The ACIT, Central Circle-1(2), Ahmedabad V. Shri Jignesh K.Thakkar(HUF), Banaskantha

ITSSA 232/AHD/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8094 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO. 232/AHD/2012 ASSESSMENT YEAR :2009-10 ACIT, CENTRAL CIRCLE 1(2), ROOM NO.305, 3 RD FLOOR, AAYKAR BHAVAN ASHRAM ROAD, AHMEDABAD V/S . SHRI JIGNESH K. THAKKAR (HUF) SHREYANCE SOCIETY, HIGHWAY RAOD, BHABHAR, DIST. BANASKANTHA PAN NO. AA CHT0246H (APPELLANT) .. (RESPONDENT) BY APPELLANT MS. SURABHI SHARMA, SR. D.R /BY RESPONDENT NONE /DATE OF HEARING 05.06.2012 /DATE OF PRONOUNCEMENT 05.06.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-I, AHMEDABAD, ORDER DATED 28.02.201 2 FOR ASSESSMENT YEAR 2009-10. 2. THE ONLY GROUND OF REVENUE IS AGAINST DELETION O F DISALLOWANCE OF CLAIM OF BAD DEBTS OF RS. 19,00,000/-. THE A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED BAD DEBT OF RS. 19,00,000/- IN THE NAME OF TRIDENT PROLIFECARE PVT. IT(SS)A NO. 232/AHD/2012 A.Y.2009-10 PAGE 2 LTD. IN A.Y. 08-09 THIS AMOUNT HAD BEEN ADVANCED A S LOAN TO ABOVE PARTY. AS PER ASSESSEES CLAIM IT TURNED OUT INSOLVENT, THERE FORE, THE ASSESSEE HAD WRITTEN OFF THE LOAN IN A.Y.09-10 OF RS. 19,00,000/ -. BUT THE A.O. HAD CONCLUDED THAT THE ASSESSEE HAD NOT ENGAGED IN THE BUSINESS OF MONEY LENDING BUSINESS AND THIS AMOUNT HAD NEVER OFFERED FOR TAXATION IN A.Y. 08-09, HE DISALLOWED THE CLAIM OF BAD DEBT OF RS. 19,00,00 0/- 3. THE ASSESSEE WAS IN APPEAL BEFORE CIT(A)-I, AHME DABAD, WHO HAS ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE BY OBS ERVING IN PARAGRAPH NO. 6 IS AS UNDER:- 6. AFTER GOING THROUGH RIVAL SUBMISSIONS, IT IS SEE N THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF FINANCE ACTIVITIES AN D ITS PROFIT AND LOSS ACCOUNT SHOWS INTEREST INCOME RECEIVED OF RS.23,50, 029. P&L ACCOUNT IS ENCLOSED AS ANNEXURE-1 OF THIS ORDER. IT WAS INFORMED BY THE LD. A.R. THAT THIS RS.23,50,029 IS NET INTEREST TINCOME AS T HE APPELLANT HAD ADVANCED LOANS ON WHICH IT RECEIVED INTEREST AND HA D ALSO BORROWED FUNDS ON WHICH IT PAID INTEREST. THE INTEREST LEDG ER ACCOUNT SHOWS INTEREST RECEIVED OF RS.37,75,375 AND INTEREST PAID OF RS.14,25,345 AND THIS ACCOUNT IS ENCLOSED AS ANNEXURE-2 OF THIS ORDER AND THAT IS WHY NET INTEREST INCOME OF RS.23,50,029 (RS.37,75,375 - RS .14,25,345) HAS BEEN SHOWN IN THE P & L ACCOUNT. THEREFORE, THE CO NTENTION OF THE ASSESSING OFFICER THAT THE APPELLANT IS NOT ENGAGED IN MONEY LENDING IS FACTUALLY INCORRECT. THIS IS FURTHER PROVED BY THE BALANCE-SHEET OF AY 2008-09 AND AY 2009-10. IN AY 2008-09, THE APPELLA NT MADE BORROWINGS OF RS.3,33,68,240 AND IN AY 2009-10, ADD ITIONAL BORROWINGS OF RS.7,72,33,000. AS AGAINST THIS ADVANCES WERE M ADE OF RS.4,66,30,875 DURING THE YEAR UNDER CONSIDERATION. AS PER SECTION 36(1)(VII) DEDUCTION OF BAD DEBT WRITTEN OFF AS IRR ECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR CAN BE ALLOWED AS IT(SS)A NO. 232/AHD/2012 A.Y.2009-10 PAGE 3 DEDUCTION SUBJECT TO THE PROVISIONS OF SECTION 36(2 ). SECTION 36(2)(I) STATES : NO SUCH DEDUCTION SHALL BE ALLOWED UNLESS SUCH DEBT OR PART THEREOF HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING TH E INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT O F SUCH DEBT OR PART THEREOF IS WRITTEN OFF OR OF AN EARLIER PREVIOUS YE AR, OR REPRESENTS MONEY LENT IN THE ORDINARY COURSE OF THE BUSINESS OF BANK ING OR MONEY-LENDING WHICH IS CARRIED ON YEAR UNDER CONSIDERATION THE AS SESSEE; AS THE APPELLANT IS ENGAGED IN THE BUSINESS OF FINANCING M ONEY LENDING DEDUCTION OF BAD DEBT OF RS.19,00,000 CAN BE ALLOWE D TO IT PROVIDED THIS AMOUNT HAS BEEN WRITTEN OFF IN THE ACCOUNTS. IT HA S BEEN SUBMITTED THAT RS.19,00,000 WAS GIVEN AS LOAN TO TRIDENT PROLIFECA RE PVT. LTD. ON 30.3.2008 THAT IS AT THE END OF THE YEAR AND THEREF ORE NO PROVISION FOR INTEREST WAS MADE. THE ASSESSING OFFICER HAS NOT S TATED THAT THE AMOUNT WAS NOT WRITTEN OFF BY THE APPELLANT. THERE FORE, RELYING UPON HONBLE SUPREME COURT DECISION IN THE CASE OF TRF L TD. VS. CIT 323 ITR 390 ALSO IN VIEW OF THE FACTUAL POSITION DISCUS SED ABOVE THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF RS.19,00,000/-. 4. NOW THE REVENUE IS BEFORE US. LD. D.R. VEHEMENT LY OPPOSED THE DELETION MADE BY THE CIT(A) AND ARGUED FOR CONFIRMA TION OF ADDITION MADE BY THE A.O. WHEREAS FROM THE SIDE OF THE ASSESSEE NO O NE APPEARED. BUT THE FACTS ARE CLEAR FROM THE CIT(A) ORDER. THE ASSESSE E IS IN THE LINE OF MONEY LENDING BUSINESS AND THIS AMOUNT HAD BEEN ADVANCED AS LOAN IN A.Y. 08-09. THE ASSESSEE HAS WRITTEN OFF THIS AMOUNT AS PER SEC TION 36(1)(VII) IN THE BOOKS OF ACCOUNT. THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT 323 ITR 390 HAD ALLOWED THE APPEAL ON THIS ISSUE WHERE AMOUNT H AS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT. THUS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND DISMISS TH E REVENUES APPEAL. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . IT(SS)A NO. 232/AHD/2012 A.Y.2009-10 PAGE 4 ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 13.06.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 13.06.2012 4) DATE OF CORRECTION 13.06.2012 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON IT(SS)A NO. 232/AHD/2012 A.Y.2009-10 PAGE 5