The DCIT, Circle-1(1),, Baroda v. M/s. Bayer Diagnostic India Ltd.,, Baroda

ITA 3867/AHD/2008 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Dismissed

Appeal Details

RSA Number 386720514 RSA 2008
Assessee PAN AAACB8542M
Bench Ahmedabad
Appeal Number ITA 3867/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 21 day(s)
Appellant The DCIT, Circle-1(1),, Baroda
Respondent M/s. Bayer Diagnostic India Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 18-03-2011
Date Of Final Hearing 09-03-2011
Next Hearing Date 09-03-2011
Assessment Year 2003-2004
Appeal Filed On 27-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MUKUL KR. SHRAWAT JUDICIAL MEMBER) ITA NO.3867/AHD/2008 [ASSTT. YEAR : 2003-2004] DCIT CIR.1(1) BARODA. VS. BAYER DIAGNOSTICS LTD. 589 SAYAJIPURA AJWA ROAD BARODA. PAN : AAACB 8542 M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI G.S. SOURYAWANSI ASSESSEE BY : SHRI J.P. SHAH O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX(APPEALS)-I BARODA DATED9.09.2008 ARISING OUT OF THE ORDER OF T HE ASSESSING OFFICER PASSED UNDER SECTION 143 R.W.S. 143(3) OF THE INCOME TAX A CT 1961. 2. IN THIS APPEAL BY THE REVENUE THE ONLY GROUND RA ISED IS AGAINST THE DELETION OF THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS.46 69 000/-. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE AO DISALLOWED THE ASSESSEES CLAIM OF BAD DEBT WITH THE FOLLOWING FINDINGS IN THE ASSESSMENT ORDER: ... HOWEVER THE ASSESSEE HAS NOT HIGHLIGHTED THE MAIN CONDITION FOR CLAIMING THE BAD DEBT. THE MAIN CONDITION IS THAT THE DEBT MUST BE BAD DEBT THEN ONLY IT IS ALLOWABLE. IN THE CASE OF THE ASSESSEE IT IS NOT SO. THE ASSESSEE CLAIMS BAD DEBT YEAR AFTER YEAR A ND ALSO SHOWS SUBSTANTIAL RECOVERED YEAR AFTER YEAR. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN HUGE RECOVERY OF RS.21 51 000/- OUT OF BAD DEBTS CLAIMED IN EARLIER YEARS. THIS VE RY FACT SHOWS THAT THE GOOD DEBTS ARE BEING CLAIMED AS BAD DEBTS. IN THE CASE OF THE ASSESSEE THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF EVIDENCES AS TO WHAT ACTIONS WERE TAKEN FOR RECOVERY AND INSPITE OF THESE EFFORTS NO RECOVERY WAS POSSIBLE. ITA NO.3867/AHD/2008 -2- THE ASSESSEE CONTENDED THAT THE CLAIM WAS ALLOWABL E. AS PER THE AMENDMENT WITH EFFECT FROM 1.4.1989 THE CONDITION O F SATISFACTION OF THE AO THAT THE DEBT HAS BECOME BAD DO NOT EXIT. THE ASSESSEE RELIED ON SEVERAL DECISIONS ALSO. THE CONTENTION OF THE ASSESSEE ARE DULY CONSIDERED . THEY ARE NOT ACCEPTABLE. THE DECISION OF THE HON. GUJARAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES & ENGINEERS P. LTD. VS. CIT 207 CTR 729 HAS DULY RECOGNIZED THE CONDITION OF SATISFACTION OF THE AO. IN THE RESULT I AM SATISFIED THAT THE CLAIM OF B AD DEBT IS NOT ALLOWABLE AND THEREFORE RS.46 69 000/- IS DISALLOWE D. FROM THE ABOVE IT IS EVIDENT THAT THE AO DID NOT A LLOW THE CLAIM OF THE BAD DEBTS ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE EVIDENCE THAT THE DEBT HAD IN FACT BECAME BAD. THE AO GAVE NO OT HER GROUND FOR THE DISALLOWANCE OF BAD. THE CIT(A) ALLOWED THE ASSESS EES CLAIM FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CA SE OF DCIT VS. OMAN INTERNATIONAL BANK 100 ITD 285 (MUM). AGGRIEVED R EVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THAT THE AO DISALLOWED THE CLAIM OF THE BAD DE BTS ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED EVIDENCES TO ESTABLISH TH AT THE DEBT HAS BECOME BAD. WE FIND THAT THIS ISSUE IS NOW SETTLED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF IN THE CASE OF T.R.F. LTD. VS. CIT 323 IT R 397 (SC) WHEREIN THEIR LORDSHIP HELD AS UNDER: AFTER THE AMENDMENT OF SECTION 36(1)(VII) OF THE I NCOME TAX ACT 1961 WITH EFFECT FROM APRIL 1 1989 IN ORDER TO OBTAIN A DED UCTION IN RELATION TO BAD DEBTS IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH T HAT THE DEBT IN FACT HAS BECOME IRRECOVERABLE; IT IS ENOUGH IF THE BAD DEBT IS WRIT TEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. FROM THE ABOVE IT IS EVIDENT THAT THE HONBLE APEX COURT HAS HELD THAT AFTER 1-4-89 IN ORDER TO CLAIM DEDUCTION IN RELATION TO BAD DEBT IT IS NOT NECESSARY FOR THE ASSESSEE THAT THE DEBT HAS IN FACT BECOME IRRECOVERABLE. IT IS E NOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE IT IS NOT ITA NO.3867/AHD/2008 -3- DISPUTED THAT THE DEBT IS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSEE. WE THEREFORE RESPECTFULLY FOLLOWING THE ABOVE DECIS ION OF THE HONBLE APEX COURT UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND RE JECT THE GROUND OF THE REVENUES APPEAL. 5. IN RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18 TH MARCH 2011 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 18-03-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD