M/s. Ambuja Intermediates Pvt. Ltd., Ahmedabad V. The Dy. CIT, Circle-1, Ahmedabad

MA 197/AHD/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2907 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: N C AMIN
• Keywords: Capital asset; Business expenditure; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) M. A. NO. 197/AHD/2014 (IN ITA NO.3190/AHD/2010) (ASSESSMENT YEA R: 2006-07) M/S. AMBUJA INTERMEDIATES PVT. LTD., 901-A NARNARAYAN COMPLEX, SWASTIK CROSS ROAD, NAVRANGPURA 380009, AHMEDABAD V/S DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACCA1236B APPELLANT BY : SHRI N.C. AMIN, A.R. RESPONDENT BY : SHRI B.L.YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 17-04-2015 DATE OF PRONOUNCEMENT : 24 -04-2015 PER ANIL CHATURVEDI,A.M. 1. BY THIS M.A. THE ASSESSEE HAS SUBMITTED FOR RECALL THE ORDER OF TRIBUNAL IN ITA NO. 3109/AHD/2010 DATED 27.03.2014. ASSESSEE HA S FILED MISCELLANEOUS APPLICATION DATED 25.11.2014 THROUGH WHICH IT IS SUBMITTED AS UNDER:- 1. THE ABOVE ORDER OF THE HON'BLE TRIBUNAL DATED 27.3. 2014 [EXHIBIT-A] SUFFERS FROM APPARENT ERRORS AND INJUSTICE IN THE FOLLOWING CIRC UMSTANCES AND THEREFORE THIS MISCELLANEOUS APPLICATION IS FILED. 2. THE APPLICANT HEREIN WAS IN APPELLANT I N APPEAL FILED ITA NO. 3190/AHD/2010 FOR A.Y. 2006-07. 3. THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL 'A' B ENCH, AHMEDABAD HAS PASSED ORDER U/S 254 DATED 27.3.2014 FOR THE ABOVE REFERRE D ASSESSMENT YEAR. MA NO 197/A/14 ( IN ITA NO.3190/A/10) . A.Y. 2006- 07 2 4. ON GOING THROUGH THE SAME, IT IS SEEN THAT THE HON' BLE INCOME-TAX APPELLATE TRIBUNAL HAS DISMISSED THE APPEAL AND CONCLUSION IS IN PARA 5 OF THE APPELLATE ORDER. THE FACTS STATED IN PARA (5) IS CONTRARY TO THE MATERIALS AVA ILABLE ON RECORD. 5. IN PARA ( 5) HON'BLE APPELLATE TRIBUNAL HAS STATED THE FACTS THAT APPELLANT HAD TAKEN POSSESSION OF IMMOVEABLE PROPERTY I.E. RESIDENTIAL HOUSE IN EARLIER YEARS AND WHICH WAS SOLD DURING THE YEAR UNDER CONSIDERATION AND CL AIMED LOSSES ON ACCOUNT OF SALE IMMOVABLE PROPERTY. 6. IN PAPER BOOK DATED 12.11.2013 THE APPELLANT HAS FI LED COPY OF APPELLATE ORDER PASSED BY HON'BLE ITAT 'A' BENCH, AHMEDABAD FOR A.Y . 2005-06 WHEREIN, IN PARAS (3),( 6) & (9) IT IS CLEARLY STATED THAT PROPERTY I N QUESTION IS MORTGAGED TO THE APPLICANT AND IN THE APPELLATE ORDER FOR THE YEAR UNDER CONSIDERATION THAT POSSESSION OF IMMOVABLE PROPERTY I.E. RESIDENTIAL HOUSE HAS TA KEN IN EARLIER YEARS WHICH FACTS ARE INCORRECT AND CONTRARY TO THE FACTS MENTIONED I N THE APPELLATE ORDER FOR A.Y. 2005-06 AND THEREFORE IT AMOUNTS TO A MISTAKE APPAR ENT ON THE FACE OF RECORD. 7. SECONDLY THE PROPERTY IN QUESTION WAS SHOWN BY THE APPELLANT IN ITS BALANCE-SHEET AS CAPITAL ASSETS AND SOLD DURING THE YEAR UNDER CONSI DERATION AND CLAIMED LOSS ON SALE OF IMMOVABLE PROPERTY. 8. THE SAID AMOUNT IS APPEARING AS BAD DEBT IN AUDITED PROFIT & LOSS ACCOUNT EVEN THIS ASSETS IS NOT APPEARING AS CAPITAL ASSETS IN THE BA LANCE-SHEET OF THE APPLICANT COMPANY AND THEREFORE THE ISSUE IN QUESTION IS DECI DED BY HON'BLE TRIBUNAL ON INCORRECT AND IRRELEVANT FACTS IN SUPPORT OF THE SA ME COPY OF BALANCE SHEET AS AT 31.3.2005 & 31.3.2006 WAS SUBMITTED THEREFORE IT AM OUNTS TO A MISTAKE APPARENT ON THE FACE OF RECORDS. 9. THE CITY CIVIL COURT VIDE ITS ORDER DATED 29.9.2004 ORDERED TO URMI CHEMICALS PVT. LTD., NOT TO TRANSFER THE PROPERTY MORTGAGED IN FAV OUR OF THE APPLICANT AND THEREAFTER DECREE ORDER WAS PASSED ON 16.12.2004 TO AVOID UNEX PECTED MALPRACTICE FROM DEBTOR COMPANY TO ALIENATE THE SAID PROPERTY TO FURTHER SA FEGUARD THE OUTSTANDING DUES OF THE APPLICANT COMPANY AND ENTERED INTO CONSENT AGRE EMENT TO TAKE POSSESSION OF BOTH THE PROPERTIES AT AGREED PRICE AS OTHER CREDITORS W ERE STANDING IN QUEUE FOR RECOVERY OF THEIR DUES IN THE BOOKS OF ACCOUNT OF THE APPELL ANT ,THE ACCOUNT OF URMI CHEMICALS PVT. LTD. FOR ACCOUNTING YEAR 2005-06 IS APPEARING ON PAGE (39) AS OPENING DEBIT BALANCE IN THE ACCOUNT OF DEBTOR AMOUNTING TO IS RS .1.00 CRORE AND AS AGAINST THAT HAWALA ENTRIES HAVE BEEN PASSED AS ON 31.3.2006 AND ON PAG E (40) THE NET AMOUNT REALIZED IS CREDITED AGAINST DEBIT BALANCE OF RS.52 ,38,920/- AND NON REALIZED AMOUNT OF RS.25,00,000/- IS DEBITED TO THE BAD DEBT ACCOUN T WHICH IS APPEARING ON PAGE (41) OF PAPER BOOK. 10. THE BALANCE AMOUNT OF RS.1,00,00,000/- WAS CARRIED FORWARD AS SECURED DEBTOR AS AT 31.3.2005. THE APPELLANT HAS OPENED BAD DEBT ACCOUN T IN ITS BOOKS OF ACCOUNT AND THE COPY OF THE SAME IS AVAILABLE IN AUDITED PROFIT & L OSS ACCOUNT UNDER THE HEAD BAD DEBTS AND THEREFORE THE CLAIM OF THE APPELLANT AS B AD DEBTS IS COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT REPORTED IN 323 ITR PAGE 397. 11. THE BAD DEBTS ALLOWED IN THE IMMEDIATELY PRECEDING YEAR AMOUNTING TO RS.80,20,000/- OUT OF TOTAL BAD DEBTS CLAIM OF RS.1 ,80,20,000/-, AS THE PART IS ALLOWED IN THE ASSESSMENT YEAR 2005-06 AND REMAINING BALANC E CARRIED FORWARDED OF RS.1,00,00,00/- WHICH WAS SECURED BY MORTGAGED HOUS E PROPERTY AND SAID PROPERTY MA NO 197/A/14 ( IN ITA NO.3190/A/10) . A.Y. 2006- 07 3 WAS SOLD BY OWNER MANJULABEN THAKORPRASAD VYAS BY H ER PER PRO UMESH R.SHETH MANAGER OF AMBUJA INTERMEDIATES (P) LTD.,LTD. HAS V IDE SALE DEED DATED 1.,4.2005 AND REALIZED AN AMOUNT OF RS.25,00,000/- AND BALANC E AMOUNT WRITE OFF AS BAD DEBTS DURING THE YEAR UNDER CONSIDERATION AND AS SUCH IT IS ADMISSIBLE CLAIM UNDER CLAUSE 36(10(VII) OF THE I.T.ACT 1961. 12. THERE ARE CERTAIN FACTUAL AND LEGAL MISTAKES WHICH ARE ENUMERATED AS ABOVE AND ORDER PASSED ON THE BASIS OF INCORRECT FACTS WHICH REQUIRES TO BE RECTIFIED U/S 254 (2) OF THE I.T.ACT 1961. 13. MOREOVER THE PROPERTY IN QUESTION WAS SOLD BY UMESH BHAI R. SHETH POWER OF ATTORNEY HOLDER OF MANJULABEN THAKORPRASAD VYAS AND SALE DEED WAS EXECUTED ON 15.4.2005 RELEVANT TO ASSESSMENT YEAR 2006-07 TO MA DHAVJI HARJIBHAI GAJERA AND GULABBHAI GORDHANBHAI GAJERA AND REALIZED AMOUNT OF RS. 25.00 LACS ON VARIOUS DATES BY CHEQUES AND THE SAID AMOUNT WAS CREDITED A GAINST THE DEBTORS ACCOUNT AND BALANCE CLAIMED AS BAD DEBTS DURING THE YEAR UNDER CONSIDERATION. 14. FURTHER IT IS NOT THE BUSINESS OF THE APPELLANT TO PURCHASE AND SALE OF PROPERTY AND THEREFORE, IN THE ALTERNATIVE IF OUR CLAIM OF BAD D EBT IS NOT ACCEPTABLE THEN AS PER GROUNDS OF APPEAL APPEARING AT SR. NOS. 6 & 7 BE AL LOWED AS BUSINESS EXPENDITURE OR BUSINESS LOSS U/S 28(1) OF THE I.T.ACT 1961. 15. BOTH THE AMOUNTS AMOUNTING TO RS.25.00 LACS CLAIMED BE ALLOWED EITHER AS BAD DEBT U/S U/S.36(L)(VII) OR IN THE ALTERNATIVE BUSINESS L OSS U/S 28(1) AND AMOUNT OF RS.50,000/- GIVEN BY WAY OF DEPOSIT FOR BOOKING OF VEHICLE WITH COMPANY PAL PEUGEOT LTD. FOR THE PURPOSE OF BUSINESS AND THEREFORE IT I S ALSO REQUIRED TO BE ALLOWED AS BUSINESS LOSSES AS CLAIMED IN VIEW OF VARIOUS DECIS IONS AND COPIES OF THE SAME IS AVAILABLE ON PAGES 132 & 138 OF THE PAPER BOOK. 16. AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TRF LTD., IT IS SPECIFICALLY HELD 'THAT IN ORDER TO OBTAIN DEDUCTIO N IN RELATION TO BAD DEBT IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT IN FACT HAD BECOME IRRECOVERABLE, IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE AND ACCORDINGLY THE APPELLANT HAD CLAIMED BAD DEBT BY P ASSING ENTRY IN THE BOOKS OF ACCOUNT DEBITING TO PROFIT AND LOSS AND CREDITED TO THE OUTSTANDING DEBTORS ACCOUNT. ON ERRONEOUS FACTS THE APPEAL OF THE APPLICANT WAS DECIDED BY HON'BLE ITAT WHILE PASSING ORDER AS STATED ABOVE FACTUAL AND LEGAL MIS TAKES CREPT REQUIRES TO BE RECTIFIED U/S 254(2) OF THE I.T. ACT 1961. 17. IN VIEW OF THE ABOVE REFERRED FACTS AND CIRCUMSTANC ES OF THE CASE OF THE LEGAL AND FACTUAL MISTAKES AS STATED ABOVE BE RECTIFIED U/S 2 54(2) OF THE I.T.ACT 1961 AND OBLIGE. 2. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE IN THE MISCELLANEOUS APPLICATION AND SUBMITTED THAT THERE ARE CERTAIN FA CTUAL AND LEGAL MISTAKES IN THE ORDER AND THEREFORE SUBMITTED THAT THE ORDER HA S BEEN PASSED ON THE BASIS OF INCORRECT FACTS AND THEREFORE THE SAME IS REQUIR ED TO BE RECTIFIED. THE LD. MA NO 197/A/14 ( IN ITA NO.3190/A/10) . A.Y. 2006- 07 4 D.R. ON THE OTHER HAND SUBMITTED THAT THERE IS NO M ISTAKE IN THE ORDER OF TRIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. CONSIDERING TH E SUBMISSIONS MADE BY THE ASSESSEE IN THE M.A., WE ARE OF THE VIEW THAT T HE CONTENTIONS OF ASSESSEE HAVE NOT BEEN CONSIDERED AND THUS THERE IS AN APPAR ENT MISTAKE. WE THEREFORE RECALL THE ORDER OF TRIBUNAL IN ITA NO. 3 109/AHD/2010 ORDER DATED 27.03.2014 AND DIRECT THE REGISTRY TO FIX THE APPEAL FOR HEARING ON 09.09.2015. BOTH PARTIES WERE INFORMED IN COURT AN D HENCE THE SEPARATE NOTICE OF HEARING WAS DISPENSED WITH THE CONSENT OF BOTH PARTIES. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 24 -04 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD