Ashish Sumatibhai Shah, Ahmedabad V. DCIT, Circle-5(2), , Ahmedabad

MA 122/AHD/2021

AI Insights

The case involves Ashish Sumatibhai Shah, the appellant, who filed a Miscellaneous Application concerning the dismissal of two grounds in his appeal against the denial of a deduction claim of Rs.4.50 lakhs as bad debts under section 36(1)(vii) of the Income Tax Act, 1961. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) (CIT(A)) had denied the claim, which was contested before the ITAT. Initially, both grounds were dismissed by the ITAT as 'not pressed'. However, the appellant contended that while ground no.2 was not pressed, ground no.3, which claimed the amount as a business loss, was indeed argued. The Tribunal acknowledged the oversight and rectified the earlier decision by recalling the appeal for further consideration of ground no.3.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133500 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-01-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 30-06-2021
• Other Referred Cases: DCIT vs. Kalpataru Power Transmission Ltd [2017] 82 taxmann.com 340 (Ahmedabad - Trib.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Bad and doubtful debts

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TIBUNAL “B” BENCH, AHMEDABAD BEFORE MRS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER MISC.APPLICATION No.122/Ahd/2021 IN ITA No.2944/Ahd/2017 Assessment Year :2013-14 Ashish Sumatibhai Shah T-3, Aakar Complex Nathala Colony Stadium Road Navrangpura Ahmedabad 380 006. PAN : AHZPS 0503 N Vs. The DCIT, Cir.5(2) Ahmedabad. अपीलाथ / (Appellant) यथ /(Respondent) Assesseeby : None Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/Date of Hearing : 13/01/2023 घोषणा क तार ख /Date of Pronouncement: 18/01/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The above Misc. Application has been filed by the assessee in relation to the order passed in the case of the assessee by the ITAT in ITA No.2944/Ahd/2021 dated 29.12.2020, pointing out that one of the grounds raised by the assessee therein was inadvertently dismissed “as not pressed” though the assessee had made arguments with respect to the same.. MA No.22/Ahd/2021 2 2. Pointing out the facts relating to the issue, Ld.Counsel for the assessee contended that the assesses claim of deduction amounting to Rs.4.50 lakhs had been denied by the AO as bad debts, holding the assessee ineligible to the same as per provisions of section 36(1)(viii) of the Act; that the same had been upheld by the ld.CIT(A) also. Before the ITAT the assessee had raised ground against the said denial of claim of bad debts, and alternatively had also raised a ground for allowing the said claim as business loss. He drew our attention to ground no. 2 raised against the denial of deduction of Rs.4.5 lacs as bad debts u/s 36(1)(vii) of the Act and ground no.3 making alternative claim as business loss of the same, before the ITAT and reproduced by the Tribunal at para no.2 as under: 2. Whether, on facts and in circumstances of the case and in law, Ld.AO has erred in disallowing bad debt of Rs.450,000/- under section 36(l)(viii) of income tax act 1961? 3. Without prejudice to ground of appeal no.2, whether, on facts and in circumstances of the case and in law, Ld.AO has erred otherwise also in not allowing bad debt of Rs.450,000/- as business loss? He thereafter pointed out that the ITAT dismissed both the grounds vide para-7 of the order “as not pressed”. He drew our attention to the same as under: “7. Ground Nos.2 & 3 are dismissed as not pressed” 3. The ld.counsel for the assessee thereafter drewour attention to written submissions filed by the assessee before the ITAT forming part of the Paper Book filed to the ITAT dated 12-11-2020 and pointed out therefrom that detailed submissions had been made by the assessee vis a vis the alternative claim of business loss with respect to the said amount. He drew our attention to PB Page No.7 MA No.22/Ahd/2021 3 & 8 where his submissions inresponse to ground no.3 raised before the ITAT with respect to the assessee’s claim of Rs.4.50 lakhs as business loss was made as under: Para 4.1 Relevant ground of appeal:- "Without prejudice to ground of appeal no. 2, whether, on facts and in circumstances of the case and in law, Ld. AO has erred otherwise also in not allowing bad debt of Rs.450,000/- as business loss?" Para 4.2 Facts of the addition:- Few advances were given in normal course of business. As no business could be concluded with said parties and also as appellant could not get said amount back, said amounts were write off with heading "Bad debt" in books of account. Copies of both ledgers (total write off of which is amounting to Rs.450,000/- and which is subject matter of addition) is attached herewith as annexure-F. Para 4.3 Submission:- While making disallowance of bad debt of Rs.450,000/-, Ld. AO considered applicability of sec.36(1)(iii) of the act only. Ld. AO has not considered the fact that said payment can also be allowed "as business loss u/s.37(1) of the act" or "as business loss u/s.28 of the act". Thus, due to this reason, we understand that appellant should get a chance to prove the allowability under these sections also and thus, we request your honor to remit the issue back to file of Ld. AO to verify this aspect also. Para 4.4 Judicial pronouncements:- In this regards, to substantiate of our claim that business advances are allowed as business expenditure or as business loss, we would like to take support from Hon'ble Jurisdictional tribunal in case of DCIT vs. Kalpataru Power Transmission Ltd [2017] 82 taxmann.com 340 (Ahmedabad - Trib.) which is attached herewith as annexure-E. Para 4.5 Conclusion:- Thus, from what has been stated above, we request the issue to file of AO so that allowability of deduction u/s.28 or u/s.37(1) of the act can also be verified. 4. He pointed out therefrom that it was only ground no.2 with respect to the assessee’s claim of the said amount as bad debts which was not pressed by the assessee vide para 4.6 of the submissions as under: MA No.22/Ahd/2021 4 Para 4.6 Not pressing ground of appeal no.2: And, we also submit that we do not wish to press the ground of appeal no.2 5. He stated therefore that clearly it was only ground no.2 which the assessee had not pressed while submissions with respect to the ground no.3 in relation to assesee’s claim of the amount of Rs.4.50 lakhs be allowed as business loss so made before the ITAT. He therefore contended that the dismissal of ground no.3 by the Tribunal as “not pressed” was a mistake in the order and sought rectification to this extent before us. 6. The ld.DR however supported the orderof the ITAT. 7. We have heard both the parties and we find that the ld.counsel for the assessee has fairly demonstrated before us that submission with regard to the ground no.3 raised before the ITAT relating to assessee’s claim to business loss Rs.4,50,000/- was made, but the said ground was dismissed by the ITAT as not pressed. We do not find anything in the submissionto the effect that the said ground was “not pressed” before the ITAT nor is there any other material to support this view taken by the ITAT. Only material on record before us supports the stand of the ld.counsel for the assessee that it had contested this ground of appeal before the ITAT. In view of the same, therefore, the dismissal of this ground by the ITAT “as not pressed” is clearly a mistake apparent from record. We therefore recall the appeal bearing ITA No.2944/Ahd/2017 for the limited purpose of hearing arguments of both sides on ground no.3 raised by the assessee and adjudicating the same. We MA No.22/Ahd/2021 5 direct Registry to fix the appeal for hearing on 1 st February 2023. Notice be issued to both the parties. 8. In the result, Misc. Application filed by the assessee is allowed. Order pronounced in the Court on 18 th January, 2023 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 18/01/2023