. 01. 04.1989 AND AFTER THE AMENDMENT ASSESSEE IS NOT REQUIRED TO BRING DEMONSTRA TIVE EVIDENCE ON THE RECORD EXHIBITING THAT DEBT HAS ACTU ALLY BEEN BECOME BAD. EVEN IN THE ABSENCE OF THE INFORMATION COLLECT ED BY THE ASSESSEE UNDER THE RTI ACT, ITS APPEAL COULD BE ALLOWED BUT T HE INFORMATION 4 PLACED BY WAY OF ADDITIONAL EVIDENCE WOULD MAKE IT SURE THAT DEBTS HAVE BECOME BAD. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE ARE OF THE VIEW THAT BAD DEBT CLAIM OF `49,27,165/- MAD E BY THE ASSESSEE DESERVES TO BE ALLOWED. CONSEQUENTLY, WE ALLOW THE AP PEAL OF THE ASSESSEE AND DISMISS THE APPEAL OF REVENUE. 3. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.09. 2011. SD/- SD/- ( B.C. MEENA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUD ICIAL MEMBER DT.09.09.2011. NS COPY FORWARDED TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 11.08.2011 DATE OF DICTATION 05.09.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 09.09.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 09.09.2011