Gujarat Flurochemicals Ltd.,, Baroda v. The ACIT., Circle-1(1),, Ahmedabad

CO 266/AHD/2004 | 2001-2002
Pronouncement Date: 31-01-2011 | Result: Allowed

Appeal Details

RSA Number 26620523 RSA 2004
Bench Ahmedabad
Appeal Number CO 266/AHD/2004
Duration Of Justice 6 year(s) 3 month(s) 19 day(s)
Appellant Gujarat Flurochemicals Ltd.,, Baroda
Respondent The ACIT., Circle-1(1),, Ahmedabad
Appeal Type Cross Objection
Pronouncement Date 31-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 31-01-2011
Date Of Final Hearing 27-01-2011
Next Hearing Date 27-01-2011
Assessment Year 2001-2002
Appeal Filed On 11-10-2004
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M GUJARAT FLUROCHEMICALS LTD. 2 ND FLOOR ABS TOWER OLD PADRA ROAD BARODA. VS. ASSTT. CIT CIRCLE-1(1) BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. N. SOPARKAR SR. ADVOCATE RESPONDENT BY:- SHRI V. K. MATHUR CIT DR O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER . IN THIS CROSS OBJECTION THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE DISALLOWANCE MADE BY THE AO OF RS.80 433/- ON ACCOUNT OF SUNDRY BALANCE WRITTEN OFF. (2) LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CAS E IN TREATING THE GROUND RELATING TO CHARGING OF INTEREST U/S 234 B AS CONSEQUENTIAL. 2. IT IS FOUND THAT THE C.O. FILED BY THE ASSESSEE IS LATE BY 8 DAYS. THE ASSESSEE EXPLAINED THE DELAY AS UNDER :- C.O. NO.266/AHD/2004 IN ITA NO.2460/AND/2004 ASST. YEAR 2001-02 CO NO.266/AHD/2004 IN ITA NO.2460/AHD/2004 ASST. YEAR 2001-02 2 THE ASSTT. REGISTRAR DATE 13.10.2003 ITAT AHMEDABAD BENCH AHMEDABAD. SUB: DELAY CONDONATION APPLICATION IN THE CASE OF GUJARAT FLUROCHEMICALS LTD. ASST. YEAR 2001 -02 SIR THE APPEAL FOR THE ABOVE STATED ASSESSEE HAS BEEN F ILED BY THE DEPARTMENT BEING ITA NO.2460/2004. THE APPEAL MEMO OF THE DEPA RTMENT WAS RECEIVED BY THE ASSESSEE ON 3-9-2004. CROSS OBJECTI ON WAS TO BE FILED AND THE NECESSARY DOCUMENTS FOR FILING THE CROSS OB JECTION WERE RECEIVED FROM THE ASSESSEE AND THE CROSS OBJECTION WAS PREPA RED AND THE SAME WAS SENT TO THE ASSESSEE FOR SIGNATURE. IT HAS TO BE STATED THAT THERE WERE CERTAIN CHARGES THAT HAD TO BE MADE IN THE GROUNDS AND HENCE A REVISED CROSS OBJECTION WAS PREPARED AND SET TO THE ASSESSEE. THE SAME WAS DULY SIGNED BY THE ASSES SEE AND RETURNED. THE CROSS OBJECTION WAS TO BE FILED WHEN IT WAS REA LIZED THAT WE HAD RECEIVED ONLY 2 SETS WHERE THE SIGNATURE WAS MADE. HENCE ANOTHER COPY WAS SENT TO THE ASSESSEE AND ON RECEIVING THE SAME ON 9.10.2004 THE CROSS OBJECTION WAS FILED ON 11.10.2004. IT IS THEREFORE HUMBLY REQUESTED THAT THE DELAY OF 8 DAYS BE CONDONED AND THE CROSS OBJECTION BE TAKEN UP FOR HEARING. THANKING YOU YOURS SINCERELY SD/- M.K. KAJI WE HAVE HEARD THE PARTIES. AFTER CONSIDERING THE SU BMISSIONS OF ASSESSEE WE CONDONE THE DELAY AND ADMIT THE C.O. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND SALE OF CHLORO FLURO CARBONS (CFC) AND HYDRO FLURO CARBO NS (HCFC) WHICH ARE SOLD IN GASEOUS FORM IN CONTAINERS OF VARIOUS C APACITIES. THE ISSUE CO NO.266/AHD/2004 IN ITA NO.2460/AHD/2004 ASST. YEAR 2001-02 3 RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS IN DEPENDENT OF GROUNDS RAISED BY THE REVENUE IN ITS APPEAL. THEREFORE IT IS DISPOSED OF INDEPENDENTLY. 4. THE ISSUE RELATING TO THIS GROUND HAS BEEN DEALT BY THE LD. CIT(A) IN PARA 13.1. TO 13.3 OF HIS ORDER. IT RELATES TO S UNDRY BALANCES WRITTEN OFFICE. THE AO NOTED THAT ASSESSEE HAS WRITTEN OFF ALL THESE DEBIT BALANCES WHICH PERTAINED TO CREDITORS AS ADVANCES AND NOT RE LATED TO BUSINESS TRANSACTIONS. THE ASSESSEE HAD CLAIMED BEFORE THE A O THAT IN ASST. YEAR 1996-97 SUCH WRITTEN OFF BALANCES WERE ALLOWED BY T HE TRIBUNAL BUT THE AO IGNORED AND DID NOT CONSIDER THE ABOVE SUBMISSIO N AND MADE THE ADDITION. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT IT IS NOT CLEAR AS TO WHICH SERVICES OR GOODS WERE RECEIV ED BY THE ASSESSEE AND WHETHER PAYMENTS WERE MADE OR NOT IN RESPECT OF THE SERVICES OR OF GOODS. THE NATURE OF THE AMOUNT AS DEBIT BALANCES I S NOT CLARIFIED. 5. BEFORE US THE LD. AR DREW OUR ATTENTION TO PAGE S 19 TO 22 OF THE PAPER BOOK WHEREIN DETAILS OF THE BALANCES WRITTEN OFF ARE GIVEN. THESE DETAILS ARE AS UNDER :- SL.NO. PARTICULARS AMOUNT 1. TRAVEL PACK DELHI 1109 2. K DEVAN ENTERPRIESE 1000 3. TRANSWORLD SHIPPING 49081 4. PUNITA ENTERPRISES 5354 5. MAERSK INDIA 2199 6. IAL SHIPPING 14962 7. OTHERS LESS THAN 500 6728 TOTAL 80433 HE SUBMITTED THAT THESE AMOUNTS WERE NOT RECOVERABL E FROM THESE PARTIES BUT DUE TO SMALLNESS OF AMOUNT AND UPRISING OF DISP UTE THE PARTIES DID NOT CO NO.266/AHD/2004 IN ITA NO.2460/AHD/2004 ASST. YEAR 2001-02 4 MAKE THE PAYMENT AND FINALLY THE ASSESSEE DECIDED T O WRITE THEM OFF. IT IS A BAD DEBT OR AS BUSINESS LOSS. 6. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER S OF LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE CLAIM IS ALLO WABLE AS BAD DEBT BECAUSE THESE AMOUNTS BEING LEFT OVER AS BALANCES WERE TAKEN INTO ACCOUNT WHILE COMPUTING THE PROFITS OF THE ASSESSEE . THEY ARE RELATED TO BUSINESS AND HENCE ARE RIGHTLY ALLOWABLE AS BAD DEB T ONCE THEY ARE WRITTEN OFF. OUR VIEW IS SUPPORTED BY THE DECISION OF HON. SUPREME COURT IN THE CASE TRF LTD. VS. CIT (2010) 323 ITR 397 (SC ). THE TRIBUNAL HAD ALSO DECIDED THE ISSUE IN ASSESSEES OWN CASE IN IT A NO.231/AHD/2000 FOR ASST. YEAR 1996-97 VIDE ITS ORDER DATED 24.8.20 00 AS UNDER :- 13. GROUND NO.4 READS AS UNDER :- THE LD. COMMISSIONER (APPEALS) ERRED IN HOLDING TH AT DEDUCTION OF RS.2 67 123/- IN RESPECT OF SUNDRY BALANCES WRITTEN OFF IS ALLOWABLE ONLY IF IT RELATED TO SALES MADE IN EARLIER YEARS A ND NOT IF THEY REPRESENT ADVANCES. YOUR APPELLANT SUBMITS THAT THE DISALLOWANCE IS NOT JUSTIFIED AS SUCH LOSS IS LOSS ON REVENUE ACCOUNT AND IS DEDUCT IBLE IN COMPUTING BUSINESS INCOME UNDER SECTION 28 ALTHOUG H NOT ALLOWABLE UNDER SECTION 36. YOUR APPELLANT PRAYS THAT THE DISALLOWANCE BE DELE TED. THE LD. CIT(A) HAS DEALT WITH THE ISSUE VIDE PARAS 14 15 & 16 OF THE ORDER AND REMITTED THE ISSUE OF DISALLOWANCE OF RS. 2 67 123/- TO THE FILE OF THE AO WITH THE DIRECTION THAT DEDUCTION WOULD BE A LLOWED IN RESPECT OF THOSE AMOUNTS WHICH WERE WRITTEN OFF IN THE BOOKS O F ACCOUNTS AND WHICH RELATED TO SALES EFFECTED IN THE PAST. THE LD. COUN SEL ARGUED THAT EVEN IF ADVANCES FOR PURCHASES WRITTEN OFF IN THE BOOKS DO NOT FALL FOR DEDUCTION CO NO.266/AHD/2004 IN ITA NO.2460/AHD/2004 ASST. YEAR 2001-02 5 U/S 36(2) THE DEDUCTIBILITY OF SUCH AMOUNTS SHOULD BE CONSIDERED AS ADMISSIBLE BUSINESS EXPENDITURE FOR THE PURPOSES OF SECTION 28. WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE LD. COUNSE L. WE WOULD ACCORDINGLY DIRECT THAT IF THE ADVANCES FOR PURCHA SES HAVE BEEN WRITTEN OFF IN THE BOOKS ON GROUNDS OF NON-RECOVERY THE AO WOULD CONSIDER THE ISSUE OF DEDUCTION OF SUCH AMOUNTS AS BUSINESS LOSS U/S 28. THIS GROUND IS THEREFORE PARTLY ALLOWED AS ABOVE. IN VIEW OF ABOVE THE CLAIM OF ASSESSEE IS ALLOWED. 8. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 31.1.11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD DATED : 31.1.11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD CO NO.266/AHD/2004 IN ITA NO.2460/AHD/2004 ASST. YEAR 2001-02 6 1.DATE OF DICTATION 27/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 28/1/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .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 ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..