TRITON COMMUNICATIONS LTD, MUMBAI v. ACIT 2(3), MUMBAI

ITA 6157/MUM/2009 | 2004-2005
Pronouncement Date: 31-01-2011 | Result: Allowed

Appeal Details

RSA Number 615719914 RSA 2009
Assessee PAN AABCT1560A
Bench Mumbai
Appeal Number ITA 6157/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 4 day(s)
Appellant TRITON COMMUNICATIONS LTD, MUMBAI
Respondent ACIT 2(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 31-01-2011
Date Of Final Hearing 19-01-2011
Next Hearing Date 19-01-2011
Assessment Year 2004-2005
Appeal Filed On 26-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP AM AND SHRI N.V. VASUDEV AN JM I.T.A.NO. 6157/MUM/2009 ASSESSMENT YEAR : 2004-05 M/S. TRITON COMMUNICATIONS LTD. 43 PROSPECT CHAMBERS ANNEXE D.N. ROAD FORT MUMBAI 400 001. PAN: AABCT 1560 A VS. THE ASST. COMMISSIONER OF INCOME- TAX-2(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI- 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BEHARILAL RESPONDENT BY : SHRI D. SONGATE O R D E R PER P.M. JAGTAP AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-6 MUMBAI DAT ED 27.10.2009 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ISSUE RAISED IN GROUND NO.1 OF THIS APPEAL R ELATES TO THE DISALLOWANCE OF RS. 12 09 362/- MADE BY THE ASSESSING OFFICER AN D CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF RUNNING AN ADVERTISING AGENCY. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 01.11.2004 D ECLARING TOTAL INCOME OF RS.69 82 313/-. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN OF INCOME A SUM OF RS. 12 09 362/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF BAD DEBT WRITTEN OFF. DURING THE CURSE OF ASSESSMENT PR OCEEDINGS THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCTION ON ACCOUNT OF BAD D EBT WAS EXAMINED BY THE ASSESSING OFFICER. ON SUCH EXAMINATION HE FOUND TH AT THE RELEVANT DEBTS CLAIMED BY THE ASSESSEE WERE OUTSTANDING FOR JUST MORE THAN ONE YEAR AND THE SAME WERE STATED TO BE WRITTEN OFF IN THE BOOKS OF ACCOUNT AS PER THE BOARD RESOLUTION PASSED ITA NO.6157/M/2009 M/S.TRITON COMMUNICATIONS LTD. . . 2 IN THE YEAR UNDER CONSIDERATION. ACCORDING TO HIM THERE WAS HOWEVER NO MATERIAL PRODUCED BY THE ASSESSEE TO ESTABLISH THAT THE SAID DEBTS HAVE BECOME ACTUALLY BAD IN THE YEAR UNDER CONSIDERATION. HE THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BAD DEBTS IN T HE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 26.12.2006. 4. ON APPEAL THE LEARNED CIT(A) CONFIRMED THE DISA LLOWANCE OBSERVING THAT THE RELEVANT DEBTS BEING ONLY ONE YEAR OLD THE ACT ION OF THE ASSESSEE IN WRITING OFF THE SAME AS BAD WAS NOT BONAFIDE. FOR THIS CONCLUS ION HE RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN DIRECTOR OF INC OME-TAX (INTERNATIONAL TAXATION) VS. OMAN INTERNATIONAL BANK (2009) (313 ITR 128)(BOM). 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT THIS ISSUE NOW STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF T.R.F. LTD. V. CIT (2010)323 ITR 397(SC) WHEREIN I T HAS BEEN HELD THAT EVERY ASSESSEE PRIOR TO 01.04.1989 WAS REQUIRED TO ESTABL ISH AS A MATTER OF FACT THAT THE DEBT ADVANCED BY HIM HAS IN FACT BECOME IRRECOVERAB LE. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT THAT THIS POSITION HOWEVER HAS GOT ALTERED BY THE DELETION OF THE WORD ESTABLISH WHICH EARLIER EXISTED IN S ECTION 36(1)(VII) OF THE ACT. THE HONBLE APEX COURT HAS HELD THAT IT IS THEREFORE NOT NECESSARY FOR THE ASSESSEE WITH EFFECT FROM 01.04.1989 TO ESTABLISH THAT THE D EBT HAS IN FACT BECOME IRRECOVERABLE AND IT IS ENOUGH IF THE BAD DEBT IS W RITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. RESPECTFULLY FOLLOWING TH E SAID DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. (SUPRA) WE H OLD THAT THE ASSESSEE HAVING ADMITTEDLY WRITTEN OFF THE BAD DEBT IN QUESTION AS IRRECOVERABLE IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION IT IS ENT ITLED FOR DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT. WE THEREFORE DELETE THE D ISALLOWANCE MADE BY THE A.O. ITA NO.6157/M/2009 M/S.TRITON COMMUNICATIONS LTD. . . 3 AND CONFIRMED BY THE CIT(A) ON ACCOUNT OF ASSESSEE S CLAIM FOR DEDUCTION ON ACCOUNT OF BAD DEBTS AND ALLOW GROUND NO. 1 OF THE ASSESSEES APPEAL. 6. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO DISA LLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNDER STATE MENT OF SALES WHICH HAS BEEN SUSTAINED BY THE LEARNED CIT(A) TO THE EXTENT OF RS .6 75 000/-. 7. FROM THE INFORMATION DIRECTLY COLLECTED FROM ONE OF THE DEBTORS/CUSTOMERS OF THE ASSESSEE VIZ. M/S. DHAN DHANA DHAN INFOTAIN MENT PVT. LTD. IT WAS NOTED BY THE ASSESSING OFFICER THAT THERE WAS A DIFFERENC E IN THE BALANCE AS REFLECTED IN THE BOOKS OF ACCOUNT OF THE SAID PARTY PERTAINING T O THE ASSESSEES ACCOUNT AND THE BALANCE SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOU NT. THE SAID DIFFERENCE TO THE EXTENT OF RS. 12 11 242/- COULD NOT BE EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF THE A.O. HE THEREFORE ADDED THE S AID DIFFERENCE TO THE TOTAL INCOME OF THE ASSESSEE. BEFORE THE LEARNED CIT(A) THE ASS ESSEE AGAIN MADE AN ATTEMPT TO RECONCILE THE SAME DIFFERENCE BY OFFERING ITS EX PLANATION. THE SAID EXPLANATION WAS FOUND TO BE PARTLY ACCEPTABLE BY THE LEARNED CI T(A). AS REGARDS THE EXPLANATION OF THE ASSESSEE THAT THE DIFFERENCE TO THE EXTENT OF RS. 6 75 000/- WAS ON ACCOUNT OF CREDIT NOTE ISSUED TO M/S. DHAN DHANA DHAN INFOTAINMENT PVT. LTD. FOR WHICH THE CORRESPONDING DEBIT ENTRY HAD NOT BEE N MADE BY THE SAID PARTY HOWEVER WAS NOT FOUND ACCEPTABLE BY THE LEARNED CI T(A) ON THE GROUND THAT THE SO-CALLED CREDIT NOTE ACCORDING TO HIM WAS ISSUED BY THE ASSESSING OFFICER IN FAVOUR OF M/S. DHAN DHANA DHAN INFOTAINMENT PVT. LT D. UNILATERALLY. HE OBSERVED THAT WHEN THE PARTY TO WHOM THE SERVICES WERE BEING RENDERED BY THE ASSESSEE DID NOT ASK FOR A CREDIT NOTE FOR DEFICIENCY IN SER VICE THERE WAS NO REASON FOR THE ASSESSEE TO REDUCE THE SALES BY ISSUING SUCH CREDI T NOTE. WE THEREFORE SUSTAINED THE ADDITION OF RS. 12 11 242/- MADE BY THE A.O. ON THIS ISSUE TO THE EXTENT OF RS.6 75 000/-. ITA NO.6157/M/2009 M/S.TRITON COMMUNICATIONS LTD. . . 4 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF DIFFERENCE OF RS. 6 75 000/- HAS BEEN REJECTED BY THE ASSESSING OFFIC ER AS WELL AS BY THE LEARNED CIT(A) WITHOUT GIVING PROPER AND SUFFICIENT OPPORTU NITY TO SUPPORT AND SUBSTANTIATE THE SAME. HE HAS CONTENDED THAT A CREDIT NOTE OF R S. 6 75 000/- WAS ISSUED BY THE ASSESSEE IN FAVOUR OF M/S. DHAN DHANA DHAN INFO TAINMENT PVT. LTD. FOR THE WORK WHICH COULD NOT BE DONE IN THE YEAR UNDER CONS IDERATION AND WHEN THE AUTHORITIES BELOW HAD ANY DOUBTS ABOUT THE GENUINEN ESS OF THE SAID CREDIT NOTE ON THE GROUND THAT THE SAME WAS ISSUED BY THE ASSESSEE UNILATERALLY AN OPPORTUNITY SHOULD HAVE BEEN AFFORDED BY THEM TO THE ASSESSEE TO OBTAIN THE CONFIRMATION FROM THAT PARTY TO MEET THAT OBJECTION. KEEPING IN VIEW THIS SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE WHICH HAS NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WE DEEM IT FAI R AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECI DING THE SAME AFRESH AFTER GIVING THE ASSESSEE A PROPER AND SUFFICIENT OPPORTUNITY TO EXPLAIN THE DIFFERENCE OF RS. 6 75 000/- ON EVIDENCE. GROUND NO. 2 OF THE ASSESSE ES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 1ST DAY OF JANUARY 2011. SD. SD. (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 31 ST JANUARY 2011. KN ITA NO.6157/M/2009 M/S.TRITON COMMUNICATIONS LTD. . . 5 COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-2 MUMBAI 4. THE CIT(A)-6 MUMBAI 5. THE DR E BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI