Jainik Industries, Ahmedabad v. The ACIT,Circle-6,, Ahmedabad

ITA 2291/AHD/2013 | 2010-2011
Pronouncement Date: 21-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 229120514 RSA 2013
Assessee PAN AACFJ2151M
Bench Ahmedabad
Appeal Number ITA 2291/AHD/2013
Duration Of Justice 1 year(s) 2 month(s) 7 day(s)
Appellant Jainik Industries, Ahmedabad
Respondent The ACIT,Circle-6,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 21-11-2014
Date Of Final Hearing 19-11-2014
Next Hearing Date 19-11-2014
Assessment Year 2010-2011
Appeal Filed On 13-09-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER. ITA. NO. 2291/AHD/2013 (ASSESSMENT YEAR:2010-11) JAINIK INDUSTRIES PLOT NO. 605/A G.I.D.C. ESTATE PHASE-4 VATVA BEHINDMARUTI WEIGH BRIDGE MAHEMDABAD ROAD AHMEDABAD-382445 APPELLANT VS. ACIT CIRCLE-6 AHMEDABAD RESPONDENT & I. T.A. NO. 2427/AHD/2013 (ASSESSMENT YEAR: 2010-11) ACIT CIRCLE-6 AHMEDABAD APP ELLANT VS. JAINIK INDUSTRIES PLOT NO. 605/A G.I.D.C. ESTATE PHASE-4 VATVA BEHINDMARUTI WEIGH BRIDGE MAHEMDABAD ROAD I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 2 AHMEDABAD-382445 RESPONDEN T PAN: AACFJ2151M / BY REVENUE :SHRI V. K. SINGH SR. D.R. / BY ASSESSEE : SHRI R. K. SHAH A.R. /DATE OF HEARING :19.11.2014 !' /DATE OF PRONOUNCEMENT : 21.11.2014 ORDER PER BENCH THESE CROSS APPEALS ARE ARISING OUT FORM THE ORDER OF CIT(A)-XI AHMEDABAD DATED 24.07.2013 FOR THE ASSE SSMENT YEAR 2010-11. SO THEY ARE BEING DISPOSED OF BY WA Y OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 2291/AHD/2013 ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN LAW AND FACT B Y CONFIRMING THE ADDITION OF RS.25 99 539/- MADE BY THE ACIT BY WAY OF DISALLOWING THE REPAIRING AND MAINTENANCE EXPENSES AND TREAT THEM AS CAPITAL EXPENDITURE IN NATURE. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 3 2. THAT ON FACT AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN LAW AND FACT BY CONFIRMING THE ADDITION OF RS.133212/- MADE BY THE ACIT BY WAY OF DISALLOWING THE COMMISSION ON SALE PAID TO MRS. PARUL VAGHASIA. 3. THAT ON FACT AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT HAS ERRED IN LAW AND FACT AND ALSO NOT JUSTIFIED TO CONFIRMING THE ADDITION TO THE EXTENT OF 10% OF DEPRECIATION INSURANCE CONVEYANCE TRAVELING AND REPAIRING EXPENSES OF RS.791554/- WHICH WAS DISALLOWED AT 20% BY THE ACIT. 3. THAT ON FACT AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT HAS ERRED IN LAW AND FACT AND ALSO NOT JUSTIFIED TO CONFIRMING THE ADDITION TO THE EXTENT OF 10% OF TELEPHONE AND MOBILE EXPENSES OF RS.186475/- WHICH WAS DISALLOWED AT 25% BY THE ACIT. 2.1 IN I.T.A. NO. 2427/AHD/2013 REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: I) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE OF RS.7 90 813/- MADE ON ACCOUNT OF COMMISSION EXPENSES OF THE I.T. ACT BY HOLDING THAT THE ASSESSEE DID NOT PROVE THE SERVICE S RENDERED BY THE COMMISSION AGENTS. II) THE LD. CIT (A) HAS FURTHER ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.28 78 670/- MADE ON ACCOUNT OF BED DEBTS U/S. 36(1)(VII) OF THE I.T. ACT BY HOLDING THAT THE DEBT CLAIMED IN RESPECT OF PART Y WAS NOT APPEARED IN THE LIST OF DEBTORS IN THE BOOK S OF THE PURCHASER OF THE GOODS IN QUESTION. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME-TAX (A)-XV I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 4 AHMADABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. ASSESSEE IS REGISTERED PARTNERSHIP FIRM AND CARR YING ON BUSINESS OF MANUFACTURING OF DYE INTERMEDIATES AND CHEMICALS AT PLOT NO. 605/A GIDC ESTATE PHASE-IV VATVA AH MEDABAD IN NAME AND STYLE OF JAINIK INDUSTRIES. 3.1 FIRST ISSUE IN ASSESSEES APPEAL IS WITH REGARD S TO RS.25 99 539/- MADE BY ASSESSING OFFICER BY WAY OF DISALLOWING THE REPAIRING AND MAINTENANCE EXPENSES. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS DEBITE D RS.16 95 529/- AND RS.23 11 200/- UNDER HEAD REPAI R AND MAINTENANCE. ASSESSING OFFICER FOUND THAT MAJORIT Y OF THE EXPENDITURE IS ON ACCOUNT OF PURCHASES OF HUGE QUAN TITY OF CEMENT BRICKS SAND ROUND WIRE ETC. ASSESSING OF FICER CAME TO THE CONCLUSION THAT ASSESSEE HAS DONE RCC WORK A ND ALSO ERECTED SOME IRON STRUCTURE. HE ALSO OBSERVED THAT ASSESSEE MADE LABOUR PAYMENT OF RS.5 40 705/-. ASSESSING OF FICER FURTHER NOTICED THAT IN CASE OF MACHINERY ALSO THE EXPENSES HAD BEEN MADE FOR THE PURCHASES OF NEW ARTICLES SUC H AS DRYERS RCC BREAKING TANKS ELECTRIC MOTORS ETC. A SSESSEE HAS ALSO MADE SIMILAR TYPE OF EXPENSES UNDER THE HEAD A DDITION TO NEW ASSETS AND CAPITALIZED THE SAME. MOST OF THE B ILLS WERE CATEGORIZED UNDER MAIN PLANT EXTENSION BUT SHOWN UNDER THE REPAIRING WORK. ASSESSING OFFICER AFTER DETAILED D ISCUSSION AND CONSIDERATION OF INDIVIDUAL ITEMS HAS TREATED ITEMS AMOUNTING I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 5 TO RS.25 99 539/- AS CAPITAL IN NATURE WHICH WAS C ONFIRMED BY CIT(A). 3.2 THE STAND OF ASSESSEE HAS BEEN THAT ASSESSEE HA S DONE ONLY REPAIR WORKS AND NOT NEW STRUCTURE HAS BEEN RA ISED. SIMILARLY HE HAS NOT PURCHASED ANY NEW MACHINERY B UT HAS REPAIRED AND MODERNIZED EXISTING MACHINES. 3.3 WE FIND THAT ASSESSING OFFICER HAS NOT MADE OUT THE CASE THAT ASSESSEE HAS RAISED THE CONSTRUCTION IN ADDITI ON TO THE EXISTING STRUCTURE. FOR NEW STRUCTURE NORMALLY TH E NEW SITE PLAN IS SUBMITTED IN CASE THERE IS MAJOR DEVIATION OR ADDITION TO THE EXISTING STRUCTURE. THE DETAILS OF MATERIAL CO NSUMED FOR CONSTRUCTION DOES NOT ESTABLISHED ITSELF THAT IT IS REPAIR WORK OR NEW STRUCTURE HAS BEEN RAISED. BOTH PARTIES ARE NO T IN POSITION TO TELL WHETHER ANY ACTION WAS TAKEN BY CONCERN MUN ICIPAL AUTHORITIES AGAINST ALLEGED ILLEGAL/NEW STRUCTURE. SIMILARLY WITH REGARDS TO THE EXPENSES FOR MODIFICATION OR EN TIRE REPLACEMENT OF THE MACHINERY. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAS PURCHASED ALTOGETHER NEW MACHINERY OR IT HAS REPAIRED EXISTING MACHINERIES. ASSESSEE HAS NOT GIVEN THE DETAILS IN THIS REGARD. ACCORDING TO US BOTH THESE ISSUES WITH REGARD TO EXPENSES ON REPAIR AND MAINTENANCE O F EXISTING BUILDING STRUCTURE AND ON MACHINERY PURCHASE NEEDS DEEP PROBE INTO MATTER. SO IN THE INTEREST OF JUSTICE WE RESTORE THIS MATTER TO ASSESSING OFFICER WITH DIRECTION TO DECID E THE ISSUES I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 6 AT HAND AS PER FACT AND LAW IN LIGHT OF ABOVE DISCU SSION AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO ASSESSEE. 4. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF CO MMISSION PAYMENT. ASSESSING OFFICER MADE DISALLOWANCE OF CO MMISSION EXPENSES OF RS.7 90 813/-. ASSESSING OFFICER OBSER VED THAT ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF COMM ISSION PAYMENT TO EIGHT DIFFERENT PARTIES AMOUNTING TO RS. 9 61 739/- OUT OF WHICH ASSESSING OFFICER HAS ALLOWED ONLY RS. 1 70 926/- AND BALANCE OF RS.7 90 813/- HAS BEEN DISALLOWED. ASSESSEE HAS MADE CLAIM TO MAKE COMMISSION PAYMENT TO THE FO LLOWING PARTIES: S. NO NAME OF THE AGENT TOTAL AMOUNT PAID IN RS. 1 ASHRIK S JHAWAR 192584 2 BHARAT VAGHASIA 452949 3 NILAY C DANI 14887 4 OM OVERSEAS 137010 5 PARUL VAGHASIA 133212 6 SUPREME DYES AND INTERMEDIATES 14424 7 RAMESHKUMAR HARLALKA 2035 8 BLISS UNLIMITED 14638 TOTAL 961739 DETAILS OF THEIR WORK ALSO PRODUCED BEFORE AUTHORIT IES BELOW. STAND OF ASSESSEE WAS REJECTED AND ASSESSING OFFICE R MADE ABOVE SAID ADDITIONS OF RS. 7 90 813/-. 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 7 HAVING CONSIDERED THE SAME CIT(A) OBSERVED THAT CO MMISSION PAYMENT MADE BY ASSESSEE HELPED TO INCREASE HIS SAL ES AS ALSO THE PROFITS WHICH IS EVIDENT FROM THE DETAILS FURNI SHED BY ASSESSEE. S.NO. PARTICULARS 2007- 08 2008- 09 RS. IN LAC 2009- 10 RS. IN LAC 2010- 11 RS. IN LAC 1. TURNOVER 132.79 1141.47 971.27 1613.22 2. COMMISSION EXPENSES 12.21 8.75 9.61 21.60 3. PROFIT BEFORE TAX 80.45 67.35 32.18 104.41 ACCORDING TO CIT(A) PRELIMINARY RESPONSIBILITIES WI TH REGARD TO COMMISSION PAYMENT HAS BEEN DISCHARGED BY ASSESSEE BY SUBMITTING THE CONFIRMATION NAMES AND ADDRESSES OF RECIPIENTS AND FACT OF ACCOUNTING BY PAYER AS WELL AS PAYEE IN THEIR RESPECTIVE RETURNS OF INCOME. REGARDING MERI T OF PAYMENTS CIT(A) DISCUSSED AS UNDER: I. PAYMENT TO SHRI BHARAT VAGHASIA - ASSESSEE HAS CLAIMED COMMISSION PAYMENT TO SHRI BHART VAGHASIA OF RS.4 5 2 949/-. DETAILED EVIDENCES WITH REGARD TO PROVIDING OF SERV ICES OF SHRI BHARAT VAGHASIA WERE SUBMITTED TO THE ASSESSING OFF ICER. ASSESSING OFFICER HAD ASKED FOR COPIES OF CORRESPON DENCE MADE BY SHRI BHARAT VAGHASIA WITH DIFFERENT PARTIES FOR WHICH THE SAME HAD BEEN SUBMITTED ON SAMPLE BASIS. IT WAS FOU ND THAT THERE WAS AN AGREEMENT OF ASSESSEE WITH SHRI BHARAT VAGHASIA AND HE HAS BEEN PAID COMMISSION IN EARLIER YEARS AS WELL. IN VIEW OF THIS CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 8 COMMISSION PAYMENT TO SHRI BHARAT VAGHASIA OF RS. 4 52 949/- AS CLAIMED BY HIM. THIS REASONED FINDIN G OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE BECAUSE ASSESSE E HAS DISCHARGED HIS BURDEN WITH REGARD TO NATURE OF JOB DONE BY RECIPIENTS FOR PAYMENT OF COMMISSION IN QUESTION. SAME IS UPHELD. II) PAYMENT OF COMMISSION TO M/S. OM OVERSEAS - M/S. OM OVERSEAS IS A PROPRIETARY CONCERN OF SHRI BHARAT VA GHASIA (HUF). THEREFORE SHRI BHARAT VAGHASIA IN CAPACITY OF KARTA HAS RENDERED SUCH SERVICES AND THEREFORE WHICH HAS NOT BEEN DISPUTED BY ASSESSING OFFICER. IN VIEW OF THIS CI T(A) RIGHTLY ALLOWED THE PAYMENT OF COMMISSION TO OM OVERSEAS OF RS. 1 37 010/-. SAME IS UPHELD. III) PAYMENT OF COMMISSION TO MRS. PARUL VAGHASIA - MRS. PARUL VAGHASIA HAS BEEN PAID COMMISSION OF RS.1 33 212/-. THE CONFIRMATIONS AND OTHER DETAILS WERE PROVIDED T O ASSESSING OFFICER. ASSESSING OFFICER HAD ISSUED SUMMONS U/S.1 31 TO MRS.PARUL VAGHASIA BUT SHE DID NOT COMPLY WITH THE SUMMONS. ASSESSEE HAD REQUESTED FOR ADJOURNMENT. THERE IS NO THING ON RECORD TO SUGGEST THAT ASSESSEE MADE ANY EFFORTS TO PRODUCE SAID RECIPIENT BEFORE ASSESSING OFFICER FOR EXAMINA TION. HE HAS REQUESTED ASSESSING OFFICER FOR FURTHER SUMMON. THUS GENUINENESS OF RENDERING SERVICES BY MRS. PARUL VAG HASIA HAS NOT BEEN DISCHARGED BY ASSESSEE. ACCORDINGLY CIT( A) WAS JUSTIFIED TO UPHOLD THE DISALLOWANCE OF COMMISSION TO THE TUNE OF RS. 1 33 212/-. SAME IS UPHELD. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 9 IV) PAYMENT OF COMMISSION TO SHRI AASHRIK JHAWAR - ASSESSING OFFICER STATED THAT PURCHASER DID NOT S UBMIT ANYTHING REGARDING COMMISSION AGENT. THEREFORE HE DREW A CONCLUSION THAT SERVICES WERE NOT RENDERED BY SHRI ASHRIK JHAWAR. IN APPEAL CIT(A) FOUND THAT PAYMENT HAS B EEN MADE BY CHEQUES. THERE IS INCREASE IN TURNOVER OF ASSES SEE. RECIPIENT HAS FILED RETURN ON AMOUNT OF COMMISSION. IN VIEW OF ABOVE CIT(A) CONCLUDED THAT COMMISSION PAYMENT TO SHRI ASHRIK JHAWAR SHOULD BE ALLOWED AND ASSESSING OFFICER WAS DIRECTED ACCORDINGLY. THIS REASONED FINDING OF CIT (A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. V) SUPREME DYES & INTERMEDIARIES IN FACT ASSESSEE HAS SUBMITTED NEW ADDRESS OF M/S. SUPREME DYES HOWEVER NO FURTHER ENQUIRY WAS MADE BY ASSESSING OFFICER. IN FACT ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE PA YMENT OF COMMISSION WHILE FACT IS THAT M/S. SUPREME DYES & INTERMEDIARIES HAS BEEN PAID SIMILAR COMMISSION IN EARLIER YEAR AS WELL. THERE IS ALSO AN INCREASE IN TURNOVE R OF ASSESSEE. PAYMENT HAS BEEN MADE BY CHEQUE AFTER DEDUCTING TDS AS PER RELEVANT PROVISIONS OF TDS. RECIPIENT COMMISSION A GENT HAS ACCOUNTED FOR COMMISSION INCOME IN ITS RETURN OF IN COME. IN VIEW OF ABOVE CIT(A) WAS JUSTIFIED IN HOLDING THAT PAYMENT OF SUPREME DYES & INTERMEDIARIES SHOULD BE ALLOWED. T HIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FR OM OUR SIDE. WE UPHOLD THE SAME. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 10 4.2 ASSESSING OFFICER HAS ALSO DISALLOWED COMMISSIO N PAYMENT CLAIMED BY ASSESSEE TO SHRI NILAY C. DANI MR. RAMESHKUMAR HARLALKA AND M/S. BLISS LTD. OF RS. 14 487/- RS. 2 035/- AND RS. 14 638/- RESPECTIVELY ON THE GR OUND THAT THEY HAVE BEEN UNABLE TO SUBMIT EVIDENCE OF SERVICE S RENDERED AS ASSESSEE ALSO NOT SUBMITTED THE SAME. IN APPEA L CIT(A) FOUND THAT ASSESSEE MADE PAYMENT BY CHEQUES BY COMP LYING THE PROVISIONS OF TDS. THERE IS INCREASE IN TURNOV ER. RECIPIENT HAS ACCOUNTED FOR THIS COMMISSION AMOUNT WHILE FILING RETURN OF ITS INCOME. THERE IS NOTHING ON R ECORD THAT RECIPIENT COMMISSION ARE RELATED TO ASSESSEE IN ANY MANNER OR THE COMMISSION HAS COME BACK TO THE ASSESSEE IN ANY MANNER. IN FACTS AND CIRCUMSTANCES CIT(A) WAS JUSTIFIED IN DELETING ABOVE SAID ADDITIONS. SAME IS UPHELD. THIS TAKES CARE OF GROUND NO.1 OF REVENUES APPEAL AS WELL. 5. NEXT ISSUE IS WITH REGARDS TO ADDITION OF DEPREC IATION INSURANCE CONVEYANCE TRAVELING AND REPAIRING EXPE NSES OF RS.7 91 554/-. ASSESSEE HAS SHOWN DETAILS OF FOLLO WING EXPENSES AMOUNTING TO RS.7 91 554/- AS UNDER: (I) DEPRECIATION: RS. 365069 (II) INSURANCE: RS. 50934 (III) CONVEYANCE EXPENSES: RS.164220 (IV) TRAVELLING EXPENSES RS.179894 (V) REPAIRING EXPENSES RS.31437 TOTA RS. 791554/- I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 11 OUT OF TOTAL EXPENSES OF RS.7 91 554/- AN AMOUNT E QUIVALENT TO 20% I.E. RS.1 97 890/- WAS DISALLOWED TREATING T HE SAME AS PERSONAL IN NATURE. SIMILARLY ASSESSEE HAS INCURRE D EXPENSES OF RS.1 86 475/- ON TELEPHONE AND MOBILE USE. AS T HE USE OF VEHICLE FOR PERSONAL PURPOSE COULD NOT BE RULED OUT PRT OF THESE EXPENSES WERE REQUIRED TO BE DISALLOWED ON AC COUNT OF NON-BUSINESS PURPOSE. THEREFORE ONE FOURTH OF THE SE EXPENSES I.E. RS.46 618/- WAS DISALLOWED BY ASSESSING OFFICE R. 5.1 IN APPEAL DETAILED SUBMISSION RAISED ON BEHALF OF ASSESSEE WERE SUBMITTED AND HAVING CONSIDERED THE S AME CIT(A) RESTRICTED THE DISALLOWANCE 10% OF THESE EXP ENSES. UNDER FACTS AND CIRCUMSTANCES THIS REASONED FINDIN G OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5.2 SIMILAR DISALLOWANCE TO THE EXTENT OF RS.23 309 /- ON ACCOUNT OF TELEPHONE EXPENSE WERE CONFIRMED BY CIT( A). AGAIN THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFEREN CE FROM OUR SIDE WHEREBY HE HAS RESTRICTED THIS DISALLOWANCE TO RS.23 309/-. WE UPHOLD THE SAME. 6 AS A RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. 7. NOW WE TAKE REVENUES APPEAL IN ITA NO. 2427/AHD/2013. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 12 8 FIRST ISSUE IS WITH REGARDS TO DISALLOWANCE OF CO MMISSION EXPENSES. THIS ISSUE HAS BEEN TAKEN CARE BY PARA 4 TO 4.2 OF THIS ORDER. ASSESSING OFFICER IS DIRECTED TO REFER THE SAME ON THIS ISSUE. 9. THE ONLY ISSUE REMAINS IN REVENUES APPEAL IS WI TH REGARDS TO DISALLOWANCE OF RS.28 78 670/- MADE ON A CCOUNT OF BAD DEBTS U/S. 36(1)(VII) OF THE ACT. ASSESSING OF FICER MADE DISALLOWANCE OF RS.28 78 670/- BY OBSERVING AS UNDE R: 'DISALLOWANCE OF BAD DEBT: 3. IT IS NOTICED THAT THE ASSESSES HAS CLAIMED A B AD DEBT OF RS. 28 78 670/-. THE ASSESSEE WAS ASKED TO J USTIFY THE CLAIM OF BAD DEBT VIDE LATTER DATED 26/10/2012. THE GIST OF THE LETTER ISSUED ON THIS POINT IS REPRODUCED AS UNDER: 'YOU HAVE CLAIMED BAD DEBT OF RS. 28 78 670/-. ON VERIFICATION OF THE DOCUMENTS SUBMITTED BY YOU IT APPEARS THAT THE SAME HAS BEEN CLAIMED AGAINST A SALE TO SO ME FOREIGN PARTY. YOU ARE REQUESTED TO SUBMIT COPIES O F BILLS OF GOODS SENT TO THEM. PLEASE ALSO SUBMIT A PROOF THAT THE GOODS HAVE BEEN ACCEPTED BY THE PARTIES CONCERNED. PLEASE EXPLAIN IF THE GOODS WERE SOLD THROUGH LC OR ANY BA NK GUARANTEE. PLEASE ALSO SPECIFY WHETHER THE SALE GOO DS WERE INSURED OR NOT. PLEASE ALSO MENTION THE REASON OF C LAIMING THESE AS BAD DEBT IN THE YEAR UNDER REVIEW. YOU ARE ALSO REQUESTED TO SUBMIT ANY OTHER DETAILS / DOCUMENTARY EVIDENCE / JUSTIFICATION IN THIS REGARD IT MAY BE N OTED THAT IF YOU FAIL TO JUSTIFY THE CLAIM OF BAD DEBT THE SAME MAY BE DISALLOWED AND ADDED W YOUR INCOME. ' 3.1. IN REPLY TO THE QUERY AS MENTIONED ABOVE THE ASSESSEE VIDE ITS REPLY DATED 06/11/2012 SUBMITTED ASUNDER: I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 13 '7. YOUR HONOR THE ASSESSEE HAS WRITTEN OF THE DEBT AS THE BAD AS THE GOODS SUPPLIED TO DEUTSCHLAND KG LTD. BU ILDING NO. 1/02645 D-20018 GERMANY VIDE THE INVOICE NO. EXP/80 DATED 20/08/2009 WORTH OF RS. 2878670/- (USD 60235/-) BECAME THE BAD AS THE LOCAL COURT IN FRANK FURT GERMANY HAS APPOINTED INSOLVENCY ADMINISTRATOR OVER THE ESTATE OF DEUTSCHLAND KG LTD ON APPLICATION FILED F OR THE INSOLVENCY PETITION. THE ASSESSEE IS ENCLOSING HERE WITH THE FOLLOWING EVIDENCES IN SUPPORT OF HIS CLAIM FOR YOU R RECORDS. 1. COPY OF THE INVOICE NO. 80 DATED 20/08/2009 F OR THE GOODS SENT TO THE AFORESAID PARTY. 2. COPY OF THE DEUTSCHLAND KG LTD ACCOUNT 3. COPY OF BAD DEBT ACCOUNT. 4. COPY OF THE FAX DATED 27/11/2009 RECEIVED FROM S ONJA NEIF GLOBAL PURCHASING HEAD SLATING THAT THE INSOLVENCY WILL BE STARTED FROM 01/12/2009 AND CREDITORS WILL GET MONEY ON PRO RATA BASIS. THIS PROCEDURE CAN LAST FOR YEARS 5. COPY OF THE FAX DATED 04/02/2010 RECEIVED FRO M SONJA NEIF ORIGINAL DOCUMENTS FOR THIS CONSIGNMENT ARE IN HAND AND ACCORDINGLY THE GOODS BELONGING TO DYSTAR THE MATTER WILL BE LEGALLY CARRIED OUT. 6. COPY OF THE PURCHASE ORDER NO. 4500164307 DAT ED 06/05/2009 RECEIVED FROM DYSTAR STALING THE TERMS O F PAYMENT TELEGRAPHIC TRANSFER 90 DAYS AFTER B/L DAT E. 7. COPY OF THE B/L NO. LCL/GL/HAM/903 DATED 01/09/2009 8. PLEASE NOTE THAT THE GOODS WERE NOT SOLD THROUG H THE L/C 9. PLEASE ALSO NOT THAT NO INSURANCE WAS COVERED FOR THE INSOLVENCY AS THE NO ONE CAN PREDICT FOR THE SAME. THE SHIPMENT WAS NEITHER DECLARED NOR PREMIUM PAID TO ECGC. SO THERE WAS NO CHANGE OF ANY AMOUNT RECEIVABLE TOWARD THE INSURANCE CLAIM. AMOUNT OF THE AFORESAID DEBT IS ALLOWABLE AS THE DEDUCTION U/S 36 (1) (VII) DUE TO THE FOLLOWING REA SONS 1. THE DEBT IS TAKEN IN THE ACCOUNT IN THE COMPUTAT ION OF THE INCOME OF THE ASSESSEE OF THE A. Y. 2010-11. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 14 2. THE TRANSACTION HAS BEEN INCURRED IN THE ORDI NARY COURSE OF THE BUSINESS. 3. THE DEBT HAS BEEN WRITTEN OFF AS IRREVOCABLE IN THE ACCOUNT OF THE ASSESSEE. 4. THE DEBT HAS BEEN WRITTEN OFF IN THE A. Y. 20 10-11 AS THE ASSESSEE HAS RECEIVED THE PRIMARY AND VITAL INFORMATION ABOUT THE INSOLVENCY PETITION BEING FIL ED AND COURT HAS APPOINTED THE ADMINISTRATOR ON THE ESTATE OF THE DEBTOR. THIS INFORMATION IS RECEIVED DURING THE A. Y. 2010-11 HENCE THE DEBT WRITTEN OFF IN THE A.Y. 2010-11 5. PROCEEDING FOR THE INSOLVENCY WAS COMMENCED A ND DUE TO THE UNSECURED CREDITOR ASSESSEE SHALL GOT AMOUNT ON PRO RATA BASIS. PROCEDURE OF INSOLVENCY TO TAKE T HE COMPANY IN LIQUIDATION SALE THE FIXED ASSETS PAY THE SECURED CREDITORS AND OUT OF BALANCE PAY THE AMOUNT ON PRO RATA BASIS. THIS PROCEDURE WILL TAKE LOT OF YEARS TO SETTLE SHE ACCOUNT. THE RECEIPT OF MONEY WAS UNCERTAIN AND QUANTUM WAS ALSO UNCERTAIN. IN SUCH CIRCUMSTANCES AS PRUDENT NORMS THE AMOUNT WRITTEN OFF AS BAD DEBT. 6. ANY AMOUNT RECEIVED AS THE RECOVERY IN ANY YE AR U/S 41(1) THE ASSESSEE ASSURES IT WILL BE DEPICTED AS T HE INCOME IN THE YEAR OF RECEIPT. 7. PLEASE NOTE THAT NOTHING IS YET RECEIVED FROM THE AFORESAID PARTY TILL DATE UP (HIS SUBMISSION' 3.2. THE ASSESSEE VIDE A LETTER DATED 07/11/201 2 FURTHER SUBMITTED A REPLY IN DAK. THE ASSESSEE HAS PUT FORT H ITS ARGUMENT IN THIS LETTER ON ALMOST SIMILAR LINES AS SUBMITTED EARLIER. HOWEVER NOW THE ASSESSEE HAS CITED SOME JUDGMENTS SUPPORTING ITS CONTENTION. 3.3. THE FACTS ARE THAT THE ASSESSEE CLAIMED A SALE OF 2801.625 KGS OF 5 NITRO AT RS. 28 78 670/- TO DEUTS CHLAND KG LTD OF GERMANY. THE ASSESSEE WAS ASKED TO SUBMIT COPIES OF BILLS AND PROOF OF SALE OF THE MATERIAL. ON VERIFICATION OF THE PURCHASE ORDER SUBMITTED BY THE ASSESSEE IT IS NOTICED THAT THE MATERIAL M-NITROOR THOSINIC ACID WAS ORDERED FOR AND ON BEHALF OF M/S DYSTAR TEXTILFARBEN AT A RATE OF 21.5 USD PER KGH. THE DAT E OF PURCHASE ORDER NO. 4500164307 OF M/S DYSTAR AS MENTIONED IN THE DOCUMENT SHOWS AS 06.05.2009. THE I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 15 TERMS AND CONDITIONS WRITTEN IN THE SAID PURCHASE O RDER READS AS ' SHIPMENT EX INDIA EARLY SEPTEMBER 2009. TERMS OF TRANSFER: 90 DAYS AFTER B/L DATE.' 3.3.1. THEREFORE IT .IS VERY CLEAR THAT THE PURCHA SE ORDER WAS GENERATED ON 06/05/2009 AND THE MATERIAL WAS TO BE SHIPPED EX INDIA EARLY SEPTEMBER 2009. THE ASSESSEE WAS REQUESTED TO SUBMIT A COPY OF THE SALE BILL. THE AS SESSEE SUBMITTED ITS INVOICE NO. EXP/80 DATED 20/08/2009 IT ALSO SUBMITTED TRANSPORT DOCUMENT WHICH SHOWS THAT THE GOODS WERE TO BE SENT ON 01/09/2009. HOWEVER THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE GOODS HAVE BEEN DELIVERED TO M/S DYSTAR OR THE CONSIGNMENT HAS BEEN TAKEN OVER BY M/S. DYSTAR. M/S DYSTAR FILED INSOLVE NT PETITION ON 28/08/2012. 3.3.2. HOWEVER THE ASSESSEE SUBMITTED COPIES OF EMAILS AS PER FOLLOWING DETAILS: A COPY OF EMAIL DATED 03/02/ 2010 SUBMITTED BY THE ASSESSEE READS AS UNDER: 'VON: NEIF SONJA DYSTAR GESENDET: MITTWOCH 3 FEBRUARY 2010 09:04 AN: JAINIK INDUSTRIES BETREFF: M-NITROORTHOSINIC ACID-SHIPMENT DEAR MR. VAGHASIA HAVE YOU MEANWHILE RETURNED THE GOODS TO INDIA? DID YOU HAVE THE ORIGINAL B/L IN HAND? PLS ADVISE.' 3.3.3. THE ASSESSEE HAS SUBMITTED A COPY OF NEWS ITEM PUBLISHED IN INTERNET DATED 29 SEPTEMBER 2009 IN W HICH THE HEADLINE READS AS ' DYSTAR FILES FOR INSOLVENCY OF ITS OPERATIONS IN GERMANY'. FROM THIS NEWS ITEM IT IS VERY CLEAR THAT THE COMPANY HAS FILED INSOLVENCY PETITIO N ON OR BEFORE 28/09/2009. THE ASSESSEE HAS CLAIMED SHIPMEN T OF GOODS ON 01/09/2009. HOWEVER IT HAS NOT SUBMITTED ANY EVIDENCE OF DATE OF DELIVERY OF GOODS TO M/S DYSTAR . IT IS IMPORTANT TO NOTE ANOTHER COPY OF EMAIL SUBMITTED B Y THE ASSESSEE WHICH READS AS UNDER: 'NEIF SONJA DYSTAR NEIF.SONJA(@)DYSTAR.COM TO: JAINIK INDUSTRIES JAINIKIND@.GMAIL.COM DEAR MR. VAGHASIA I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 16 PLEASE UNDERSTAND THAT DUE TO THE FACT OF BEING PRE LIMINARY INSOLVENT ALL OPEN INVOICES THAT WE HAD WITH YOU UN TIL 28 TH SEPT. '09 WILL REMAIN UNPAID. ' THE ABOVE LETTER AND COPIES OF EMAILS DISCUSSED EAR LIER CREATE A DOUBT WHETHER THE GOODS WERE ACTUALLY DELI VERED TO M/S DYSTAR BEFORE 28/09/2009. THE ASSESSEE HAS NOT BEEN ABLE TO SUBMIT ANY EVIDENCE IN THIS REGARD. THEREFO RE THE ASSESSEE'S CLAIM THAT THE DEBT HAS IN FACT BECOME B AD IN THIS PARTICULAR PERIOD IS UNVERIFIABLE. 3.3.4 FURTHER ANOTHER COPY OF EMAIL DATED 02/04/20 10 WHICH HAS BEEN SUBMITTED BY THE ASSESSEE READS AS U NDER: 'ON 2/04/10 NEIF SONJA DYSTAR NEIF.SONJA(@)DYSTA R.COM WROTE: DEAR MR. VAGHASIA FINALLY LEXZAU CONFIRMED TO HAVE THE ORIGINAL DOCU MENTS FOR THIS CONSIGNMENT IN HAND. ACCORDING TO THE INSO LVENCY REGULATIONS THUS GOODS BELONG TO DYSTAR. CORRECTL Y YOU DID CLAIM THE OUTSTANDING AMOUNT AT OUR INSOLVENCY ADMINISTRATOR. SO THIS MATTER WILL BE LEGALLY CARRI ED OUT. BEST REGARDS SONJA NEIF GLOBAL PURCHASING. ' THE ABOVE MENTIONED COPIES OF EMAIL PROVES THAT THE GOODS HAVE NOT BEEN DELIVERED TO M/S DYSTAR NOR THEY HAVE TAKEN POSSESSION OF THE SAME. EVEN IF IT IS ASSUMED THAT THE GOODS IN FACT HAVE BEEN DELIVERED TO M/S DYSTAR THE SAME WAS CONFIRMED ONLY ON 02/04/2010. IF THE FORMAT OF DATE IS TAKEN AS 2 ND FEBRUARY 2010 THEN THE CONFIRMATION TO THE ASSESSEE COMES ON 04/02/2010. HOWEVER FROM THE COP Y OF BAD DEBT ACCOUNT SUBMITTED BY THE ASSESSEE IT IS N OTICED THAT THE ASSESSEE HAS WRITTEN OFF THE BAD DEBT ON 31/12/2009 MUCH EARLIER THAN THE DATE OF ABOVE CONFIRMATION WHICH IS NOT LEGALLY CORRECT. 3.3.5. FURTHER FROM THE ABOVE CORRESPONDENCE IT A PPEARS THAT THE ASSESSEE HAS ALREADY STARTED RECOVERY PROC EEDINGS I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 17 BY LODGING ITS CLAIM TO M/S DYSTAR'S INSOLVENCY ADMINISTRATOR. THE ASSESSEE IN ITS REPLY DATED 06/ 11/2012 HAS ALSO CONFIRMED IN PARA 7 (POINT 5) THAT PROCEED INGS FOR THE INSOLVENCY WAS COMMENCED HOWEVER THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE WHETHER THE ADMINISTRATO R HAS IN FACT ACCEPTED ITS CLAIM TO PROVE THE FACT THAT M /S DYSTAR HAS IN FACT RECEIVED THE GOODS OR HAS TAKEN POSSESS ION OF GOODS AND HAS BECOME ASSESSEE'S DEBTOR. IF M/S DYST AR HAS NOT SHOWN THE ASSESSEE AS A CREDITOR IN THEIR BOOKS OF ACCOUNT OR HAS NOT SHOWN THE STOCK IN ITS STOCK RE GISTER THEN THE DELIVERY OF GOODS CANNOT BE PROVED BY THE ASSESSEE. 3.4. IN VIEW OF THESE FACTS THE CLAIM OF BAD DEBT BY THE ASSESSEE CAN NOT BE ALLOWED AND IS ACCORDINGLY DISA LLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE DISALL OWANCE UNDER THIS HEAD COMES TO RS. 28 78 670/-. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE I.T. ACT ARE INITI ATED AS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS LEADI NG TO CONCEALMENT OF INCOME.' 9.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN VARIOUS CONTENTIONS WERE SUBMITTED ON BEHAL F OF ASSESSEE WHICH ARE HELD AS UNDER: 'THE FACT OF THE CASE WAS THAT THE ASSESSEE HAS REC EIVED THE EXPORT ORDER DATED 06/05/2009 FROM DYSTAR FOR THE S UPPLY OF THE PRODUCT M-NITROORTHOSINIC 2801.625 KG AT THE RATE 21.5 USD PER KG. (PP-01) ASSESSEE HAS EXPORTED THE SAID MATERIAL AND RAISED THE INVOICE NO. EXP/80 DATED 20/08/2009. (PP-02) ASSESSEE HAS SHIPPED THE MATERI ALS FROM BOMBAY AND OBTAINED THE BILL OF LADING NO. LCL/GL/HAM/903 DATED 01/09/2009-STATING CONSIGNOR JAINIK INDUSTRIES AND CONSIGNEE DYSTAR TEXTILFARBEN . BILL OF LADING WAS MADE OUT 'TO ORDER'. (PP 8) INVOICE PAC KING LIST BILL OF LADING BILL OF EXCHANGE ETC. I.E. DOCUMENT S OF TITLE WERE SENT THROUGH THE BANK OF BARODA TO THE BANKER OF THE BUYER. DOCUMENTS WERE DELIVERED TO THE BANKER OF TH E BUYER ON 14/09/2009.(PP-13) THE ASSESSEE CAME TO KNOW THA T LOCAL COURT IN FRANKFURT GERMANY HAS APPOINTED THE INSOLVENCY ADMINISTRATOR OVER THE ESTATE OF DEUTSCH LAND KG. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 18 LTD. ON APPLICATION FILED FOR THE INSOLVENCY PETIT ION DATED 28/09/2009. THE ASSESSEE ON CAME TO KNOW THIS PRIMA RY AND IMPORTANT INFORMATION VIDE FAX DATED 30/09/2009 AND 27/11/2009 FROM THE SONJA NEIF GLOBAL PURCHASING H EAD OF DYSTAR (PP- 10-11). THE ASSESSEE HAS THEREFORE WRIT TEN OF THE DEBT IN THE BOOKS OF ACCOUNT AS BAD DEBT ON 31/12/2 009. (PP 1 TO 21) THE ASSESSEE HAS CLAIMED THE DEBT WRITTEN OFF AS TH E ALLOWABLE DEDUCTION U/S 36(L)(VII) DUE TO THE FOLLO WING REASONS 1. THE DEBT IS TAKEN IN THE ACCOUNT IN THE COMPUT ATION OF THE INCOME OF THE ASSESSES OF THE A.Y. 2010-11. 2. THE TRANSACTION HAS BEEN INCURRED IN THE ORDIN ARY COURSE OF THE BUSINESS. 3. THE DEBT HAS BEEN WRITTEN OFF AS IRREVOCABLE I N THE ACCOUNT OF THE ASSESSEE. (PP-1-2) 4. THE DEBT HAS BEEN WRITTEN OFF IN THE A. Y. 2010 -11 AS THE ASSESSEE HAS RECEIVED THE PRIMARY AND VITAL INFORMA TION ABOUT THE INSOLVENCY PETITION BEING FILED AND COURT HAS APPOINTED THE ADMINISTRATOR ON THE ESTATE OF THE DE BTOR. THIS INFORMATION IS RECEIVED DURING THE A. Y. 2010- 11 HENCE THE DEBT WRITTEN OFF IN THE A.Y. 2010-11(PP-10-11) (PP-20) 5. INSOLVENCY PROCEEDING WAS COMMENCED AND DUE TO UNSECURED CREDITORS ASSESSEE SHALL GOT AMOUNT ON PR O RATA BASIS. PROCEDURE INSOLVENCY TO TAKE THE COMPANY IN LIQUIDATION SALE THE ASSETS PAY THE SECURED AND PR EFERENTIAL CREDITORS AND OUT OF BALANCE AMOUNT PAY THE UNSECU RED CREDITORS ON PRO RATA BASIS. THIS LEGAL PROCEDURE W ILL TAKE LOT OF YEARS TO SETTLE THE ACCOUNT. THE RECEIPT OF MONE Y AND THE QUANTUM WAS UNCERTAIN IN SUCH CIRCUMSTANCES AS PRU DENT MAN THE ASSESSEE HAS WRITTEN OFF THE DEBT AS BAD. THE A.O. HAS GIVEN THE SHOW CAUSE LETTER DATED 26/1 0/2012 TO JUSTIFY THE CLAIM OF BAD DEBT. THE ASSESSEE HAS REPLIED THE SHOW CAUSED LETTER VIDE PARA 7 OF THE SUBMISSIO N DATED 06/11/2012. THE ASSESSEE HAS ALSO FURTHER SUBMITTE D THE JUSTIFICATION VIDE SUBMISSION LETTER DATED 07/11/20 12 WITH SUPPORT OF SOME CASE LAWS. I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 19 9.2 AFTER CONSIDERING THE SAME CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. SAME HAS BEEN OPPOSED ON BEHALF O F REVENUE INTER ALIA SUBMITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING DISALLOWANCE OF RS.28 78 670/- MADE ON ACCOUNT OF B AD DEBTS U/S. 36(1)(VII) OF THE ACT. ACCORDINGLY ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. O N THE OTHER HAND LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE O RDER OF CIT(A) ON THE ISSUE. 9.3 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL AVAILABLE BEFORE US WE FIND THAT ASSESSING OFFICER DISALLOWED CLAIM OF BAD DEBT ON THE GROUND THAT GOODS HAVE NOT BEEN DELIVERED TO THE PURCHASER M/S. DYSTAR NOR THEY HAV E TAKEN POSSESSION OF THE SAME. ASSESSING OFFICER FURTHER CONTENDED THAT ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE WHETHE R THE ADMINISTRATOR HAD IN FACT ACCEPTED ITS CLAIM FOR RE COVERY TO PROVE THE FACT THAT M/S. DYSTAR HAD IN FACT RECEIVE D THE GOODS IN ANY MANNER. WE FIND THAT E-MAIL SUBMITTED BY AS SESSEE DATED 2.4.2010 ESTABLISHED THE POSSESSION OF ORIGIN AL DOCUMENTS IN RESPECT OF CONSIGNMENT BY M/S. DYSTAR. ASSESSEE HAS FILED CLAIM BEFORE INSOLVENCY ADMINIST RATOR AND A COPY OF THE SAME ALONG WITH ACKNOWLEDGMENT OF RECEI PT HAS ALSO BEEN SUBMITTED BEFORE CONCERNED ASSESSING OFFI CER. THIS WAS SUFFICIENT EVIDENCE TO ESTABLISH THE FACT THAT THE GOODS WERE SENT TO A FOREIGN PARTY AND THE VERY FACT THAT PAYM ENTS WERE NOT RECEIVED BY ASSESSEE FROM THE PURCHASER WHO SUB SEQUENTLY FILED THE INSOLVENCY PETITION. IN VIEW OF ABOVE C IT(A) WAS I.T.A. NOS. 2291 & 2427/AHD/20131 FOR A.Y. 10-11 (JAINIK INDUSTRIES VS. ACIT) PAGE 20 JUSTIFIED IN HOLDING THAT CLAIM MADE BY ASSESSEE TO WARDS BAD DEBTS OF RS.28 78 670/- IS ADMISSIBLE AS PER THE PR OVISIONS OF SECTION 36(1)(VII). THIS VIEW IS FORTIFIED BY DECI SION OF HONBLE SUPREME COURT IN CASE OF M/S. TRF LTD. V CIT (201 0) 323 ITR 397 (SC). ACCORDINGLY THE ORDER OF CIT(A) ON THIS ISSUE IS UPHELD. 10. AS A RESULT REVENUES APPEAL IS DISMISSED. 11. IN RESULT ASSESSEES APPEAL IS PARTLY ALLOWED WHEREAS REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. - / CONCERNED CIT 4. -- / CIT (A) 5. &12 % / DR ITAT AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # 9/ ;