Marvellous Construction Co., Himatnagar V. The ACIT., S.K. Circle, Himatnagar

MA 46/AHD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8473 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-06-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: MRS URVASHI SODHAN
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, JM AND SHRI A. MOHA N ALANKAMONY, AM) M. A. NO.46/AHD/2010 (IN ITA NO.1783/AHD/2005 AY: 2002-03) M/S. MARVELLOUS CONSTRUCTION CO.,MEHTAPURA, IDAR ROAD, HIMATNAGAR PA NO. AACFM 5361 J VS THE A. C. I. T.-IX, AHMEDABAD (APPLICANT) (RESPONDENT) APPLICANT BY MRS. URVASHI SODHAN, AR RESPONDENT BY SHRI B. L. YADAV, SR. DR DATE OF HEARING: 22-06-2012 DATE OF PRONOUNCEMENT: 06-07-2012 ORDER PER A. MOHAN ALANKAMONY : THIS MISC. APPLICATION IS FILED BY THE ASSESSEE SEEKING RECALLING OF THE O RDER OF THE TRIBUNAL DATED 29-08-2008 PASSED IN ITA NO.1783/AHD/2005 FOR THE ASSESSMENT YEAR 2002-03. THE ASSESSEE HAS MADE AN E LABORATE SUBMISSION AS UNDER: 1. THE PRESENT APPLICATION IS FILED BY THE APPLI CANT/APPELLANT ABOVE NAMED FOR SETTING ASIDE THE ORDER DATED 29/08 /2008 PASSED BY THIS HON'BLE ITAT DISMISSING THE APPEAL FILED BY THE APPELLANT (ORIGINAL APPELLANT). IT IS MOST RESPECTFULLY SUBMI TTED THAT IN THE SAID ORDER OF THE HON'BLE ITAT, THERE IS AN ERROR A PPARENT ON THE RECORD. 2. THE HON'BLE ITAT ON PAGE 1 PARA 1 OF THE O RDER REPRODUCED THE GROUNDS OF APPEAL RAISED BY THE APPLICANT AS FO LLOWS: MA NO.46/AHD/2010 (IN ITA NO.1783/AHD/2005 AY: 2002-03) M/S. MARVELLOUS CONSTRUCTION CO.VS ACIT-IX, AHMEDAB AD 2 '1. THE ID. CIT (A) ERRED IN LAW AND ON FACTS IN D ISALLOWING BAD DEBT CLAIM OF RS. 10, 98, 731/- WHICH IS WRITTE N OFF IN THE BOOKS OF ACCOUNTS IN THE YEAR UNDER CONSIDERATION. 2. THE CIT (A) ERRED IN HOLDING THAT AS THE PETITI ON IS PENDING AT THE GUJARAT PUBLIC WORKS CONTRACTS DISPU TES ARBITRATION TRIBUNAL, WHICH IS A GOVERNMENT AGENCY WHERE DELAY OF MATTER IS NOT UNCOMMON AND HENCE UNLESS TH E SAID TRIBUNAL DECLARED ANY ARBITRATION AWARD, CLAIM OF B AD DEBT CANNOT BE ALLOWED EVEN IF IT IS WRITTEN OFF IN THE ACCOUNTS. ' 3. THE HON'BLE ITAT WHILE DISMISSING THE APPE AL ON PAGE 7 PARA 8 STATED THAT - 'IN VIEW OF THE FOREGOING AND IN THE LIGHT OF THE A FORESAID DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F DHALL ENTERPRISES AND ENGINEERS P. LTD. V CIT 295ITR 481 (GUJ) AND OF HON'BLE MADRAS HIGH COURT, WE HAVE NO HESITA TION IN HOLDING THAT EXCEPT THE UNILATERAL ACT OF THE TA XPAYER TO WRITE OFF THE DEBTS AS BAD DEBTS IN THE BOOKS OF AC COUNTS FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION, THE TAXPAYER HAS NOT MADE OUT ANY CA SE TO REGARD THE DEBTS AS IRRECOVERABLE. THE JUDGMENT OF THE TAXPAYER IN REGARDING THE DEBTS AS BAD DEBTS IS ONL Y REGARDED AS A CONVENIENT JUDGMENT TO SUIT ITS CLAIM , BUT NOT AN HONEST JUDGMENT. IN THESE CIRCUMSTANCES, GROUNDS RAISED BY THE TAXPAYER ARE REJECTED.' 4. THE APPLICANT MOST RESPECTFULLY SUBMITS THA T THE JUDGMENT OF DHALL ENTERPRISES AND ENGINEERS P. LTD. (SUPRA) AS WELL OF HON'BLE MADRAS HIGH COURT ON WHICH THE HON'BLE BENCH RELIED UPON TO DISMISS THE APPEAL OF THE APPLICANT TO DISALLOW THE CLAIM OF BAD DEBTS WRITTEN OFF IN THE BOOK OF ACCOUNT IS NO LON GER GOOD LAW IN VIEW OF THE JUDGMENT OF THE HON'BLE APEX COURT IN T RF LIMITED V CIT (ANNEXURE I) RECENTLY DELIVERED LAYING DOWN / THE RATIO THAT AFTER THE AMENDMENT TO SECTION 36(L)(VII) OF THE AC T THAT WRITING OFF OF THE DEBT AS IRRECOVERABLE WAS SUFFICIENT TO CLAI M THE DEBT AS BAD DEBTS. THE HON'BLE APEX, COURT ALSO DISMISSED THE S PECIAL LEAVE PETITION (SLP) FILED BY THE REVENUE AGAINST THE JUD GMENT OF THE MA NO.46/AHD/2010 (IN ITA NO.1783/AHD/2005 AY: 2002-03) M/S. MARVELLOUS CONSTRUCTION CO.VS ACIT-IX, AHMEDAB AD 3 HON'BLE BOMBAY HIGH COURT AFFIRMING THE DECISION IN OMAN INTERNATIONAL BANK (SB) (MUM) REPORTED AT 100 ITD 2 85 IN RAJENDRA Y. SHAH & OTHERS REPORTED @ [2009] 313 ITR (ST) 3 (ANNEXURE II). THE HON'BLE THIRD MEMBER ORDER OF ITAT, AHMEDABAD BENCH, IN THE CASE OF M/S RIDDHI SIDDHI G LUCO BOILS LTD., BEARING ITA NO. 404/AHD/2003 (ANNEXURE III) CONSIDERING THE SLP DISMISSAL BY THE HON'BLE APEX COURT, REVERS ED THE RATIO LAID BY THE HON'BLE GUJARAT HIGH COURT IN DHALL ENT ERPRISES ENGINEERS P. LTD., ON WHICH THE BENCH RELIED IN THE IMPUGNED ORDER. THE APPLICANT MOST RESPECTFULLY SUBMITS THAT IN LIG HT OF THE ABOVE MENTIONED JUDGMENTS, THERE IS ERROR APPARENT IN THE IMPUGNED ORDER, AS HELD BY THE APEX COURT IN CIT V SAURASHTRA KUTCH STOCK EXCHANGE LTD. (305 ITR 227) THAT NON - CONSIDERATION OF A JUDGMENT OF THE APEX COURT WOULD ALWAYS CONSTITUTE A MISTAKE APPARENT FROM THE RECORD, REGARDLESS OF THE JUDGMEN T BEING RENDERED PRIOR TO OR SUBSEQUENT TO THE ORDER PRONOU NCED TO BE RECTIFIED, THEREFORE THE ORDER OF THE HON'BLE ITAT IS REQUIRED TO BE MODIFIED SO AS THE CLAIM OF BAD DEBT WRITTEN OFF IN THE BOOKS OF ACCOUNT IS ALLOWED. 6. THE APPLICANT THEREFORE RESPECTFULLY SUBMITS TH AT IN THE LARGER INTEREST OF JUSTICE THE HON'BLE TRIBUNAL BE PLEASED TO ACCEPT THE PRAYER OF THE APPLICANT/APPELLANT AND MODIFY TH E ORDER AS STATED ABOVE. 2. THE LEARNED AR REITERATED WHAT WAS SUBMITTED IN THE WRITTEN SUBMISSION. THE LEARNED DR OPPOSED TO THE SUBMISSIO N OF THE LEARNED AR AND ARGUED THAT THERE IS NO MISTAKE APPA RENT ON RECORD FOR INVOKING SECTION 254 (2) OF THE ACT AND THEREFO RE, THE MISC. APPLICATION OF THE ASSESSEE MAY BE DISMISSED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, CONSIDERED THE ORDER OF THE TRIBUNAL AND CAREFULLY PERUSED THE MATERIALS MA DE AVAILABLE BEFORE US. WE FIND FORCE IN THE SUBMISSION OF THE L EARNED AR. IT WAS MA NO.46/AHD/2010 (IN ITA NO.1783/AHD/2005 AY: 2002-03) M/S. MARVELLOUS CONSTRUCTION CO.VS ACIT-IX, AHMEDAB AD 4 HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF SUHRID GEIGY LTD. VS COMMISSIONER OF SURTAX (1999) 237 ITR 834 THAT IF A POINT IS COVERED BY THE DECISION OF THE JURISDICTIO NAL COURT RENDERED PRIOR TO OR EVEN SUBSEQUENT TO THE ORDER O F RECTIFICATION IT COULD BE SAID TO BE A MISTAKE APPARENT FROM RECO RD U/S 254 OF THE ACT. FURTHER, THE HONBLE APEX COURT IN THE CASE OF T. R. F. LTD. VS CIT, 323 ITR 397 HELD THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT HAS BECOME IRRE COVERABLE. IT IS ENOUGH IF THE DEBT IS WRITTEN OFF AS IRRECOVERAB LE IN THE ACCOUNT OF THE ASSESSEE TO CLAIM THE SAME AS BAD. CONSIDERING BOTH THE DECISIONS OF THE HONBLE HIGH COURT AND TH E APEX COURT, WE HEREBY RECALL THE ORDER OF THE TRIBUNAL INVOKING SE CTION 254(2) OF THE ACT WITH RESPECT TO THE ISSUE OF DISALLOWANCE OF BA D DEBTS, SINCE THE HONBLE APEX COURT HAS MADE IT CLEAR THAT BAD DEBTS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUNT SHALL BE ALLO WED AS DEDUCTION. FURTHER, IN THE LIGHT OF THE DECISION RENDERED BY T HE HONBLE APEX COURT WE HEREBY DIRECT THE LEARNED AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.10,98,731/- BEING BAD DEBTS WRITTEN OFF IN THE BOOKS OF ACCOUNTS, AT THE SAME BREATH WE ALSO CAUTION THE LEARNED AO TO TAKE NECESSARY ACTION IF THE SAME DEDUCTION IS GRANTED IN ANY OTHER PREVIOUS YEAR IN ORDER TO AVOID DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE UNDER THE ACT. MA NO.46/AHD/2010 (IN ITA NO.1783/AHD/2005 AY: 2002-03) M/S. MARVELLOUS CONSTRUCTION CO.VS ACIT-IX, AHMEDAB AD 5 4. IN THE RESULT, THE MISC. APPLICATION FILED BY TH E ASSESSEE IS ALLOWED IN ITS FAVOUR. ORDER PRONOUNCED IN THE OPEN COURT ON 06-07-2012. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: (PART DICTATION) 04-07-12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 05-07-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S ./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: