REPRO INIDA LTD, MUMBAI v. ACIT 7(2), MUMBAI

ITA 1787/MUM/2010 | 2005-2006
Pronouncement Date: 31-03-2011 | Result: Allowed

Appeal Details

RSA Number 178719914 RSA 2010
Assessee PAN AAACR0379J
Bench Mumbai
Appeal Number ITA 1787/MUM/2010
Duration Of Justice 1 year(s) 23 day(s)
Appellant REPRO INIDA LTD, MUMBAI
Respondent ACIT 7(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 31-03-2011
Assessment Year 2005-2006
Appeal Filed On 08-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 1787/MUM/2010 (ASSESSMENT YEAR: 2005-06) M/S. REPRO INDIA LIMITED ACIT 7(2) 2ND FLOOR MARATHE UDYOG MUMBAI BHAVAN A.M. MARG VS. PRABHADEVI MUMBAI 400025 PAN - AAACR 0379 J APPELLANT RESPONDENT APPELLANT BY: SHRI SANJIV M. SHAH RESPONDENT BY: SHRI R.K. GUPTA O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XIII MUMBAI DATED 27.10.2009. 2. ASSESSEE HAS RAISED 8 GROUNDS OUT OF WHICH GROUND N OS. 1 TO 4 PERTAIN THE ISSUE OF BAD DEBT CLAIMS OF ` 22 18 777/- GROUND NO. 5 PERTAINS TO DISALLOWANCE OF ` 81 20 041/- PERTAINING TO PUBLIC ISSUE EXPENSES GR OUND NO. 6 PERTAINS TO LEVY OF INTEREST UNDER SECTION 23 4C AND GROUND NOS. 7 & 8 BEING GENERAL IN NATURE. 3. THE LEARNED COUNSEL DURING THE ARGUMENT DID NOT PRE SS FOR GROUND NO. 5 HENCE IS IT TREATED AS WITHDRAWN. GROUND NO. 6 R EGARDING LEVY OF INTEREST IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. THAT LEAVES US WITH THE ISSUE OF BAD DEBTS IN GROUND NOS . 1 TO 4. 4. ASSESSEE CLAIMED AN AMOUNT OF ` 25 48 303/- AS BAD DEBTS IN THE P & L ACCOUNT AND THE A.O. HAD ASKED THE DETAILS OF BAD DEBTS CLAIMED AND JUSTIFICATION FOR THE CLAIMS MADE. ASSESSEE FURNISH ED DETAILS BUT IN THE OPINION OF THE A.O. THERE IS NO COPIES OF COMMUNICA TION FROM THESE PARTIES AND MOST OF THE AMOUNTS HAVE BEEN LESS THAN THREE Y EARS OLD AND THEREFORE ASSESSEE HAS NOT JUSTIFIED IN THE WRITE OFF. IN VIE W OF THIS THE A.O. DISALLOWED THE AMOUNT AND ADDED BACK TO THE TOTAL INCOME. BEFO RE THE CIT(A) ASSESSEE ITA NO. 1787/MUM/2010 M/S. REPRO INDIA LIMITED 2 CONTESTED THAT THE CLAIM OF BAD DEBTS WERE ALLOWED BY THE CIT(A) IN ASSESSEES CASE FOR A.Y. 2002-03 TO 2004-05 AND ITA T AS WELL AS THE HON'BLE HIGH COURT APPROVED THE SAME IN EARLIER YEARS. THE CIT(A) HOWEVER DID NOT ALLOW THE CLAIM AS SUCH AND WAS OF THE OPINION THA T PERUSAL OF THE ASSESSEES ARGUMENT/FINDINGS IN THE AFORESAID CASES REVOLVES AROUND THE OBSERVATION THAT MERE WRITE OFF IS SUFFICIENT COMPL IANCE AS PER AMENDED PROVISIONS OF SECTION 36(1)(VII). THEREAFTER THE CI T(A) ANALYSED THE AMOUNTS AND WAS OF THE OPINION THAT AS ASSESSEE DID NOT SHO W ANY EXTERNAL COMMUNICATION WITH THE PARTIES/ISSUE OF DISPUTE FOR NON PAYMENT OF THE AMOUNT THE SAME CANNOT BE ALLOWED. HOWEVER HE ALLO WED AN AMOUNT OF ` 3 29 526/- FOR WHICH THE ASSESSEE COULD FURNISH SOM E CORRESPONDENCE. ASSESSEE IS CONTESTING THE ALLOWANCE OF BAD DEBTS O F ` 22 18 777/-. 5. THE LEARNED COUNSEL PLACED ON RECORD THE ORDERS OF THE ITAT IN EARLIER ASSESSMENT YEARS WHEREIN THE CIT(A) ALLOWED AND THE REVENUE CONTESTED BEFORE THE ITAT WHICH DISMISSED THE APPEALS. THESE ORDERS WERE UPHELD BY THE HON'BLE HIGH COURT FOR A.Y. 2004-05 IN ITA NO. 3221/2009. THE LEARNED COUNSEL ALSO RELIED ON THE PRINCIPLES ESTABLISHED B Y THE HON'BLE SUPREME COURT IN THE CASE OF TRF LIMITED VS. CIT 323 ITR 39 7 FOR THE PROPOSITION THAT IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE AFTER 1 ST APRIL 1989. IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT BECAME IRRECOVERABLE. BY FOLLOWING THE ABOVE PRINCIPLE WE ARE OF THE OPINION THAT ASS ESSEES CLAIM OF BAD DEBT IS TO BE ALLOWED AS THE SAID AMOUNTS HAVE BEEN WRIT TEN OFF IN THE BOOKS OF ACCOUNT. THERE IS NO DISPUTE THAT THESE AMOUNTS ARE TAKEN INTO ACCOUNT IN EARLIER YEARS THEREFORE PROVISIONS OF SECTION 36(2 ) WERE SATISFIED. EVEN ON MERITS WHAT WE NOTICED WAS THAT THE AMOUNTS PERTAI N TO THE DISPUTE WITH REFERENCE TO QUALITY OF THE PAPER AND SHORT QUANTIT IES SUPPLIED ON MAJORITY OF THE ITEMS( EXTRACTED IN PARA 2.3 OF THE CIT(A)S OR DER). THE NATURE OF AMOUNT SEEMS NOT EXACTLY OF BAD DEBTS BUT LESSER PAYMENT T HAN THE BILLED AMOUNT. EVENTHOUGH THESE ARE TERMED AS BAD DEBTS THESE AMOU NTS ARE ALLOWABLE UNDER SECTION 28 AS LOSS OR UNDER SECTION 37(1) AS AN EXPENDITURE AS ASSESSEE COULD NOT RECOVER THE ENTIRE AMOUNT CONTRA CTED DUE TO DISPUTE IN THE QUALITY QUANTITY AND COST OF SUPPLIED OF MATER IAL TO VARIOUS COMPANIES. ITA NO. 1787/MUM/2010 M/S. REPRO INDIA LIMITED 3 SINCE THESE ASPECTS ARE NOT NOTICED BY THE A.O. WHO COULD HAVE EXAMINED THE NATURE OF AMOUNTS WRITTEN OFF BEFORE DISALLOWIN G THE SAME. WE ARE OF THE OPINION THAT THE AMOUNTS ARE ALLOWABLE TO THE ASSES SEE BOTH LEGALLY AND FACTUALLY. THEREFORE THE A.O. IS DIRECTED TO ALLOW THE AMOUNTS. GROUND 1 TO 4 ARE CONSIDERED ALLOWED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 31 ST MARCH 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIII MUMBAI 4. THE CIT VII MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.