Integra Engineering India Ltd.,(Formerly known as Schlafhorst Engineering(India) Ltd.), Panchmahal V. The ACIT.,Circle-4, Vadodara

MA 24/AHD/2023

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The case involves Integra Engineering India Ltd., which filed a Miscellaneous Application concerning an earlier Tribunal order that disallowed a deduction for bad debts amounting to Rs.69,33,446. The assessee argued that this amount, written off against the provision for doubtful debts, should be deductible based on the Supreme Court's decision in TRF Limited vs. CIT, which was not considered in the Tribunal's earlier decision. The Tribunal had initially confirmed the disallowance, stating that the assessee had not substantiated efforts made for collecting the debts and had not established that the debts had become bad. However, upon review, the Tribunal acknowledged the oversight and recalled the earlier order for re-examination of this specific ground.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129867 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-03-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2023
• Other Referred Cases: TRF Limited vs. CIT
• Laws Referred To: TRF Limited vs. CIT, 323 ITR 397
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 48

Judgement Text

M.A. No.24/Ahd/2023 (In ITA No.1316/Ahd/2016) A.Y. 2007-08 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER M.A. No.24/Ahd/2023 (In ITA No.1316/Ahd/2016) Assessment Year: 2007-08 Integra Engineering India Ltd., vs. The A.C.I.T., Circle – 4, (Formerly known as Schlafhorst Baroda. Engineering (India) Ltd.) Post Box No.55, Chandrapura Village, Halol, Dist. Panchmahal – 389 350 [PAN – AABCS 8347 Q] (Appellant) (Respondent) Assessee by : Shri Yogesh Shah, AR Respondent by : Shri Rajdeep Singh, CIT DR Date of hearing : 17.03.2023 Date of pronouncement : 22.03.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This Miscellaneous Application has been filed by the Assessee in respect of order dated 24.08.2022 passed by the Tribunal. 2. Ld. AR submitted that the assessee had written off bad debts amounting to Rs.1,06,00,000/-. Out of the said amount Rs.36,75,000/- was debited to Profit & Loss Account and balance of Rs.69,33,446/- was debited to provision of bad debts and settled against provision for doubtful debts created in Assessment Year 2002-03. The Ld. AR submitted that the Assessing Officer did not grant deduction of the bad debts so written off on the ground the assessee was not able to prove that the debt bad become bad during the year. The CIT(A) observed that it is not necessary to establish that the debt has become bad in view of Hon’ble Supreme Court’s decision in the case of TRF Limited vs. CIT, 323 ITR 397 and allowed deduction of Rs.36,75,000/- which was debited to the Profit & Loss Account. However, confirmed M.A. No.24/Ahd/2023 (In ITA No.1316/Ahd/2016) A.Y. 2007-08 Page 2 of 3 Rs.69,33,446/- on the ground that it has not been actually written off. Against that the assessee filed appeal before the Tribunal in ground no.3 & 3.1. The Ld. AR submitted that the Department did not file any appeal against the CIT(A)’s order holding that in view of Supreme Court decision in case of TRF Limited, it is not necessary to establish that debt has become bad. Thus, they accepted the CIT(A)’s order that it is not necessary to establish that debt has become bad in view of TRF Limited. The Ld. AR further submitted that the bad debts of Rs.69,33,446/- was written off against provision for doubtful debts, page nos.30 to 48 of the Paper Book from the financials which showed that the provision for doubtful debts was Rs.69,33,446/- as on March 2006 whereas it was NIL as of March 2007. To substantiate the assessee’s claim, the Ld. AR pointed out Schedule-8 Sundry Debtors on page no.38 of the paper Book. The assessee also pointed out copy of statement of total income at Paper Book-II, page no.290 to establish that the provisions of doubtful debts created in A.Y. 2002-03 was disallowed and added back to the total income in that year. As the assessee has written of the bad debts, the assessee submitted that based on the Supreme Court decision the assessee was entitled to deduction of the same without having to prove that the debt has become bad. The Ld. AR submitted that, however, the Tribunal vide paragraph no.11 confirmed the disallowance by stating that assessee had not substantiated efforts made for collecting and not established that the debt had become bad. The Ld. AR submitted that reasoning given are contrary to the decision of TRF Limited Limited which was already settled before the CIT(A) and the issue does not survive as the department did not challenge the order of CIT(A). Thus, the Ld. AR submitted that this is a mistake apparent from record. 3. The Ld. DR relied upon the order of the Tribunal and submitted that the assessee is seeking review of the order and, therefore, this Miscellaneous Application may be dismissed. 4. We have heard both the parties and perused all the material available on record. It is pertinent to note the contention of the Ld. AR that the Tribunal has not considered the decision of Hon’ble Apex Court in the case of TRF Limited. It appears that there is a mistake apparent on record. Therefore, we recall the order dated 24.08.2022 passed by the Tribunal to the extent of Ground No.3 only. The Registry is directed to place the appeal for hearing on 17.04.2023 to the extent of Ground No.3. M.A. No.24/Ahd/2023 (In ITA No.1316/Ahd/2016) A.Y. 2007-08 Page 3 of 3 Issue notice to both the parties accordingly. Hence, the present Miscellaneous Application is allowed. 5 In the result, Miscellaneous Application filed by the assessee is allowed. Order pronounced in the open Court on this 22 nd day of March, 2023. Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 22 nd day of March, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad