DCIT, New Delhi v. M/s Shiv Nath Rai Harnarayan (I) Ltd., New Delhi

ITA 4517/DEL/2010 | 2007-2008
Pronouncement Date: 16-09-2011 | Result: Dismissed

Appeal Details

RSA Number 451720114 RSA 2010
Assessee PAN AAECS5326C
Bench Delhi
Appeal Number ITA 4517/DEL/2010
Duration Of Justice 11 month(s) 4 day(s)
Appellant DCIT, New Delhi
Respondent M/s Shiv Nath Rai Harnarayan (I) Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 16-09-2011
Date Of Final Hearing 08-09-2011
Next Hearing Date 08-09-2011
Assessment Year 2007-2008
Appeal Filed On 12-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 4517/DEL/10 ASSTT. YR: 2007-08 DCIT CIRCLE 8(1) VS. M/S SHRI LAL MAHAL LTD. NEW DELHI. (FORMERLY KNOWN AS SHIV NATH RAI HARNARAYAN (I) LTD.) B-16 BHAGWAN DASS NAGAR NEW DELHI. PAN/GIR NO.AAECS5326C ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MRS. ANUSHA KHURANA DR RESPONDENT BY: SHRI R.S. SINGHVI FCA O R D E R PER R.P. TOLANI J.M : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DAT ED 5-7-2010 RELATING TO A.Y. 2007-08. SOLE EFFECTIVE GROUND RAI SED IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CI T(A) ERRED IN LAW AS WELL AS ON MERITS IN DELETING THE ADDITIO N OF RS. 88 37 631/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS. 2. FOR A.Y. 2007-08 THE ASSESSEE DEBITED RS. 88 37 631/- AS BAD DEBT IN ITS P&L A/C AND CLAIMED THE SAME AS ALLOWABLE U/S 3 6(2)(A) OF THE I.T. ACT. VIDE HIS ASSESSMENT ORDER DATED 31-12-2009 THE AO DISALLOWED THE CLAIM BY HOLDING THAT THE BURDEN OF PROOF HAS NOT BEEN FU LLY DISCHARGED BY THE ASSESSEE. IN FIRST APPEAL THE CIT(A) ALLOWED THE C LAIM OF THE ASSESSEE BY 2 OBSERVING THAT AS PER PRESENT REQUIREMENT OF LAW T HE ASSESSEE HAS SATISFIED ALL THE PREREQUISITES. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 3. LEARNED DR RELIES ON THE ORDER OF AO AND CONTEND S THAT AO WAS JUSTIFIED IN EXAMINING THE FACT AS TO WHETHER THE D EBT HAD IN FACT BECOME BAD AND THE CLAIM WAS DISALLOWED ACCORDINGLY. THE CIT(A ) WHILE ALLOWING THE CLAIM FAILED TO CONSIDER THIS VITAL ASPECT. 4. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H ANDS CONTENDS THAT THESE ARE OLD BAD DEBTS ON ACCOUNT OF UNREALIZED SA LE PROCEEDS; ALL THE NECESSARY DETAILS WERE FILED; AO HELD THAT ASSESSEE COULD NOT SATISFY HIM ABOUT THE FACT THAT THE DEBTS HAVE BECOME BAD IGN ORING ASSESSEES EXPLANATION ABOUT THEM BEING OLD AND OUT OF UNREALI ZED SALE PROCEEDS. LEARNED COUNSEL CONTENDS THAT THERE IS NO QUESTION ABOUT THE GENUINENESS OF THE DEBTS AND THE SAME WERE RIGHTLY WRITTEN OFF. RE LIANCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF T. R.F. LTD. VS. CIT (2010) 323 ITR 397(SC) HOLDING 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 DEDUCTION IN RELATION TO BAD DEBTS IT IS NOT NECES SARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT HAS B ECOME IRRECOVERABLE: IT IS ENOUGH IF THE BAD DEBT IS WRIT TEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 4.1. LEARNED COUNSEL FURTHER CONTENDS THAT DEBTS HA VE ALREADY BEEN WRITTEN OFF IN THE BOOKS OF THE ASSESSEE; AS PER DECISION O F HONBLE SUPREME COURT IT IS NOT NECESSARY ON THE PART OF THE ASSESSEE TO ESTABLISH THE FACTUM OF DEBTS BECAME IRRECOVERABLE. CIT(A) HAS IN DELETING THE AD DITION HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TR F LTD. (SUPRA). 3 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. HONBLE SUPREME COURT IN THE CASE OF TRF LTD. (SUPRA) HAS H ELD THAT CONSEQUENT TO AMENDMENT IN SEC. 36(1)(VII) AFTER 1-4-1989 THE A CTUAL WRITING OFF OF THE DEBT WILL CONSTITUTE A SUFFICIENT COMPLIANCE IN ALL OWING THE BAD DEBTS CLAIM OF THE ASSESSEE. BESIDES IN THIS CASE IT HAS NOT B EEN DISPUTED THAT THE DEBTS WERE OLD DUE TO UNREALIZED SALE PROCEEDS. IN VIEW O F THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF TRF LTD. (SUPR A) WE SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE. WE UPHOD THE SAME. 6. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16-09-2011. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16-09-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 4