BAYER CROPSCIENCE LTD SUCCESSOR OF BAYER INDIA LTD ( FORMELRY KNOWN AVENTIS CORPSCIENCE INDIA LTD), V. ITO WD 13(2)-2,

MA 190/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3578 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 25-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUM BAI BEFORE N V VASUDEVAN, JUDICIAL MEMBER AND SHRI B RAMAKOTAIAH, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION NO 190/MUM/2010 ARISING OUT OF ITA NO 3968/MUM/2005 FOR AY 2001-02 BAYER CROPSCIENCE LTD (FORMERLY KNOWN AS AVENTIS CROPSCIENCE (I) LTD), BAYER HOUSE, CENTRAL AVENUE, HIRANANDANI GARDEN, POWAI, MUMBAI PAN: AAACB 9651 K VS ACIT, CIRCLE 8(1), ROOM NO.210, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400 020 APPLICANT RESPONDENT APPLICANT BY: SHRI MAYUR KISHNADWALA RESPONDENT BY: SHRI PRADEEP HEDAOO ORDER PER B RAMAKOTAIAH, AM BY THIS MISCELLANEOUS APPLICATION (MA) THE ASSESSEE WANTS TO RAISE GROUND PERTAINING TO DISALLOWANCE OF BAD DEBTS BE C ONSIDERED ON THE BASIS OF THE EVIDENCES ALREADY ON RECORD. THE ASSESSEES PR AYER ON THE ISSUE MADE FROM PARA 2 TO 7 ARE AS UNDER:- 2. THE APPELLANT HAD RAISED THE GROUND PERTAINING TO DISALLOWANCE OF BAD DEBTS AS FOLLOWS: THE LEARNED CIT (A) ERRED IN NOT DIRECTING THE LEA RNED A.O. TO ALLOW THE ENTIRE AMOUNT OF BAD DEBTS OF RS 2,92,70, 003/- (RS 1,72,70,003 + RS 1,20,00,000/-) 3. THE HONBLE TRIBUNAL REJECTED THE AFORESAID GROU ND VIDE ORDER PASSED ON 31.03.2009. THE RELEVANT PART OF THE ORD ER IS ON PAGE 13 TO 18 OF THE SAID ORDER. 4. THE APPLICANT RESPECTFULLY SUBMITS THAT WHILE PA SSING THE ORDER, THE HONBLE ITAT DID NOT CONSIDER THE DOCUMENTS SUB MITTED IN PAPER BOOK AS STATED IN POINT NO.5 BELOW PERTAINING TO DI SALLOWANCE OF BAD DEBTS AND STATED AT PAGE NO 18 OF THE ORDER AS UNDE R: MA 190/M/2010 BAYER CROPSCIENCE LTD 2 BEFORE US NOTHING WAS BROUGHT ON RECORD EITHER TO PROVE THAT THE AMOUNTS WERE ADVANCED IN THE COURSE OF BUSINESS AS NO SUCH AGREEMENTS WERE FILED BEFORE US NOR CONTROVERTED TH E FINDINGS OF THE LEARNED CIT (A) EXCEPT MAKING STATEMENTS. SINCE THE DETAILS AND PROOF WAS NOT FURNISHED EITHE R TO THE A.O., CIT (A) OR BEFORE US THE CLAIM CANNOT BE ALLOWED ON THE BASIS OF SUBMISSION ALONE. 5. DURING THE APPELLATE PROCEEDINGS, THE APPLICANT HAD SUBMITTED A PAPER BOOK BEFORE THE HONBLE ITAT ON 05.01.2009, W HICH INCLUDED: - DETAILS OF BAD DEBTS / ADVANCE WRITTEN OFF AT PAGE 47 OF THE PAPER BOOK. - LETTER DATED 01/10/1998 RECEIVED FROM UNIVERSAL FOO DS AT PAGES 49-53. - PROFILE OF UNIVERSAL EXPORTS AT PAGES 54-57. - AGREEMENT DATED 14/05/1999 WITH ORION EXPORTS AT PA GES 58-62. - AGREEMENT DATED 14/05/1999 WITH ORION EXPORTS AT PA GES 63-66. - EXTRACT OF SUBMISSIONS BEFORE THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) AT PAGES 77-78. - AT THE DIRECTION OF THE BENCH, A NOTE WAS FILED SUB SEQUENTLY RECONCILING THE CLAIMS OF BAD DEBTS / ADVANCES WRIT TEN OFF. 6. FURTHER IT WAS SUBMITTED THAT AS REGARDS BALANCE DUE FROM SUJANIL INDUSTRIES, IT PERTAINED TO THE SALES PROCE EDS RECEIVABLE OF THE GOODS SOLD TO THEM AND OUGHT TO HAVE BEEN THEREFORE ALLOWED AS BAD DEBTS. 7. DURING THE COURSE OF HEARING, THE APPELLANTS RE PRESENTATIVE DREW THE ATTENTION OF HONBLE BENCH TO THE AFORESAI D DOCUMENTS FORMING PART OF THE PAPER BOOK AT THE TIME OF HEARI NG, AS ALSO THE CASE LAW ON THE ISSUE FILED IN A SEPARATE PAPER BOOK TIT LED INDEX TO CASE LAW AT PAGES 37-49. 3. THE LEARNED COUNSEL WHO APPEARED FOR THE ASSESSE E HAS REITERATED THAT THE BAD DEBTS AND ADVANCES WRITTEN OFF WAS PLA CED AT PAGE 47 AND THE LETTERS RECEIVED FROM UNIVERSAL FOODS WAS ON PAGES 49 TO 53 AND OTHER AGREEMENTS WERE PLACED IN THE PAPER BOOK, AS EXACTE D IN PARA 5 BUT THE BENCH HAS OBSERVED THAT NO DETAILS WERE FILED BEFOR E THE ITAT. ACCORDINGLY, HE STATED THAT THE DECISION WAS TAKEN REJECTING THE CLAIM. IT WAS HIS SUBMISSION THAT NECESSARY DETAILS WERE FILED AND TH E ISSUE SHOULD BE CONSIDERED ON MERITS AFTER EXAMINING THE DETAILS FI LED IN THE PAPER BOOK INCLUDING THE STATEMENT OF RECONCILIATION FILED AT THE TIME OF HEARING AT THE MA 190/M/2010 BAYER CROPSCIENCE LTD 3 INSTANCE OF THE BENCH. IT IS HIS PRAYER THAT THE I SSUE SHOULD HAVE BEEN CONSIDERED ON MERITS ON THE BASIS OF DETAILS FILED IN THE PAPER BOOK INCLUDING THE CASE LAWS TWICE FILED ON PAGES 39 TO 47. THE L EARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUBMITTED THAT ITAT HAS PA SSED A DETAILED ORDER AND ACCORDINGLY THERE IS NO NEED TO ENTERTAIN THE P ETITION. 4. BEFORE ADVERTING TO THE PRAYER OF THE ASSESSEE, IT IS NECESSARY TO EXTRACT THE ORDER PASSED BY THE ITAT VIDE PARA 29 O NWARDS:- 29. GROUND NO. 8 PERTAINS TO AN AMOUNT OF RS.2,92,70,00 3/- CLAIMED AS BAD DEBT. THE A.O. HAS DISALLOWED THE BAD DEBT CLAI MED OF RS.1,72,70,003/- STATING THAT THE ASSESSEE HAS NOT PROVED THAT THE DEBT HAS BECOME BAD. BEFORE THE LEARNED CIT(A), WHILE CO NTESTING THE ABOVE DISALLOWANCE, THE ASSESSEE ALSO MADE A SUBMISSION T HAT ANOTHER AMOUNT OF RS.1,20,00,000/- PERTAINING TO AMOUNT DUE FROM M /S. UNIVERSAL FOODS WAS CLAIMED AS DEDUCTION UNDER THE HEAD AVENTIS INT EGRATION EXPENSES WHICH ALSO TO BE CONSIDERED AS BAD DEBT AND HENCE, THE TOTAL CLAIM HAS COME TO RS.2,92,70,003/-. BEFORE THE LEARNED CIT(A) , HOWEVER, THE ASSESSEE SUBMITTED THE FOLLOWING AMOUNT WITH REFERE NCE TO BAD DEBT CLAIM WHICH ARE CONSIDERED IN PARA 62 & 63 OF THE ORDER O F THE LEARNED CIT(A): - I) UNIVERSAL FOODS RS. 37,02,356/- II) ORIENTAL EXPORTS RS.1,00,00,000/- (APPROX) III) SURAJMAL INDUSTRIES RS. 29,15,695/- THUS EVEN THE TOTAL OF THE AMOUNTS AS SUBMITTED BEF ORE THE LEARNED CIT(A) IS NOT EVEN RS.2,92,70,003/- BUT RS.2,86,18, 001/-. ACCORDINGLY THE GROUND IS CONSIDERED TO THAT EXTENT ONLY. 30.THE LEARNED COUNSEL REFERRED TO THE FACTS REGARD ING BAD DEBT CLAIM AND SUBMITTED THAT THE AMOUNT FROM UNIVERSAL FOODS AND ORIENTAL EXPORTS PERTAINS TO ITS ABANDONED BUSINESS OF EXPORT AND IM PORT OF CASHEWS AND THE AMOUNTS WERE WRITTEN OFF AT THE TIME OF MERGER OF AGREVO AND RHONE- POULENC WITH THE ASSESSEE COMPANY AS THEY ARE FOUND TO BE NOT RECEIVABLE AND IN ORDER TO REPRESENT CORRECT BALANCE AT THE TI ME MERGER THESE AMOUNTS WERE WRITTEN OFF. IT WAS SUBMITTED THAT THE AMOUNT PERTAINING TO SURAJMAL INDUSTRIES SATISFY THE CONDITIONS OF SECTI ON 36(2) AND OTHER AMOUNTS ARE LOSS INCIDENTAL TO THE BUSINESS. IF THE Y ARE NOT ALLOWED AS BAD DEBT THEY SHOULD BE ALLOWED AS BUSINESS LOSS. THE L EARNED COUNSEL RELIED UPON VARIOUS LEGAL PRINCIPLES INCLUDING THAT OF THE HON'BLE SUPREME COURT DECISION IN SUTLEJ COTTON MILLS LIMITED VS. CIT 116 ITR 1 WITH REFERENCE TO ALLOWANCE OF VARIOUS CLAIMS. HE ALSO REFERRED TO TH E RECONCILIATION OF BAD DEBT AVAILABLE AT PAGE NO. 77 OF THE PAPER BOOK AND ALSO VARIOUS SCHEDULES PLACED AT PAGE NOS. 12 TO 45. IT WAS ALSO SUBMITTED THAT NO DETAILS WERE FURNISHED BEFORE THE A.O. AS CERTAIN D ETAILS WERE NOT AVAILABLE AFTER THE MERGER. MA 190/M/2010 BAYER CROPSCIENCE LTD 4 31.THE LEARNED D.R., HOWEVER, RELIED ON THE ORDER O F THE LEARNED CIT(A). 32. WE HAVE CONSIDERED THE ISSUE. IN ORDER TO ALLOW ANY AMOUNT AS BAD DEBT, IT HAS TO BE CONSIDERED THAT THE AMOUNT HAS B EEN TAKEN INTO ACCOUNT IN THE EARLIER YEARS AND CONDITIONS OF SECTION 36(2 ) ARE SATISFIED OR NOT. EVEN TO CONSIDER AN AMOUNT AS BUSINESS LOSS THE ASS ESSEE HAS TO PROVE THAT THE ASSESSEE HAS INCURRED A BUSINESS LOSS IN T HE COURSE OF ITS BUSINESS. AS SEEN FROM THE ORDER OF THE LEARNED CIT (A) AND THE ORDER OF THE A.O. THE ASSESSEE IS NOT CLEAR ABOUT THE AMOUNT S INVOLVED. AS SEEN FROM VARIOUS SCHEDULES AND DETAILS SUBMITTED TO THE A.O. THE ASSESSEE WAS FURNISHING THE AMOUNTS AS APPROXIMATE AMOUNTS, WITHOUT CRYSTALLISING THE AMOUNT EXACTLY. BOTH IN THE CASE OF ORIENTAL EX PORTS AS WELL AS UNIVERSAL FOODS AS PER THE SUBMISSION MADE TO THE A .O., PLACED AT PAGE 77 & 78 OF THE PAPER BOOK, THE ASSESSEE HAS THE FOL LOWING TO SUBMIT: - 'OUT OF THE TOTAL BAD DEBTS CLAIMS, THE APPELLANT COMPANY SUBMITS THAT OUT OF THE ABOVE AMOUNT, AN AMOUNT OF RS.1,66,18,001 (APPROX) PERTAIN TO THE FOLLOWING PARTIES: 1. UNIVERSAL FOODS 3,702,356.00 ERAVIPUTHURKADI KATATHURAI P O KANYAKUMARI, TAMILNADU - 629158 2. ORIENTAL EXPORTS C/O UNIVERSAL FOOD ERAVIPUTHURKADI 10,000,000.00 KATATHURAI P O (APPROX) KANYAKUMARI, TAMILNADU 629158 3. SUJANIL CHEMO INDUSTRIES 69/1A/1B/3, WANWADI INDS. AREA 2,915,645.00 KONDHAWA ROAD PUNE 411040 16,618,001.00 IN THIS CONNECTION, WE SUBMIT THAT DURING THE MERGE R OF AGREVO AND RHONE POULENCE, THE COMPANY REVIEWED ALL ITS RECEIV ABLE AND WROTE OFF AMOUNTS, WHICH THEY BELIEVED WERE NOT RECOVERAB LE. OUT OF THE ABOVE-MENTIONED AMOUNTS, RS.13,702,356 (APPROX) PER TAIN TO A BAD DEBTS FROM THE CASHEW BUSINESS. THIS WAS A NEW BUSI NESS, WHICH THE COMPANY HAD STARTED IN 1999-2000. SUBSTANTIAL ADVAN CES/CREDIT WERE GIVING TO SUPPLIERS/CUSTOMERS AT THE INITIAL STAGES OF THE OPERATIONS. HOWEVER, BECAUSE OF A STEADY DECLINE IN CASHEW PRIC ES, THE BUSINESS WENT INTO LOSS AND THE MANAGEMENT DISCONTINUED THE BUSINESS.' 33. AS CAN BE SEEN FROM THE ABOVE THE AMOUNTS WERE TAKEN AS APPROXIMATE FIGURES WITHOUT ESTABLISHING THE CORREC T AMOUNTS INVOLVED. MA 190/M/2010 BAYER CROPSCIENCE LTD 5 MOREOVER THE LEARNED CIT(A) HAS CONSIDERED THIS ASP ECT IN ITS ENTIRETY AND THE FINDINGS OF THE LEARNED CIT(A) IN PARA NO. 63 T O 74 ARE AS UNDER: - '63 IN RESPECT OF THE ACTION OF THE ASSESSING OFFIC ER, THE APPELLANT'S REPRESENTATIVE HAS SUBMITTED THAT OUT O F TOTAL BAD DEBT OF RS.1,72,70,0043/-, AN AMOUNT OF RS.1,66,18,001/- PERTAINED TO DUES FROM THE FOLLOWING PARTIES. I) UNIVERSAL FOODS RS. 37,02,356/- II) ORIENTAL EXPORTS RS.1,00,00,000/- (APPROX) III) SURAJMAL INDUSTRIES RS. 29,15,695/- 64 IT WAS SUBMITTED THAT THE APPELLANT CONSIDERED THES E AMOUNT AS HAVING BECOME BAD DEBTS. DURING THE MERGER OF AG REVO AND RHONE-POULENCE, THE COMPANY REVIEWED ALL ITS RECEIV ABLES AND WROTE OFF AMOUNTS THAT WERE FOUND AS NOT RECEIVABLE . THE APPELLANT HAD STARTED A NEW CASHEW BUSINESS IN THE FINANCIAL YEAR 1999- 2000. SUBSTANTIAL ADVANCE/CREDITS WERE GIVEN TO THE SUPPLIES, AT THE INITIAL STAGE OF OPERATION. HOWEVER, BECAUSE OF STEADY DECLINE IN CASHEW PRICE, THE BUSINESS WENT INTO LOSS AND TH E MANAGEMENT DISCONTINUED THE BUSINESS. SINCE THE AMOUNTS DUE FR OM DEBTORS IN THE CASHEW BUSINESS WERE FOUND IRRECOVERABLE, THESE WERE WRITTEN OFF. HENCE, THE APPELLANT HAD