Bhansali Fiscal Services Pvt.Ltd.,, Ahmedabad v. The Income tax Officer,Ward-1(2),, Ahmedabad

ITA 1823/AHD/2009 | 2005-2006
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 182320514 RSA 2009
Assessee PAN AAACB6168M
Bench Ahmedabad
Appeal Number ITA 1823/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 19 day(s)
Appellant Bhansali Fiscal Services Pvt.Ltd.,, Ahmedabad
Respondent The Income tax Officer,Ward-1(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 21-01-2011
Date Of Final Hearing 19-01-2011
Next Hearing Date 19-01-2011
Assessment Year 2005-2006
Appeal Filed On 01-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING : 19.1.20111 DRAFTED ON: 20.1 .2011 ITA NO. 1823 /AHD/ 2009 ASSESSMENT YEAR : 2005-06 B HANSALI FISCAL SERVICES PVT.LTD. 27 NEW CLOTH MARKET O/S RAIPUR GATE AHMEDABAD VS. THE ITO WARD-1(2) AHMEDABAD PAN/GIR NO. : AAACB6168M (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.N. SOPARKAR SR.ADV. RESPONDENT BY: SHRI ANURAG SHARMA S R. D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI AHMEDABAD D ATED 03/02/2009 PASSED FOR ASSESSMENT YEAR 2005-06. 2. THE SOLE ISSUE INVOLVED IN BOTH THE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF `26 51 875 CLAIMED BY THE ASSESSEE AS BAD DEBTS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE CLAIMED BAD DEBTS OF `26 51 875 BEING THE AMOUNT RECEIVABLE FROM THREE PERSONS AS UNDER:- 1. ADHUNIK FINANCE INVESTMENT - RS. 6 00 000/- 2. PURMI BOIS FOOD & BEVERAGES LTD. - RS.15 00 000/- 3. SANJAY R.SHAH - RS. 5 51 875/- - 2 - ITA NO.1823/AHD/2009 BHANSALI FISCAL SERVICES PVT.LTD. VS. ITO ASSESSMENT YEAR 2005-06 3.1. THE LEARNED ASSESSING OFFICER DISALLOWED THE D EDUCTION FOR BAD DEBTS. THE LEARNED ASSESSING OFFICER OBSERVED THAT ASSESSE E IS NOT A BANKING COMPANY IN WHICH CASE LOAN GIVEN IS ALLOWABLE AS A BAD DEBT. IN THE BUSINESS OF CHEQUE DISCOUNTING DONE BY THE ASSESSEE ONLY THE CHEQUE DISCOUNTING CHARGES FORMS THE PART OF INCOME. THE CHEQUE PURC HASED HAS NOT BEEN OFFERED TO INCOME IN ANY YEAR. IT IS A BALANCE SH EET ITEM SHOWN AS DEBTOR BY THE ASSESSEE. 4. ON APPEAL THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) OBSERVING THAT THE ASSESSEE FAILED TO ESTABLISH THA T THE DEBT HAS BECOME BAD AND THEREFORE IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES AND ENGINEERS PVT.LTD. REPORTED AT 207 CTR 729 (GUJ.) THE SAME CANNOT BE ALLOWED DEDUCTION TO THE ASSESSEE CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT CHEQUE DISCOUNTING CHARGES OF `90 000 IN A.Y. 1996- 97 `3 30 009 IN A.Y. 1997- 98 WAS OFFERED TO TAX AS BUSINESS INCOME FROM THE ABOVE THREE PARTIES HAS BEEN CLAIMED AS BAD DEBT THEREFORE THE BAD DEBT IS ALLOWABLE AS DEDUCTION TO THE ASSESSEE. HE RELIED UPON THE DECISION OF TH E MUMBAI TRIBUNAL IN THE CASE OF F.A. JASDANWALLA V. CIT (2007) 18 SOT 1 (MUM); FURST GLOBAL STOCKE ROKING (P) LTD. V ACIT (2008) 115 TTJ 173 (MUM); DELHI TRIBUNAL IN THE CA SE OF SPACE FINANCIAL SERVICES V. ACIT (2008) 115TTJ 165 (DEL); GOETZE (INDIA) LTD V. DCIT (2008) 119 TTJ 351 (DEL). HE ALSO SUBMITTED THAT A S THE BAD DEBT WAS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCO UNT THEREFORE IN VIEW OF THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CAS E OF TRF LTD. VS. CIT REPORTED AT (2010) 323 ITR 397(SC) THE ASSESSEE IS NOT FURTHER REQUIRED TO PROVE THE DEBT THAT DEBT HAS BECOME BAD DURING THE YEAR UNDER CONSIDERATION. 6. ON THE OTHER HANDS THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. WE FIND THAT IN THE ASSESSMENT ORDER THE LEARNED ASSESSING OFFICER HAS CATEGORICALLY RECORDED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CHEQUE - 3 - ITA NO.1823/AHD/2009 BHANSALI FISCAL SERVICES PVT.LTD. VS. ITO ASSESSMENT YEAR 2005-06 DISCOUNTING ALSO. THUS IT IS NOT IN DISPUTE THAT T HE ASSSESSEE WAS ENGAGED IN CHEQUE DISCOUNTING BUSINESS WHEREIN MONEY WAS LENT TO THE PERSON ON SECURITY OF POST DATED CHEQUES AND INTEREST/DISCOUNT WAS EAR NED THEREON. FURTHER IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS WRITTEN O FF RS.26 51 875/- AS IRRECOVABLE WHICH WAS OTHERWISE RECEIVABLE BY THE A SSESSEE IN RESPECT OF ITS CHEQUE DISCOUNTING BUSINESS FROM THREE PARTIES NAM ELY ADHUNIK FINANCE INVESTMENT PURMI BOIS FOOD & BEVERAGES LTD. AND SA NJAY R.SHAH. IT IS ALSO OBSERVED THAT THE AO HAS RECORDED THAT CHEQUE RECEI VED FROM THESE PARTIES WERE DISHONOURED AND CONSEQUENTLY THE ASSESSEE ALSO FILED CRIMINAL CASES AGAINST THOSE PARTIES. ON THE ABOVE FACTS IN OUR O PINION THE WRITING OFF CANNOT BE HELD TO BE NOT BONA FIDE. FURTHER AS THE CHEQUE DISCOUNTING BUSINESS WAS A FORM OF MONEY-LENDING BUSINESS IN WHICH THE ASSESSE E WAS ENGAGED IN OUR CONSIDERED VIEW BAD DEBTS WRITTEN OFF IS CLEARLY A LLOWABLE UNDER SECTION 36(1)(VII) OF THE ACT. EVEN OTHERWISE AS THE MONEY WAS ADVANCED DURING THE NORMAL COURSE OF BUSINESS OF THE ASSESSEE THE LOSS ARISEN TO THE ASSESSEE ON ACCOUNT OF THOSE ADVANCE BECOMING BAD IS ALLOWABLE AS BUSINESS LOSS IF NOT UNDER SECTION 36(1)(VII) THEN U/S.28 OR UNDER SECTI ON.37 OF THE ACT. WE THEREFORE DELETE THE DISALLOWANCE OF RS.26 51 875/ - AND ALLOW THE APPEAL OF THE ASSESSEE. 8. I II IN THE RESULT THE APPEAL OF THE N THE RESULT THE APPEAL OF THE N THE RESULT THE APPEAL OF THE N THE RESULT THE APPEAL OF THE ASSESSEE IS ASSESSEE IS ASSESSEE IS ASSESSEE IS ALLOWED. ALLOWED. ALLOWED. ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON THIS 21 ST DAY OF JANUARY 2011. SD/- SD/- (BHAVNESH SAINI) ( N.S. SA INI ) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: AHMEDABAD 21 ST DAY OF JANUARY 2011. COMPILED AND COMPARED BY: COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// - 4 - ITA NO.1823/AHD/2009 BHANSALI FISCAL SERVICES PVT.LTD. VS. ITO ASSESSMENT YEAR 2005-06 (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 20.1.2011 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 21-1-2011 ----- -------------- 3. DRAFT PROPOSED & PLACED 21-1-2011 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 21-1-2011 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 21-1-2011 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 21-1-2011 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 21-1-2011 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- A.R. 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------