Axiom Thermo Furnaces Pvt. Ltd., CHENNAI V. ITO Corporate WArd 1(1), CHENNAI

MA 85/CHNY/2018

• Counselvise Citation: [2018] 129 COUNSELVISE.COM (IT) 9980 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 18-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MAMMEN MATHEWS
• Keywords: Sale consideration of property below Jantri Value; Bad and doubtful debts
• Section: 37

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER M.P. NO. 85/CHNY/2018 [IN I.T.A.NO.3129/MDS/2017] / ASSESSMENT YEAR:2014-15 M/S. AXIOM THERMO FURNACES PVT. LTD., NO. 15/2, MAYA STREET, POOMPUHAR NAGAR, AMBATTUR, CHENNAI 600 053. [PAN: AAFCA0822N] VS. THE INCOME TAX OFFICER, CORPORATE WARD 1(1), CHENNAI 600 034. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI MAMMEN MATHEWS, C.A. /RESPONDENT BY : SHRI AR. V. SREENIVASAN, JCIT / DATE OF HEARING : 20.07.2018 /DATE OF PRONOUNCEMENT : 04.10.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: IN THIS MISCELLANEOUS PETITION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL IN I.T.A. NO. 3129/CHNY/2017 DATED 16.03.2018, ITS GRIEVANCE IS THAT THE PETITIONER HAS EXPLAINED THE CONDITIONS NECESSARY FOR WRITE OFF OF BAD DEBTS, BUT, IN ITS ORDER DATED 16.03.2018, THE TRIBUNAL HAS SUSTAINED THE DISALLOWANCE AND THUS, THERE IS A MISTAKE APPARENT ON RECORD. WITH REGARD TO THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER LONG TERM CAPITAL GAINS, BY REFERRING TO THE PETITION, THE LD. COUNSEL HAS SUBMITTED THAT THE SALE OF THE ASSESSEES PROPERTY IS A DISTRESS SALE. IT WAS ALSO SUBMITTED THAT IN THE M.P. NO.85/CHNY/18 2 WRITTEN SUBMISSIONS FILED ON 26.02.2018, IT WAS SUBMITTED THAT THE ASSESSEE WAS FORCED TO SELL THE LAND AT .2,508 PER SQ.FT. BECAUSE THE GUIDELINE VALUE WAS INCREASED BY 300% FROM .1,000 WHICH WAS THE GUIDELINE VALUE FROM 01.08.2007 TO 21.03.2012 TO .3,000 ON 01.04.2012. AGAIN IT WAS INCREASED TO .4,500 SQ.FT. AND THE GOVERNMENT OF TAMIL NADU REALISING THAT THE INCREASE WAS STEEP REDUCED IT TO .3,015 SQ.FT. ON 09.06.2017. HOWEVER, SINCE THE STAMP DUTY VALUATION ON THE DATE OF AGREEMENT FOR SALE ON 17.10.2013 WAS TO BE .3,000/-, THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO EXAMINE AND MAKE REVISION OF THE STAMP DUTY VALUE AND RECOMPUTED THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF CAPITAL GAIN TAXATION, WHICH IS A MISTAKE APPARENT ON RECORD AND PRAYED FOR RECALLING THE ORDER OF THE TRIBUNAL DATED 16.03.2018. 2. PER CONTRA, THE LD. DR SUBMITTED THAT THERE WAS NO MISTAKE IN THE ORDER OF THE TRIBUNAL WARRANTING INTERFERENCE UNDER SECTION 254(2) OF THE ACT. 3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ORDER OF THE TRIBUNAL. WITH REGARD TO THE ISSUE OF DISALLOWANCE OF BAD DEBT, WHAT WAS HELD BY THE TRIBUNAL AT PARA 6 TO 6.2 OF THE ORDER ARE REPRODUCED HEREIN BELOW: 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN DISALLOWING THE CLAIM OF BAD DEBTS WRITTEN OFF BY THE M.P. NO.85/CHNY/18 3 ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS WRITTEN OFF CERTAIN AMOUNT DURING THE YEAR IN RESPECT OF FOUR PARTIES AGGREGATING TO .17,48,797/-. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM FOR BAD DEBTS WHICH WERE SAID TO HAVE ARISEN ON ACCOUNT OF LATE DELIVERY OF PROJECT AND OTHER SERVICES TO THEIR CLIENTS BY THE ASSESSEE. AFTER EXAMINING THE CLAIM OF THE ASSESSEE UNDER SECTION 37 OF THE ACT, THE ASSESSING OFFICER CONCLUDED THAT THE AMOUNTS PAID IN BREACH OF CONTRACT WAS NOT AN ALLOWABLE DEDUCTION UNDER THE SAID PROVISION AND ACCORDINGLY, DISALLOWED THE SAME. 6.1 ON APPEAL, THE SUBMISSIONS OF THE ASSESSEE AND OBSERVATION MADE BY THE LD. CIT(A) ARE REPRODUCED AS UNDER: THE ASSESSEE HAS SHOWN BAD DEBTS OF RS. 17,48,797/ - DUE TO LATE DELIVERY, DEFICIENCY, UNCERTIFIED WORK, AMOUNT NOT COLLECTABLE DUE TO CLOSURE OF BUSINESS AND REFUSAL TO PAY. LEDGER COPY OF THE BAD DEBTS WAS FILED BEFORE THE ASSESSING OFFICER. NO OTHER DOCUMENTS NOR ANY EVIDENCE WAS FURNISHED BY THE APPELLANT IN THE COURSE OF APPEAL PROCEEDINGS. WHERE DEDUCTION IS CLAIMED UNDER THE HEAD BAD DEBTS, THE APPELLANT HAS TO SHOW THAT THE CONDITIONS PROVIDED UNDER THE STATUTE FOR CLAIMING OF DEDUCTION AS BAD DEBTS HAS BEEN FULFILLED IN ITS CASE. THE APPELLANT DID NOT MAKE ANY ATTEMPT TO SHOW HOW THE CONDITION PRESCRIBED IN SECTION 36(1)(VII) READ WITH SECTION 36(2) ARE COMPLIED WITH IN THIS CASE. IN FACT, NO OTHER SUBMISSION WAS MADE TO EXPLAIN THE NATURE OF THE EXPENDITURE CLAIM. NO MATERIAL WAS PLACED ON RECORD TO SHOW THAT THE DEBT HAD BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE APPELLANT IN THE PAST. UNDER THE CIRCUMSTANCES, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER DOES NOT WARRANT ANY INTERFERENCE AS THE APPELLANT HAS FAILED TO SHOW HOW THE SAID SOME WAS DEDUCTIBLE AS BAD DEBTS OR AS ANY OTHER EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THIS GROUND OF APPEAL IS DISMISSED. 6.2 EXCEPT MAKING A MENTION IN THE NOTES ON FINANCIAL STATEMENT FOR THE YEAR ENDED 31.03.2014, THE ASSESSEE FAILED TO SUBSTANTIATE THE CLAIMS OF BAD DEBTS. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW AND THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. M.P. NO.85/CHNY/18 4 4. WITH REGARD TO THE DISALLOWANCE OF DEDUCTION CLAIMED UNDER LONG TERM CAPITAL GAINS, BY CONSIDERING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SUGANTHA RAVIDNRAN 352 ITR 488 AS WELL AS THE DECISION OF THE AHMEDABAD BENCHES OF THE TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONANI V. ACIT IN I.T.A. NO. 1237/AHD/2013 DATED 30.09.2016, AT PARA 5.3, IN ITS ORDER, THE TRIBUNAL HAS HELD AS UNDER: 5.3 IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT BEFORE EXECUTING THE DEED OF SALE ON 28.02.2014, THE ASSESSEE HAS BEEN RECEIVED THE ENTIRE SALE CONSIDERATION AS PER THE REGISTERED AGREEMENT FOR SALE EXECUTED ON 17.10.2013 AND THE CONDITIONS LAID DOWN IN THE NEWLY ENACTED PROVISO WERE COMPLIED AND THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION IN THE CASE OF DHARAMSHIBHAI SONANI V. ACIT (SUPRA), WE DIRECT THE ASSESSING OFFICER TO ADOPT THE STAMP DUTY VALUE ON THE DATE OF AGREEMENT TO SELL, I.E., 17.10.2013 INSTEAD OF 28.02.2014. MOREOVER, THE LD. CIT(A) THAT THE TOTAL AREA OF LAND INVOLVED IN THE ABOVE TRANSACTION WAS 11220 SQ.FT. OUT OF THE SAME, .28,55,100/- PERTAINS TO THE VALUE OF BUILDING. EXCLUDING THE SAME FROM THE SALE CONSIDERATION, THE EFFECTIVE SALE PRICE REALIZED BY THE ASSESSEE WAS TO BE .2,508/- PER SQ.FT. MOREOVER, THE LD. CIT(A) OBSERVED THAT THE STAMP DUTY VALUATION ON THE DAY OF AGREEMENT FOR SALE I.E., 17.10.2013, WAS TO BE .3,000/-. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE AND MAKE REVISION OF THE STAMP DUTY VALUE AND RECOMPUTE THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF CAPITAL GAIN TAXATION. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN OUR OPINION, A FAIR READING OF THE ORDER OF THE TRIBUNAL ON BOTH THE ISSUES, WE FIND THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL IN REACHING ITS CONCLUSIONS, THE DECISION OF THE TRIBUNAL IS NOT LIABLE TO BE INTERFERED WITH AS THE CONCLUSION REACHED BY THE TRIBUNAL IS NOT PERVERSE. BEING SO, W E FIND NO MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL; OTHERWISE, IT M.P. NO.85/CHNY/18 5 WOULD TANTAMOUNT TO REVIEW OF THE ORDER OF THE TRIBUNAL, WHICH IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE ACT. 5. IN THE RESULT, THE MP FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 04 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 04.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.