Nichrome India Ltd., Pune V. Additional Commissioner of Income-tax,

ITA 919/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2816 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Bad and doubtful debts
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 870/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 DY. COMMISSIONER OF INCOME TAX, CIRCLE 7, PUNE ....... / APPELLANT ' / V/S. NICHROM INDIA LIMITED, 4, SAFFIRE PARK, 2 ND FLOOR, WAKDEWADI, PUNE-MUMBAI ROAD, SHIVAJINAGAR, PUNE-411005 PAN : AAACT4161C / RESPONDENT / ITA NO. 919/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 NICHROM INDIA LIMITED, 4, SAFFIRE PARK, 2 ND FLOOR, WAKDEWADI, PUNE-MUMBAI ROAD, SHIVAJINAGAR, PUNE-411005 PAN : AAACT4161C ....... / APPELLANT ' / V/S. ADDL. COMMISSIONER OF INCOME TAX, RANGE - 7, PUNE / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 19-01-2016 / DATE OF PRONOUNCEMENT : 29-01-2016 2 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 * / ORDER PER VIKAS AWASTHY, JM : ITA NO. 870/PN/2014 HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE D ATED 19-02-2014 FOR THE ASSESSMENT YEAR 2009-10. THE ASSE SSEE HAS FILED CROSS APPEAL AGAINST THE SAID ORDER OF COMMISSIONER OF INC OME TAX (APPEALS) IN ITA NO. 919/PN/2014. 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE: THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON 20-09-2009 DECLARING INCOME OF ` 3,89,73,479/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MAD E CERTAIN ADDITIONS/DISALLOWANCES IN THE INCOME RETURNED BY THE ASSE SSEE AND ASSESSED THE TOTAL TAXABLE INCOME AT ` 5,40,22,640/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 09-12-2011, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUG NED ORDER PARTLY ACCEPTED THE APPEAL OF THE ASSESSEE. NOW , BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL AGAINST THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS) BEFORE THE TRIBUNAL. ITA NO. 870/PN/2014 (APPEAL BY THE REVENUE) 3. FIRST, WE WILL TAKE UP THE APPEAL OF REVENUE. THE REVEN UE IN APPEAL HAS RAISED 5 GROUNDS. ALL THE GROUNDS IN THE APPE AL OF THE 3 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 REVENUE RELATE TO THE WRITE OFF OF BAD DEBTS. THE ASSE SSEE HAS CLAIMED ` 40,45,951/- AS BAD DEBTS WRITTEN OFF. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT WITH MOST OF THE PARTIES, T HE ASSESSEE HAS DONE TRANSACTIONS IN THE SUBSEQUENT YEARS AND ALL THE TRANSACTIONS IN RESPECT OF WHICH DEBTS HAVE BEEN WRITTEN OFF WERE MADE B Y THE ASSESSEE JUST ONE YEAR BEFORE. ALL THE PARTIES ARE IN EXISTENCE AN D DOING THEIR BUSINESS. HENCE, DUES THEREFROM CANNOT BE TREATED AS B AD. IN APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CON TENTIONS OF THE ASSESSEE IN THE LIGHT OF DECISION RENDERED IN THE CAS E OF SOUTH INDIA SURGICAL CO. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORT ED AS 287 ITR 62 (MAD) AND THE DECISION OF HON'BLE SUPREME COUR T OF INDIA IN THE CASE OF TRF LTD. VS. CIT REPORTED AS 323 ITR 397 (SC). 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT SUB MITTED THAT A PERUSAL OF THE IMPUGNED ORDER WOULD SHOW THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) WHILE ALLOWING THE CLAIM OF THE ASSESSEE HAS BIFURCATED THE DEBTS WRITTEN OFF IN THREE CA TEGORIES. THE FIRST CATEGORY IS THE DEBTORS, WHERE THE DEBTS WRITTEN O FF REPRESENT OPENING BROUGHT FORWARD BALANCES AND THERE WERE NO TRA NSACTIONS AT ALL WITH THE DEBTORS DURING THE YEAR. THE SECOND CATEGORY IS THE DEBTORS, WITH WHOM THE ASSESSEE CONTINUED TO HAVE TRANSACTIONS AND ALSO RECEIVED PAYMENTS FROM THE DEBTORS DURING THE YEAR. THE THIR D CATEGORY IS THE DGFT REFUNDS. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW AS TO HOW THE DEBTS HAVE BECOME BAD. THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER AND PRAYED FOR REVERSING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 4 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 5. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED THAT THE IDENTICAL ISSUE RELATING TO WRITE OFF O F BAD DEBTS WAS RAISED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1623/PN/2012 AND ITA NO. 1639/PN/2012 FOR THE ASSESSM ENT YEAR 2007-08 DECIDE ON 31-10-2013. THE TRIBUNAL AFTER APPREC IATING THE FACTS OF THE CASE AND THE WELL SETTLED LAW DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE. THE LD. AR PLACED ON RECORD A COPY OF THE ORDER OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1623/PN/2012 AN D ITA NO. 1639/PN/2012 (SUPRA). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE DEPARTMENT HAS IMPUGNED THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER BY DISALLOWING THE ASSESSEE'S CLAIM OF BAD DEBTS AMOUN TING TO RS.40,45,951/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED IN HOLDING THAT AFTER THE AMENDMENT TO SECTIO N 36(1)(VII) (W.E.F. 01.04.1989), THE ASSESSEE NEED NOT DEMONSTRATE TO T HE TAX AUTHORITIES THAT DEBT HAS BECOME BAD WHEREAS THE REAL OBJECTIVE OF THIS AMENDMENT WAS TO ELIMINATE THE DISPUTE AS TO THE YEAR IN WHICH A BAD DEBT WAS TO BE ALLOWED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS NOT APPRECIATED THAT EVEN AFTER THE AMENDMENT W.E.F. 01 .04.1989, THE ALLOWANCE IS ONLY IN RESPECT OF 'BAD DEBT' AND 'NOT JUST A DEBT WRITTEN OFF . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT THE ASSESSEE EXERCISED ITS HONEST JUDGMENT IN WRITI NG OFF THE DEBTS IN QUESTION AS BAD DEBTS. 5 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 5. THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 7. WE FIND THAT THE ISSUE RAISED BY THE DEPARTMENT IN PR ESENT APPEAL IS SIMILAR TO THE ISSUE THAT WAS RAISED IN THE ASSE SSMENT YEAR 2007-08. THE TRIBUNAL ADJUDICATED THE MATTER AS FOLLOWS: 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 36(1)(VII) OF THE ACT PROVIDES THAT SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) OF SECTION 36 OF THE ACT, THE AMOUNT OF ANY BAD DEBT O R PART THEREOF WHICH IS WRITTEN-OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE SHALL BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE RELEVANT PREVIOUS YEAR. FURTHER, SUB-SECTION (2) OF SECTION 36 PRESCR IBES THE CONDITIONS IN ORDER TO CLAIM DEDUCTION FOR WRITE-OFF OF BAD DEBTS . IN SO FAR AS THE PRESENT CASE IS CONCERNED, THE CONDITION APPLICABLE IS TO THE EFFECT THAT SUCH DEBT OUGHT TO HAVE BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME EITHER IN THE PREVIOUS YEAR IN WHICH THE AMOUNT OF SUCH DEBT OR PART THEREOF WRITTEN-OFF OR OF AN EARLIER PREVIOUS YEAR. 10. WITH RESPECT TO THE AFORESAID STATUTORY REQUIRE MENT THERE IS NO DISPUTE IN THE PRESENT CASE. FIRSTLY, THE DEBTS IN QUESTION HAVE BEEN WRITTEN-OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE; AND, SECONDLY IT IS ALSO NOT IN DISPUTE THAT THE SAME HA VE ALREADY BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSE E IN THE PRECEDING YEARS. HOWEVER, THE STAND OF THE REVENUE IS THAT, O N FACTS, ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE DEBTS HAVE BECO ME IRRECOVERABLE. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE PROCEE DED ON THE PROPOSITION THAT THE ASSESSEE WAS REQUIRED TO ESTABLISH THAT TH E DEBTS HAD BECOME BAD; OR, IN OTHER WORDS, THAT THE DEBTS WERE IRREC OVERABLE AND ONLY THEN THE WRITTE-OFF OF SUCH BAD DEBTS WOULD QUALIFY FOR DEDUCTION U/S. 36(1)(VII) OF THE ACT. IN OUR CONSIDERED OPINION, THE CONTROVE RSY ON THIS POINT HAS BEEN ANSWERED BY THE HONBLE SUPREME COURT IN THE C ASE OF T.R.F. LTD. (SUPRA). THE HONBLE SUPREME COURT COMPARED THE PRO VISIONS OF SECTION 36(1)(VII) OF THE ACT WHICH EXISTED PRIOR TO 01.04. 1989 WITH THAT WHICH ARE ON STATUTE POST01.04.1989. ASSESSMENT YEARS BEFORE THE HONBLE SUPREME COURT WERE 1990-91 AND 1993-94, I.E. BOTH P OST 01.04.1989. AS PER THE HONBLE SUPREME COURT, PRIOR TO 01.04.19 89, EVERY ASSESSEE HAD TO ESTABLISH, AS MATTER OF FACT, THAT THE DEBT ADVANCED BY THE ASSESSEE HAD, IN FACT, BECOME IRRECOVERABLE. FURTHE R, EXPLAINING THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT AS AMEN DED W.E.F. 01.04.1989, 6 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 THE HONBLE SUPREME COURT OBSERVED THAT UNDER THE A MENDED PROVISIONS IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH T HAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH THAT THE BAD DEB T IS WRITTEN-OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IN ORDER TO EMPHASIZE THE POINT SOUGHT TO BE MADE OUT, WE REPRODUCE HEREUNDER THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE SUPREME COUR T IN THE CASE OF T.R.F. LTD. (SUPRA) :- 2. .. PRIOR TO APRIL 1, 1989, EVERY ASSESSEE HA D TO ESTABLISH, AS A MATTER OF FACT, THAT THE DEBT ADVANCED BY THE ASSES SEE HAD, IN FACT, BECOME IRRECOVERABLE. THAT POSITION GOT ALTERED BY DELETION OF THE WORD ESTABLISHED, WHICH EARLIER EXISTED IN SECTION 36( 1)(VII) OF THE INCOME-TAX ACT, 1961 (THE ACT, FOR SHORT). 3. FOR THE SAKE OF CLARITY, WE REPRODUCE HEREINBELO W THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, BOTH PRIOR TO APRIL 1, 1989 AND POST APRIL 1, 1989 : PRE-APRIL 1, 1989 : 36. OTHER DEDUCTIONS.(1) THE DEDUCTIONS PROVIDED F OR IN THE FOLLOWING CLAUSES 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 DEBT, OR PART THEREOF, WHICH IS ESTABLISHED TO HAVE BECOM E A BAD DEBT IN THE PREVIOUS YEAR. POST-APRIL 1, 1989 : 36. OTHER DEDUCTIONS.(1) THE DEDUCTIONS PROVIDED F OR IN THE FOLLOWING CLAUSES 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 IRRECO VERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR. 4. THE POSITION IN LAW IS WELL-SETTLED. AFTER APRIL 1, 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. .. 11. THUS, IN SO FAR AS THE ASSESSMENT YEAR BEFORE U S IS CONCERNED, WHICH IS POST01.04.1989, IN TERMS OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. (SUPRA), THE STAND OF THE REVENUE THAT 7 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 ASSESSEE WAS REQUIRED TO ESTABLISH THAT THE DEBTS I N QUESTION, IN-FACT, HAD BECOME IRRECOVERABLE IN ORDER TO ALLOW THE CLAI M U/S. 36(1)(VII) OF THE ACT, IS QUITE MISPLACED. 12. NEVERTHELESS, EVEN ON FACTS ALSO, WE FIND THAT IN SO FAR AS THE IRRECOVERABILITY OF THE IMPUGNED DEBTS IS CONCERNED , THERE CANNOT BE ANY DOUBT. IN THIS CONTEXT, WE HAVE PERUSED THE DETAILS OF AMOUNTS DUE FROM DIFFERENT DEBTORS WHICH HAS BEEN WRITTEN-OFF AS BAD DEBTS AMOUNTING TO RS.40,89,838/-, THE RELEVANT DETAILS ARE AT PAGES 4 TO 9 OF THE PAPER BOOK. AGAINST EACH AND EVERY ENTRY ASSESSEE HAS EXP LAINED THE REASONS FOR TREATING THE SAME AS A BAD DEBT. A PERUSAL OF THE SAME REVEALS THAT AMOUNTS WRITTENOFF ARE OUTSTANDING FOR RECOVERY FOR PERIODS RANGING FROM 2 TO 10 YEARS. IN-FACT, AN OVERWHELMING MAJORITY OF THE ENTRIES ARE OF SMALL AMOUNTS AND ARE OUTSTANDING FOR 4 YEARS AND A BOVE. NO DOUBT, WITH SOME OF THE PARTIES IN QUESTION, ASSESSEE HAS UNDERTAKEN DEALINGS IN THE INSTANT YEAR ALSO. SO, HOWEVER, THE AMOUNTS THAT HAVE BEEN WRITTEN-OFF, AS DETAILED IN THE PAPER BOOK, ARE SPE CIFIC BILLS OR PART OF SPECIFIC BILLS RAISED BY THE ASSESSEE, WHICH HAVE N OT BEEN COLLECTED FROM SUCH PARTIES. THEREFORE, MERELY BECAUSE ASSESSEE HA D DEALING WITH THAT PARTICULAR CONCERN OR THAT THE CONCERNS ARE OTHERWI SE FINANCIALLY VIABLE DOES NOT DISTRACT FROM THE FACT THAT THE AMOUNTS IN QUESTION, WHICH ARE INDIVIDUALLY OF SMALL VALUES, WERE SPECIFIC BILLS O F THE ASSESSEE OR PART THEREOF, WHICH WERE OUTSTANDING FOR A LONG PERIOD O F TIME AND THEREFORE CONSIDERING THE AFORESAID ASPECT, ON FACTS, THE JUD GMENT OF THE ASSESSEE OF TREATING THEM AS IRRECOVERABLE CANNOT BE FAULT ED. THUS, IN OUR CONSIDERED OPINION, THE CLAIM OF THE ASSESSEE FOR W RITING-OFF OF SUCH AMOUNTS U/S. 36(1)(VII) OF THE ACT AS IRRECOVERABL E WAS FAIR AND PROPER. 13. IN SO FAR AS THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT RELIED UPON BY THE REVENUE IN THE CASE OF SOUTH INDIA SURG ICAL CO. LTD. (SUPRA) IS CONCERNED, THE SAME, IN OUR VIEW, DOES NOT HELP THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. (S UPRA) HAS OPINED THAT POST01.04.1989, IT IS NO LONGER NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT, IN-FACT HAS BECOME IRRECOVERABLE BEF ORE CLAIMING DEDUCTION U/S.36(1)(VII) OF THE ACT. THUS, CANVASSING TO THE CONTRARY, BASED ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF SOUTH INDIA SURGICAL CO. LTD. (SUPRA), IN OUR VIEW, DOES NOT HE LP THE REVENUE. 14. IN CONCLUSION, WE HOLD THAT ON FACTS AND ALSO I N LAW, THE ENTIRE CLAIM OF THE ASSESSEE FOR WRITE-OFF OF BAD DEBTS U/S. 36( 1)(VII) OF THE ACT AMOUNTING TO RS.40,89,838/- WAS JUSTIFIED AND THE C IT(A) OUGHT TO HAVE ALLOWED IT, INSTEAD OF RESTRICTING IT TO RS.22,56,9 98/- ONLY. THEREFORE, WE 8 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AS SESSING OFFICER TO DELETE THE ENTIRE DISALLOWANCE OF RS.40,89,838/-. WE FIND THAT THERE IS NO CHANGE IN THE FACTS IN THE IMPUGN ED ASSESSMENT YEAR EXCEPT FOR THE AMOUNTS. THE LD. DR HA S NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE TRIBUNAL ON THIS ISSUE. RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE, WE UPHOLD THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEA LS) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED B EING DEVOID OF ANY MERIT. ITA NO. 919/PN/2014 (APPEAL BY THE ASSESSEE) 9. THE ASSESSEE HAS IMPUGNED THE FINDINGS OF THE COMMISSIO NER OF INCOME TAX (APPEALS) ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING DISALLOWANCE OF LABOUR WELFARE EXPENSE AMOUNTING TO RS.65,310 AS PAID TO BIHAR RELIEF FUND WHEN IT WAS EXPENSES INCURRED TO SUPPLY MILK TO FLOOD AFFECTED AS PART OF CORPORATE SOCIAL RESPONSIBILITY EXPENSE. THE LEARNED CIT (A) FURTHER FAILED TO APPRECIATE THE ARGUMENTS AND CONTENTIONS ADVANCED IN THIS BEHALF. 2. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING DISALLOWANCE OF COMPUTER REPAIRS EXPENSES AMOUNTING TO RS.8,87,1 03 ON THE GROUNDS THAT DETAILS WERE NOT SUBMITTED BY THE ASSESSEE WHE REAS ALL THE RELEVANT DOCUMENTS ARE ALREADY ON RECORD OF THE LOWER AUTHOR ITIES AND THE SAID REPAIRS ARE OF REVENUE IN NATURE. ALSO THE SAID DIS ALLOWANCE IS BASED ON AD HOC BASIS AND ON MERE SURMISES AND CONJECTURES. 3. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UP HOLDING DISALLOWANCE OF UN-RECONCILED BALANCE OF RS.35,000 OF SUNDRY CRE DITORS ON THE GROUNDS THAT IT WAS UN-RECONCILED WHEN DETAILED ACCOUNT STA TEMENTS ALONG WITH EXPLANATIONS WERE ALREADY SUBMITTED IN THIS BEHALF. 9 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 10. THE LD. AR SUBMITTED THAT IN ORDER TO DISCHARGE ITS CORPORATE SOCIAL RESPONSIBILITY THE ASSESSEE HAD CONTRIBUTED ` 65,310/- TOWARDS BIHAR RELIEF FUND. IN SUPPORT OF HIS SUBMISSIONS, THE ASSESS EE REFERRED TO PAGES 1 TO 3 OF THE PAPER BOOK. THE LD. AR SUBMITTE D THAT A PERUSAL OF CREDIT NOTE DATED 15-12-2008 AND TAX INVOICE DATED 19-11-2008 WOULD SHOW THAT THE ASSESSEE HAS INCURRED EXPENSES FOR SUPPLY OF MILK TO FLOOD AFFECTED PARTS OF BIHAR. 10.1 IN RESPECT OF DISALLOWANCE OF COMPUTER REPAIRS EXPENS ES AMOUNTING TO ` 8,87,103/- THE LD. AR CONTENDED THAT THE ASSESSEE HAD PLACED ON RECORD THE DETAILS OF EXPENDITURE BEFORE THE AS SESSING OFFICER. HOWEVER, THE SAME WERE NOT CONSIDERED AT THE TIME OF AS SESSMENT. THE LD. AR REFERRED TO THE BILLS AND INVOICES AT PAGES 4 TO 62 OF THE PAPER BOOK IN SUPPORT OF HIS SUBMISSIONS. THE COMMISSIONER OF INC OME TAX (APPEALS) HAS ALSO REJECTED THE CONTENTION OF THE ASSESS EE IN A MECHANICAL MANNER WITHOUT APPRECIATING THE BILLS AND INVOICES FURNISHED BY THE ASSESSEE. 10.2 AS REGARDS DISALLOWANCE OF UN-RECONCILED BALANCE OF ` 35,000/- OF SUNDRY CREDITORS THE LD. AR SUBMITTED THAT THE ADDITION H AS BEEN MADE BY TAKING INTO ACCOUNT ONLY THE CREDIT BALANCES. THERE ARE BOTH DEBIT AND CREDIT ENTRIES. THE AUTHORITIES BELOW OUGHT TO HAVE TAKEN INTO EFFECT OF BOTH THE TRANSACTIONS. THE LD. AR IN SUPPORT OF H IS SUBMISSIONS REFERRED TO THE DETAILS OF CREDITORS BALANCE R ECONCILIATION AT PAGES 75 TO 78 OF THE PAPER BOOK. 11. ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF THE AUTHORITIES BELOW AND PRAYED FOR DISMISSING THE APPE AL OF THE 10 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 ASSESSEE. THE LD. DR SUBMITTED THAT THE EXPENDITURE INCU RRED BY THE ASSESSEE TOWARDS BIHAR RELIEF FUND IS NOT OUT OF ANY BUSIN ESS EXPEDIENCY, THEREFORE, THE SAME SHOULD BE DISALLOWED. IN SO FAR AS EXPENDITURE TOWARDS COMPUTER REPAIRS IS CONCERNED THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE EXPENDITURE WITH SUPPORTING DOCUMENTS, THEREFORE, THE SAME WAS RIGHTLY DISALLOWED BY THE AUTHORITIES BELOW . 12. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PE RUSED. THE FIRST GROUND RAISED BY THE ASSESSEE IN GROUNDS OF APPEAL IS DISALLOWANCE OF LABOUR WELFARE EXPENSE AMOUNTING TO ` 65,310/-. THE SAID EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE TOWARDS BIHAR RELIEF FUND AS PART OF CORPORATE SOCIAL RESPONSIBILITY. IN SUPPO RT OF HIS SUBMISSIONS, THE LD. AR HAS DRAWN OUR ATTENTION TO THE T AX INVOICE DATED 19-11-2008 AT PAGE 2 OF THE PAPER BOOK WHEREBY THE ASSESSEE PURCHASED 419 BOX OF MILK FOR ` 65,310/- AND THE CREDIT NOTE DATED 15-12-2008 AT PAGE 1 OF THE PAPER BOOK. THE SAID EXPE NDITURE HAS BEEN INCURRED TOWARDS CORPORATE SOCIAL RESPONSIBILITY. THE SAID EXPENDITURE INCURRED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE DEPARTMENT. THE ONLY OBJECTION RAISED IS THAT IT IS NOT ON ACCOUNT OF BUSINESS EXPEDIENCY. THE CORPORATE SOCIAL RESPONSIBILITY DIS CHARGED BY THE ASSESSEE SHOWS ITS SENSITIVITY TOWARDS THE SOCIET Y AT LARGE. SUCH EXPENDITURES NEED NOT BE MEASURED IN THE TERMS OF BUSIN ESS EXPEDIENCY. THE COMPANIES ACT, 2013 MANDATES THE COMPA NIES TO CONTRIBUTE 2% OF THE PROFIT TOWARDS CORPORATE SOCIAL RESP ONSIBILITY. THE GOVERNMENT ALSO RECOGNIZES THE NEED AND IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY TO BE DISCHARGED BY THE CORPORATE HO USES. THUS, WE ARE OF THE CONSIDERED VIEW THAT THE EXPENDITURE OF ` 65,310/- HAS TO 11 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 BE ALLOWED. ACCORDINGLY, THE FIRST GROUND RAISED IN THE APP EAL OF THE ASSESSEE IS ACCEPTED. 13. IN THE SECOND GROUND OF APPEAL THE ASSESSEE HAS A SSAILED THE DISALLOWANCE OF COMPUTER REPAIRS EXPENSES AMOUNTING TO ` 8,87,103/-. THE CONTENTION OF THE ASSESSEE IS THAT THE INVOICES AND THE BILLS IN SUPPORT OF EXPENDITURE WERE NEITHER CONSIDERED BY THE A SSESSING OFFICER NOR BY THE COMMISSIONER OF INCOME TAX (APPEALS), ALTHOUGH, THE SAME WERE PLACED ON RECORD BEFORE THEM. THE ASSESSEE HAS FILE D BILLS AND INVOICES OF COMPUTER REPAIRS AT PAGES 4 GO 62 OF THE PAP ER BOOK. WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE NEEDS A REV ISIT TO ASSESSING OFFICER. THE ASSESSING OFFICER SHALL VERIFY THE BILLS A ND INVOICES FURNISHED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH LAW. THIS GROUND OF APPEAL BY T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 14. THE THIRD GROUND RAISED IN THE APPEAL IS WITH RESPECT TO DISALLOWANCE OF UN-RECONCILED BALANCE OF ` 35,000/- OF SUNDRY CREDITORS. THE CONTENTION OF THE ASSESSEE IS THAT THE DISALLOWANCE H AS BEEN MADE BY CONSIDERING ONLY ONE SIDE. THERE ARE BOTH POSITIVE AN D NEGATIVE ENTRIES. THE ASSESSEE HAS PLACED ON RECORD THE DETAILS OF CREDITORS BALANCE RECONCILIATION AT PAGES 75 TO 78 OF THE PAPER BOO K. THE CONTENTION OF THE ASSESSEE IS THAT BENEFIT OF NETING SHOUL D BE GIVEN WHERE THERE ARE BOTH DEBIT AND CREDIT ENTRIES. WE FIND FO RCE IN THE SUBMISSIONS OF THE LD. AR. WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY THE LIST OF CREDITORS AND GIVE THE BENEFIT OF NETING WHERE THERE ARE BOTH DEBIT AND CRE DIT ENTRIES. 12 ITA NOS. 870 & 919/PN/2014, A.Y. 2009-10 ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSE. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 29 TH JANUARY, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-I, THANE 4. ' / THE CIT-II, THANE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE