ACIT, CHENNAI v. M/s. Shripet Cybertech Systems P Ltd., CHENNAI

ITA 770/CHNY/2011 | 2004-2005
Pronouncement Date: 14-07-2011 | Result: Dismissed

Appeal Details

RSA Number 77021714 RSA 2011
Assessee PAN AABCS1535J
Bench Chennai
Appeal Number ITA 770/CHNY/2011
Duration Of Justice 2 month(s) 16 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Shripet Cybertech Systems P Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 14-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2004-2005
Appeal Filed On 28-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI N. S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NO. 770/MDS/2011 ASSESSMENT YEAR : 2004-05 THE ASSISTANT COMMISSIONER OF INCOME-TAX COMPANY CIRCLE-VI(2) CHENNAI. V. M/S. SHRIPET CYBERTECH SYSTEMS P. LTD. NEW NO. 35 VAIDHYARAM STREET T. NAGAR CHENNAI-600 017. (PAN : AABCS1535J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SRI S. BALAMURUGAN O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-V CHENNAI IN ITA NO. 585/2006-07 DATE D 27-01-2011 FOR THE ASSESSMENT YEAR 2004-05. 2. SHRI SHAJI P. JACOB LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI BALAMURUGAN ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : I.T.A. NO.770/MDS/2011 2 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1. THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF ` 33 52 067 CLAIMED AS BAD DEBTS. 2.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE DID NOT PRODUCE EVIDENCE TO THE ASSESSING OFFICER T O PROVE THAT THE FINANCIAL POSITION OF THE DEBTORS WERE SUCH THAT IT WAS IMPOSSIBLE TO COLLECT ANY MONEY FROM THEM. 2.3. HAVING REGARD TO THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN CASE OF DIT V. OMAN INTERNATIONAL BANK (3 13 ITR 128) WHICH HELD THAT THE DECISION OF THE ASSESSEE TO TRE AT THE DEBT AS BAD CANNOT BE WHIMSICAL OR FANCIFUL DECISION BUT SH OULD BE BASED ON MATERIAL THAT THE DEBT IS NOT RECOVERABLE AND TH E DECISION IS A BONAFIDE DECISION- THE CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 3.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE D ISALLOWANCE OF ` 4 34 020 BEING MOULD DEVELOPMENT EXPENSES BEING CL AIMED AS REVENUE EXPENDITURE. 3.2 HAVING REGARD TO THE FACT THAT THE MOULDS HAVE ENDURING BENEFIT THE CIT(A) OUGHT TO HAVE UPHELD THE ASSESS ING OFFICERS ACTION OF TREATING THE EXPENDITURE AS CAPITAL AND A LLOWING DEPRECIATION ON IT. 3.3 EVEN PRESUMING THAT THE ASSESSEE WAS ENTITLED T O HIGHER DEPRECIATION THE ASSESSEE WOULD HAVE BEEN ELIGIBLE FOR 40% DEPRECIATION ONLY AS PER THE I.T. RULES. I.T.A. NO.770/MDS/2011 3 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE C OURSE OF ASSESSMENT THE ASSESSING OFFICER HAD DISALLOWED BAD DEBTS WRITTEN OFF DURING THE YEAR ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDE NCE IN RESPECT OF THE DEDUCTIONS MADE BY THE CUSTOMERS AS ALSO ON THE GRO UND THAT THE ASSESSEE HAD NOT PROVED THAT THE FINANCIAL POSITION OF THE DEBTO RS WAS PRECARIOUS OR SHAKY. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELE TED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAD WRITTEN OFF THE AMOUNT IN THE DEBTORS ACCOUNTS AND THE AMOUNT HAD BEEN OFFERED AS INCOME IN THE EARLIE R YEARS. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. IT WAS THE FURTHER SUBMISSION BY THE LEARNED DR THAT THE ASSESSING OFFICER HAD ALSO DISALLOWED MOULD DEVELOPMENT EXPENDITURE B Y TREATING THE SAME AS CAPITAL EXPENDITURE. IT WAS THE SUBMISSION THAT TH E ASSESSEE HAD CLAIMED THE MOULD DEVELOPMENT EXPENDITURE IN REGARD TO THE MOUL DS FOR THE MANUFACTURE OF PET BOTTLES AS REVENUE EXPENDITURE. IT WAS THE SUB MISSION THAT THE LEARNED CIT(A) HAD ALLOWED THE ASSESSEES CLAIM OF REVENUE EXPENDITURE IN RESPECT OF THE MOULD DEVELOPMENT EXPENSES ON THE GROUND THAT MOULD S REQUIRED REPLACEMENT AND NO ENDURING BENEFIT HAD ACCRUED TO THE ASSESSEE . HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. I.T.A. NO.770/MDS/2011 4 6. IN REPLY THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE RELIED HEAVILY ON THE ORDER OF THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE ASSESSEE HAD WRITTEN OFF THE DEBT AND IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF TRF LTD. V. CIT REPORTED IN 323 ITR 397 RELIED UPON BY THE LEARNED CIT(A) THE ISSUE WAS LIABLE TO BE HELD IN FAVOUR OF THE ASSESSEE. 7. IN RESPECT OF THE MOULD DEVELOPMENT EXPENDITURE IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE LIFE OF THE MOULDS VARY AND AS THE ASSESSEE WAS IN THE BUSINESS OF PET BOTTLES THE REP LACEMENT OF THE MOULDS WAS MORE IN THE NATURE OF REPAIRS AND MAINTENANCE. IT WAS THE FURTHER SUBMISSION THAT THE CAPACITY OF THE ASSESSEE DID NOT INCREASE NOR WAS THERE ANY ENDURING BENEFIT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN RE GARD TO THE ISSUE OF BAD DEBTS AS IT IS NOTICED THAT THE ASSESSEE HAD OFFERE D THE AMOUNT AS INCOME IN THE EARLIER YEARS AND AS IT IS NOTICED THAT THE ASSESSE E HAS WRITTEN OFF THE AMOUNTS IN ITS ACCOUNTS AND AS THESE FINDINGS OF THE LEARNED C IT(A) HAD NOT BEEN DISLODGED BY THE ASSESSING OFFICER OR BY THE REVENUE WE ARE OF THE VIEW THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TRF LTD . REFERRED TO SUPRA THE FINDING OF THE LEARNED CIT(A) ON A RIGHT FOOTING AN D DOES NOT CALL FOR ANY INTERFERENCE. I.T.A. NO.770/MDS/2011 5 9. IN REGARD TO THE MOULD DEVELOPMENT EXPENDITURE AS THE FINDING OF THE LEARNED CIT(A) THAT THE REPLACEMENT IS AKIN TO CONS UMABLES OR REPAIRS AND MAINTENANCE AND NO ENDURING BENEFIT HAS ACCRUED TO THE ASSESSEE AND HAS NOT BEEN DISLODGED WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ALSO ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 11. THE ORDER WAS PRONOUNCED IN THE COURT ON 14/07/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 14 TH JULY 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE