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TAXAP/1231/2009 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1231 of 2009
=========================================================
DESIGN
BUILD - Appellant(s)
Versus
ACIT
- CIR-9 OR HIS SUCCESSOR - Opponent(s)
=========================================================
Appearance :
MR
SN DIVATIA for
Appellant(s) : 1,
MRS MAUNA M BHATT for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 11/05/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
The
assessee is in appeal against the judgment of the Tribunal dated
06/02/2009 raising several questions in the Tax Appeal. We however
find that the issue is common. Sole ground that the assessee raises
in this appeal is whether the Tribunal was justified in not granting
benefit of deduction of Rs.6,80,087/- during the year in question.
In that view of the matter, ignoring other questions proposed, we
frame following question for the purpose of present Tax Appeal.
“Whether
on the facts and in the circumstances of the case, the Appellate
Tribunal was justified in reversing the order passed by CIT (A)
deleting the addition of Rs.6,80,087/- ? ”
We
may also notice that in view of the short controversy involved, on
08/03/2011 we had issued notice to the respondents. In response to
which learned Counsel, Ms.Bhatt appeared and argued on behalf of the
revenue.
The
facts are short. The assessee had claimed deduction of Rs.6,80,087/-
as bad-debts. Same was not accepted by the Revenue. Assessee carried
the issue in appeal. CIT (A) accepted the assessee’s case partly.
Issue was carried in appeal. Tribunal was of the opinion that
deduction was not justified. The Tribunal disallowed the claim on
following ground.
“6.4 In
the light of the aforesaid facts and circumstances of the case under
consideration, the reliance on behalf of the assessee on the
decisions in the case of Morgan Stanley, 292 ITR 331 (Del), Auto
Maker Ltd., 292 ITR 35 (Del), Brilliant Tutorials, 292 ITR 399 (Mad),
Star Chemicals, 11 DTR 331 (Bom), Punjab National Bank Vs. IAC, 30
itd 245 (Del) and Oman International Ltd., 100 ITD 285 (Mum) (SB), is
totally misplaced, especially when the Hon’ble jurisdictional High
Court in the case of Dhall Enterprises and Engineers P. Ltd., (supra)
had tersely held that mere debiting the amount is not sufficient.
The requirement is that the assessee should also prove that the debit
has become bad in that particular year while the assessee has not
placed before us any material, suggesting that the debts had become
irrecoverable as on 31.3.2001, when the assessee wrote off these
amounts.”
We
notice that it is not in dispute that the amount in question was
offered for tax in the previous year. This aspect is clearly and
unequivocally emerging from the record. That being the position, as
rightly pointed out by learned Counsel for the assessee, issue would
stand covered by the decision of the Apex court in case of T.R.F.
Ltd. Vs. Commissioner of Income Tax [2010] 323 ITR 397 (SC)
wherein it was held and observed as under:
“This
position in law is well-settled. After April 1, 1989, it is not
necessary for the assessee to establish that the debt, in fact, has
become irrecoverable. It is enough if the bad debt is written off as
irrecoverable in the accounts of the assessee. However, in the
present case, the Assessing Officer has not examined whether the debt
has, in fact, been written off in the accounts of the assessee. When
a bad debt occurs, the bad debt account is debited and the customer’s
account is credited thus, closing the account of the customer. In
the case of of companies, the provision is deducted from sundry
debtors. As stated above, the Assessing Officer has not examined
whether, in fact, the bad debt or part thereof is written off in the
accounts of the assessee. This exercise has not been undertaken by
the Assessing Officer. Hence, the matter is remitted to the
Assessing Officer for de novo consideration of the abovementioned
aspect only and that too only tot he extent of the write-off.”
This
being the position of law, we are of the view that Tribunal committed
an error in not granting deduction of the bad debts claimed by the
assessee. The question framed is thus answered in favour of the
assessee and against the revenue. Judgment of the tribunal shall
stand modified accordingly. Tax appeal is disposed of in above terms.
(AKIL
KURESHI, J.)
(SONIA
GOKANI, J.)
sompura
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