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TAXAP/1431/2010 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1431 of 2010
=========================================
COMMISSIONER
OF INCOME TAX, CENTRAL - II - Appellant(s)
Versus
M/S
VENUS LAMINATION LTD - Opponent(s)
=========================================
Appearance :
MR
BHATT SR ADV FOR MRS MAUNA M BHATT
for Appellant(s) : 1,
None
for Opponent(s) : 1,
=========================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 21/09/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Revenue,
in appeal, has challenged the judgement of the Income Tax Appellate
Tribunal dated 21.01.2010.
2. Appeal
pertains to assessment year 2001-02. Question raised for our
consideration is as follows:
“Whether
the Appellate Tribunal is right in law and on facts in allowing the
claim of bad debt u/s. 36 (1)(vii) of I.T. Act even after finding
that the assessee had discontinued its manufacturing business?”
3. The
sole question is with respect to the claim of bad debt made by the
assessee under Section 36(1)(vii) of the Income Tax Act, 1961. The
Assessing Officer disallowed the claim upon which the assessee
approached the CIT(A). CIT(A) reversed the view of the Assessing
Officer and allowed the claim for bad debt. Tribunal dismissed the
appeal of the revenue making following observations:
“3.6. We
have considered the rival submissions. On examination of Assessment
order, it is seen that various income which are shown by the
assessee as other income were still assessed under the “head
‘profit and gains and Business'”. Out of these incomes even
the brought forward business losses of preceding years were allowed
to be set off. Thus, the fact remains that the income from interest
were assessed as business income. It is therefore clear that though
the manufacturing business was not carried on during the year still
other business were duly carried on. Both these business are part
of same business as per test laid down like unity of control, unity
of fund, common premises, common capital etc. The claim is made u/s.
36(2)(vii) read with Section 36(2) of the Act. There is no denial of
fact that amount written off has become bad during the year. Only
dispute is as to whether the bad debt which were in respect of
manufacturing business activities and since there are no
manufacturing during the year such bad debt can be claimed against
business income from other business income. Section 36(1)(vii) did
not restrict in this regard. We, therefore, hold that the claim was
rightly held allowable by the CIT(A).”
4. Having
heard learned counsel for the revenue and having perused the orders
on record, we noticed that though the manufacturing activity of the
assessee had been discontinued, the assessee’s business had not come
to an end. The assessee had claimed bad debts from the profit and
gains of business of carried forward losses of the preceding years.
In that view of the matter, we do not find any question of law
arising, in particular, the Tribunal has recorded that though the
manufacturing business whose no longer being carried on, the other
business of the assessee still continued and both the businesses were
part of the same business in view of the unity of control, common
funds, common premises,common capital etc. We are of the opinion that
the CIT(A) as well as Tribunal having given to above factual
findings, no question of law arises for our consideration. In the
result, tax appeal is dismissed.
[AKIL
KURESHI, J.]
[SONIA
GOKANI, J.]
JYOTI
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