RIGHTLY CLAIMED THE D EDUCTION IN RESPECT OF THE AMOUNTS INCLUDING AN AMOUNT OF RS.1, 20,00,000/- DUE FROM M/S. UNIVERSAL FOODS WHICH WERE SEPARATELY SHOWN AS AVENTIS INTEGRATION EXPENSES. THIS AMOUNT WAS SHOWN AS SUCH UNDER THAT HEAD AS IT WAS WRITTEN OFF DURING THE IN TEGRATION PROCESS. IT WAS SUBMITTED THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT'S ACTION IS NOT BONAFIDE AND, THEREFORE, THE AMOUNT IS NOT ADMISSIBLE AS DEDUCTIO N. THE AMOUNT WRITTEN OFF IS NOTHING BUT BAD DEBT AND, THEREFORE, SHOULD BE PERMITTED AS DEDUCTION. ALL THE CONDITIONS PRESCRIB ED IN THE STATUTE WERE FULFILLED BEFORE THE WRITE OFF AND NOTHING FUR THER IN THIS DIRECTION NEEDED TO BE PROVED. 65 IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION S OF THE CASES OF ITO VS. ANIL H. RASTOGI 86 ITD 193 (MUM), DCIT VS. NEWDEAL FINANCE AND INVESTMENT LTD. 74 ITD 469 (MAD ) AND CIT VS. GIRISH BHAGWAT PRASAD 256 ITR 772 (GUJ). IT WAS SUBMITTED THAT THE DISALLOWANCE IN THE CIRCUMSTANCE IS UNCALL ED FOR AND, THEREFORE, BE DELETED. 66 THE SUBMISSION MADE BY THE APPELLANT'S REPRESENTATI VE HAS BEEN CONSIDERED. AT THE OUTSET, IT HAS TO BE SAID T HAT THERE IS APPARENT CONTRADICTION IN THE SUBMISSIONS MADE IN T HIS DIRECTION. WHILE IN THE SUBMISSIONS MADE VIDE LETTER DATED 22/ 11/2004, THE BAD DEBT AMOUNT WAS CLAIMED AT RS.1,66,18,001/- PLU S A FURTHER AMOUNT OF RS.1,20,00,000/- CLAIMED UNDER THE HEAD A VENTIS INTEGRATION EXPENSES, IN THE SUBMISSION MADE VIDE L ETTER DATED 3.12.2004, THE AMOUNT WAS CLAIMED AT RS.1,81,55,776 /-. APART THEREFROM, IN THAT LETTER CLAIMS FOR DEDUCTION OF F URTHER SUMS OF MA 190/M/2010 BAYER CROPSCIENCE LTD 6 EXCESS TURNOVER TAX PAID OF RS.31,71,408/- AND ADVA NCES GIVEN FOR TENDER DEPOSIT OF RS.39,72,001/- AS TRADING LOSS WA S MADE. 67 IN RESPECT OF THE NEW CLAIM FOR DEDUCTION OF THE AM OUNT AS TRADING LOSS THAT HAS BEEN EVIDENTLY NOT MADE BEFOR E THE ASSESSING OFFICER, NO FURTHER DETAILS, SUCH AS WHEN THE TENDE R FEE OR EXCESS TURNOVER TAX WAS PAID AND THE CIRCUMSTANCE UNDER WH ICH THESE PAYMENTS WERE MADE WERE FILED IN THE CIRCUMSTANCE, THE FRESH CLAIM FOR ALLOWANCE OF THE AMOUNTS AS BUSINESS LOSS CANNOT BE ACCEPTED. 68 THE LEAVES ONLY ISSUE OF ALLOWING THE DEDUCTION AS ORIGINALLY CLAIMED. SINCE THE MAJOR PORTION OF THE AMOUNT CLAI MED REPRESENTED AMOUNTS DUE FROM M/S. UNIVERSAL FOOD AN D M/S ORIENTAL EXPORTS, THE APPELLANT'S REPRESENTATIVE WA S ASKED TO SUBSTANTIATE THAT IN RESPECT OF THE AMOUNTS OUTSTAN DING WHICH WERE WRITTEN OFF AND CLAIMED AS DEDUCTION UNDER SEC TION 36(1)(VII) OF THE ACT, THE CONDITIONS LAID DOWN IN SECTION 36( 2) OF THE ACT, THE SATISFACTION OF WHICH IS A CONDITION PRECEDENT FOR ALLOWANCE OF DEDUCTION, WERE SATISFIED. IN THIS RESPECT, HE WAS ALSO ASKED TO FILE THE COPIES OF THE AGREEMENTS THE APPELLANT COMPANY HAD WITH M/S. UNIVERSAL FOODS AND M/S. ORIENTAL EXPORTS, TO EXAMI NE THE NATURE OF TRANSACTIONS THE APPELLANT COMPANY HAD WITH THES E TWO CONCERNS. INSPITE OF REPEATED REQUEST, IN REGARD TO AGREEMENT WITH M/S. UNIVERSAL FOODS, THE COPY OF THE AGREEMENT COU LD NOT BE PRODUCED. 69 IN RESPECT OF ARRANGEMENT WITH M/S. ORIENTAL EXPORT S, THE APPELLANT'S REPRESENTATIVE HAS SUBMITTED A COPY OF THE AGREEMENT. A PERUSAL THEREOF REVEAL THAT THE APPELLANT HAD SOM ETIME IN 1998 ENTERED INTO AN AGREEMENT WITH THE SAID CONCERN. IN TERMS OF THE SAID AGREEMENT, THE APPELLANT WAS TO IMPORT RAW CAS HEW WHICH WAS TO BE PROCESSED BY M/S. ORIENTAL EXPORTS FOR FU RTHER EXPORT. THAT CONCERN WAS TO RECEIVE PROCESSING CHARGES AS A LSO PACKING CHARGES FOR PACKAGING THE PROCESSED CASHEW FOR EXPO RTS. THUS, M/S. ORIENTAL EXPORTS WAS NEVER TO BE THE SUPPLIER. NEITHER THE APPELLANT COMPANY HAD SOLD TO THEM THE RAW CASHEW P ROCURED. THE APPELLANT'S REPRESENTATIVE IN THE CIRCUMSTANCE ASKE D TO STATE HOW IN RESPECT OF THE AMOUNT DUE FROM M/S. ORIENTAL EXP ORT, THE CLAIM OF THE AMOUNT HAVING BECOME BAD CAN BE ACCEPTED CON SIDERING THAT THE CONDITIONS PRESCRIBED IN SECTION 36(2) OF THE ACT ARE NOT SATISFIED. THIS WAS ACCEPTED BY THE APPELLANT'S REP RESENTATIVE. CLEARLY THE CLAIM ORIGINALLY MADE FOR DEDUCTION UND ER SECTION 36(1)(VII) OF THE ACT IS LEGALLY NOT TENABLE. AT TH E SAME TIME, THE ASSESSING OFFICER'S ACTION FOR NOT ALLOWING IT UNDE R THE SECTION ONLY WAS ALSO WRONG WITHOUT APPRECIATING THE FULL FACTS. 70 IT WAS HOWEVER SUBMITTED BY THE APPELLANT'S REPRESE NTATIVE THAT THE AMOUNT BE TREATED AS A BUSINESS LOSS ALLOW ABLE AS DEDUCTION UNDER SECTION 28(1) OF THE ACT. THIS CLAI M OF THE MA 190/M/2010 BAYER CROPSCIENCE LTD 7 APPELLANT WAS HOWEVER, NOT ACCEPTABLE CONSIDERING T HAT IN TERMS OF THE AGREEMENT, THE APPELLANT COMPANY HAD WITH M/S. ORIENTAL EXPORTS, IT WAS ONLY TO PAY PROCESSING AND PACKAGIN G CHARGES TO THE SAID CONCERN FOR THE RAW CASHES IMPORTED. THE A PPELLANT'S REPRESENTATIVE HAS NOT BEEN ABLE TO PROVIDE ANY DOC UMENTARY EVIDENCE OF RAW CASHEW BEING IMPORTED BY IT AND DIS PATCHED TO M/S. ORIENTAL EXPORTS FOR PROCESSING. SIMILARLY, NO EVIDENCE OF THE SUBSEQUENT EXPORT OF CASHEW AFTER PROCESSING WAS FI LED. THE AMOUNT SHOWN AS ADVANCE TO M/S. ORIENTAL EXPORTS IS FAR FROM DISPROPORTIONATE TO AMOUNT DUE AS PROCESSING AND PA CKAGING CHARGES PAYABLE TO M/S. ORIENT EXPORTS. 71 IN THE CIRCUMSTANCES, ON ACCOUNT OF FAILURE ON THE PART OF THE APPELLANT, THE AMOUNT CLAIMED AS BUSINESS LOSS CANN OT ALSO BE ACCEPTED. THE AMOUNT IF AT ALL REPRESENTING A GENUI NE TRANSACTION OF THE MONEY BEING ACTUALLY TRANSFERRED AT BEST CAN BE TREATED AS LOAN ADVANCED TO M/S. ORIENTAL EXPORTS. CONSIDERING THAT THE APPELLANT COMPANY IS NOT IN THE BUSINESS OF MONEY L ENDING SUCH LOAN WRITTEN OFF CANNOT BE ALLOWED AS DEDUCTION AS BUSINESS LOSS IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COU RT IN THE CASE OF GREAVES LTD. VS. CIT 251 ITR 190 (BOM). 72 IN REGARD TO THE AMOUNTS DUE FROM M/S. UNIVERSAL EX PORTS CLAIMED AS DEDUCTION BOTH UNDER THE HEAD BAD DEBT A ND AVENTIS INTEGRATION EXPENSES, SINCE THE APPELLANT'S REPRESE NTATIVE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE INDICATING THE NA TURE OF TRANSACTION LENDING TO THE PAYMENT MADE, ITS ADMISS IBILITY AS LOSS CANNOT BE ACCEPTED. 73 IN RESPECT OF THE AMOUNT DUE FROM SUJANIL CHEMO IND USTRIES AS WELL, THE APPELLANT'S REPRESENTATIVE HAS NOT BEE N ABLE TO PRODUCE ANY EVIDENCE THAT THE TRANSACTION ENTERED I NTO WITH THE SAID COMPANY SATISFIES THE CONDITIONS PRESCRIBED IN SECTION 36(1)(VII) READ WITH SECTION 36(2) OF THE ACT. 74 IN THE CIRCUMSTANCES, THE CLAIM OF THE APPELLANT IN THIS DIRECTION CANNOT BE ACCEPTED. HENCE, THE ALLOWANCE OF DEDUCTIONS OF RS.1,72,70,003/- AND OF RS.1,20,00,000/- RESPECT IVELY CLAIMED AS BAD DEBT AND AVENTIS INTEGRATION EXPENSES CANNOT BE ACCEPTED. THE ACTION OF THE ASSESSING OFFICER IN THIS DIRECTI ON IS HELD AS CORRECT THOUGH FOR DIFFERENT REASONS DISCUSSED ABOV E AND, THEREFORE, IS SUSTAINED. THE APPEAL IN RESPECT OF G ROUND NO. 10 IS, THEREFORE, DISPOSED OFF AS DISMISSED.' 34. BEFORE US NOTHING WAS BROUGHT ON RECORD EITHER TO PROVE THAT THE AMOUNTS WERE ADVANCED IN THE COURSE OF BUSINESS AS NO SUCH AGREEMENTS WERE FILED BEFORE US NOR CONTROVERTED TH E FINDINGS OF THE LEARNED CIT(A) EXCEPT MAKING STATEMENTS. UNLESS THE BAD DEBT CLAIMS ARE COVERED BY THE PROVISIONS OF SECTION 36(1)(VII) R.W.S. 36(2) THE AMOUNTS WRITTEN OFF CANNOT BE ALLOWED AS DEDUCTION. SINCE THE DETAILS MA 190/M/2010 BAYER CROPSCIENCE LTD 8 AND PROOF WAS NOT FURNISHED EITHER TO THE A.O., CIT (A) OR BEFORE US THE CLAIM CANNOT BE ALLOWED ON THE BASIS OF SUBMISSION ALONE. AS NOTED EARLIER THE ASSESSEE IS ALSO NOT CLEAR ABOUT THE AM OUNTS INVOLVED AND ONLY AMOUNTS IN APPROXIMATE WERE WRITTEN OF WHICH I NDICATES THAT THE ASSESSEE HAS NO SUCH DETAILS TO SUBSTANTIATE THE CL AIM. IN VIEW OF THIS THE ASSESSEE'S CLAIM CANNOT BE ACCEPTED AND THE GRO UND IS REJECTED. 5. AS CAN BE SEEN FROM THE ABOVE, THE BENCH HAS NOT ONLY CONSIDERED THE CLAIMS BUT ALSO EVIDENCES ON RECORD BEFORE DECIDING ON MERITS. THE ASSESSEES PAPER BOOK WAS EXAMINED AT THE TIME OF P ASSING THE ORDER. PAGE 47, REFERRED TO ABOVE, IS ONLY SUMMARY OF THE ACCOU NTS WITHOUT OTHER DETAILS OF NATURE OF ADVANCE OR EXPENDITURE. PAGE 48 ADDRES SED TO CIT (A) VIII WAS THE NOTE ON BUSINESS ARRANGEMENT AND ANNEXURE I, II & III. THESE ARE ALSO PLACED IN THE PAPER BOOK FROM PAGES 49 TO 66, THE S AME INFORMATION WAS AVAILABLE BEFORE THE CIT (A) AND ON EXAMINATION OF THE SAME, THE CIT (A) HAS GIVEN FINDINGS, WHICH WERE EXTRACTED IN PARA 33 AS ABOVE. THERE IS ALSO A FINDING THAT THERE NOTHING WAS BROUGHT ON RECORD EITHER TO PROVE THE AMOUNTS ADVANCED DURING THE COURSE OF BUSINESS. AGR EEMENTS, ALREADY ON RECORD WERE ALREADY CONSIDERED BY THE CIT (A), HENC E, THERE IS NO FRESH RECONSIDERATION REQUIRED AT OUR END UNLESS THE ASSE SSEE PROVES THAT THE AMOUNTS ARE ADVANCED IN THE COURSE OF BUSINESS. IN FACT, VIDE PARA 73 OF THE CIT (A)S ORDER HAVE BEEN WITH REFERENCE TO THE AMO UNT DUE FROM SUJANIL CHEMO INDUSTRIES AS WELL, THERE IS CLEAR FINDING TH AT THE TRANSACTION ENTERED INTO WITH THE SAID COMPANY HAVE NOT BEEN SATISFYING THE CONDITIONS PRESCRIBED U/S 36(1)(VII) R W S 36(2). IT IS ALSO ON RECORD THAT BAD DEBTS CLAIMED WERE WRITTEN OFF AS AN INTEGRATION EXPENSE S IN THE BOOKS OF ACCOUNT. SINCE THE ASSESSEE FAILED TO FURNISH THE NATURE OF ADVANCES AND HOW THESE ARE SATISFYING THE CONDITIONS FOR ALLOWING EXPENDIT URE, THE BENCH HAS CONSIDERED THE EVIDENCES ON RECORD AND AGREED WITH THE FINDINGS OF THE CIT (A). SINCE A VIEW WAS TAKEN ON ITS MERITS AFTER EX AMINING THE RECORD, WE ARE OF THE OPINION THAT THERE IS NEED TO RECONSIDER THE ISSUE, AS SOUGHT OUT BY THE ASSESSEE. THIS FORUM DOES NOT HAVE ANY POWER TO RE VIEW ITS OWN ORDER. ACCORDINGLY, THE CONTENTIONS ARE REJECTED. MA 190/M/2010 BAYER CROPSCIENCE LTD 9 6. IN THE RESULT, MA IS DISMISSED. ORDER PRONOUNCED ON 14TH MAY 2010. SD/- ( N V VASUDEVAN ) JUDICIAL MEMBER SD/- ( B RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATE: 14TH MAY 2010 COPY TO:- 1) THE APPLICANT. 2) THE RESPONDENT. 3) THE CIT (A) -VIII, MUMBAI. 4) THE CIT VIII, MUMBAI CITY. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI CHAVAN* MA 190/M/2010 BAYER CROPSCIENCE LTD 10 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 7.5.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 11.5.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER