ADDL CIT 1(3), MUMBAI v. UTILITY POWERTECH LTD, MUMBAI

ITA 3348/MUM/2009 | 2005-2006
Pronouncement Date: 09-02-2010 | Result: Dismissed

Appeal Details

RSA Number 334819914 RSA 2009
Assessee PAN EYEAR2000N
Bench Mumbai
Appeal Number ITA 3348/MUM/2009
Duration Of Justice 8 month(s) 19 day(s)
Appellant ADDL CIT 1(3), MUMBAI
Respondent UTILITY POWERTECH LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 09-02-2010
Date Of Final Hearing 08-02-2010
Next Hearing Date 08-02-2010
Assessment Year 2005-2006
Appeal Filed On 20-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F : MUMBAI BEFORE SHRI D.MANMOHAN HONBLE VICE PRESIDENT AND SHRI RAJENDRA SINGH ACCOUNTANT MEMBER ITA. NO. 3348/MUM/2009 ASSESSMENT YEAR 2005-2006 ACIT 1 (3) MUMBAI 020. VS. M/S. UTILITY POWERTECH LTD. MUMBAI 400 055 PAN AAACU-3458-P (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VIRENDRA OJHA D.R. FOR RESPONDENT : SHRI AMIT KHATIWALA ORDER PER SHRI D. MANMOHAN V.P. 1. THIS APPEAL FILED AT THE INSTANCE OF THE REVEN UE IS DIRECTED AGAINST THE ORDER DATED 16-2-2009 PASSED B Y THE CIT (A)-XXI MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2005- 2006. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSE SSING OFFICER TO ALLOW BAD DEBTS AS CLAIMED BY THE ASSESS EE. 2. AT THE TIME OF HEARING LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS TO P RIMA FACIE PROVE THAT THE DEBT IS BAD AND WRITTEN OFF AS IRRECOVERAB LE IN THE BOOKS OF THE ASSESSEE AS PER SECTION 36(1)(VII) OF THE ACT AND T HE LEGISLATION HAS NOT GIVEN THE ASSESSEE A WIDE DISCRETION TO WRITE OFF A NY DEBT AT WILL. 3. ON THE OTHER HAND LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE STANDS COV ERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF DIT VS. OMAN INTERNATIONAL BANK (BOM.) (2009) 313 ITR 128. 2 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. THE HONBLE BOMBAY HIGH COURT IN THE A FORECITED DECISION OBSERVED AT PAGE 136 AS UNDER : CONSIDERING THE ABOVE DISCUSSION IN OUR OPINION TO TREAT THE DEBT AS BAD DEBT HAS TO BE COMMERCIAL OR BUSINESS DECISION OF THE ASSESSEE BASED ON THE RELEVANT MATERIAL IN POSSESSION OF THE ASSESSEE. ONCE THE ASSESSEE RECORDS THE DEBT AS BAD DEBT IN HIS BOOKS OF ACCOUNT THAT WOULD PRIMA FACIE ESTABLISH THAT IT IS A BAD DEBT UNLESS THE ASSESSIN G OFFICER FOR GOOD REASONS HOLDS OTHERWISE. THE WRITING OFF IN THE ACCOUNTS NO DOUBT HAS TO BE BON A FIDE. ONCE THAT BE THE CASE THE ASSESSEE IS NOT CALLED UPON TO DISCHARGE ANY FURTHER BURDEN. IN OUR OPINION THEREFORE WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE MAJORITY CONSTITUTING THE BENCH O F THE LEARNED TRIBUNAL. THE QUESTION AS FRAMED WILL HAVE TO BE ANSWERED BY HOLDING THAT AFTER THE AMENDMENT IT IS NEITHER OBLIGATORY NOR IS THE BURDEN ON THE ASSESSEE TO PROVE THAT THE DEBT WRITTEN OFF BY HIM IS INDEED A BAD DEBT AS LONG AS IT IS BONA FIDE AND BASED ON COMMERCIAL WISDOM OR EXPEDIENCY. APPEAL DISPOSED OF ACCORDINGLY. 5. IN THE INSTANT CASE THERE IS NO DISPUTE WITH RE GARD TO THE FACT THAT ASSESSEE HAS WRITTEN OFF IN THE BOOKS OF ACCOUNT A SUM OF RS.8 16 250/- REFERABLE TO THE BILL DATED 8-5-2000 RAISED ON ITI LUCKNOW. IN ORDER TO PROVE BONAFIDES OF THE CLAIM THE ASSESSEE SUBMITTED THAT AS AGAINST THE BILL RAISED IN THE YE AR 2000 NO PAYMENT WAS RECEIVED TILL 2007. EVEN AFTER REPEATED REMINDE RS AND EFFORTS TAKEN TO RECOVER THE SAME THE ASSESSEE-COMPANY WAS UNSUC CESSFUL IN 3 RECOVERING THE AMOUNT AND HENCE IT HAD TO TAKE A DE CISION OF WRITING OFF THE SAME AS BAD DEBT. 6. THE BONAFIDES OF THE CLAIM WAS NOT DISPUTED BY THE ASSESSING OFFICER. HE OBSERVED THAT THE ONUS IS UPO N THE ASSESSEE THAT THE DEBT HAD BECOME BAD AND IRREVOCABLE. 7. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) ALLOWED THE BENEFIT OF WRITE OFF BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF STAR CHEMI CALS 11 DTR 311. THUS THE REVENUE IS IN APPEAL BEFORE US. NO MATERIA L WHATSOEVER WAS PLACED BEFORE US TO CONTRADICT THE CLAIM OF THE ASS ESSEE THAT THE WRITE OFF IS BASED ON BONAFIDE DECISION. UNDER THE CIRCUM STANCES WE ARE OF THE CONSIDERED VIEW THAT THE VIEW TAKEN BY THE LEAR NED CIT(A) IS IN CONSONANCE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF OMEN INTERNATIONAL (SUPRA) AND THUS IT DOES NOT CALL FOR INTERFERENCE. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. PRONOUNCED ACCORDINGLY SD/- SD/- (RAJENDRA SINGH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DT. 09 TH FEBRUARY 2010 VBP/- COPY TO 1. ACIT 1 (3) ROOM NO. 540/564 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD NEW MARINE LINES MUMBAI 400 020. 2. M/S. UTILITY POWERTECH LTD. 3 RD FLOOR RELIANCE ENERGY CENTRE SANTACRUZ (EAST) MUMBAI 400 055 PAN AAACU-3458-P 3. CIT(A)-XXI MITTAL COURT B WING R.NOS. 13 & 14 3 RD FLOOR NARIMAN POINT MUMBAI 400 021. 4. CIT CITY-1 MUMBAI 5. DR F BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES 4 SNO DATE INITIALS 1 DRAFT DICTATED ON 08-02-2010 SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR 08-02-2010 SR.P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER