2012 (5) TMI 29

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....ct in law in allowing the claim of assessee as bad debts written off amounting to 5.12 crores u/s 36(1)(vii) of the Act? 2. Whether provisions of Section 36(1) are at all applicable to the present case?   2. The aforesaid appeal relates to the assessment year 2003-04 and arises in the case of Auto Pin India Ltd., the respondent-assessee.   3. The respondent-assessee is engaged in manufacture and sale of automobile parts. For the assessment year in question, the assessee on 21st November, 2003, had filed its return of income declaring a loss of Rs.19,88,20,459/-. By assessment order dated 10th March, 2006, the total income of the assessee was assessed at loss of Rs.7,94,51,570/-. One of the major additions made by the Assessi....

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....at the Assessing Officer had not disputed the factum that bad debts written off, relate to trading transactions. The case of the assessee was that the transportation cost and cost of lifting the rejected goods itself was prohibitive. The contention of the assessee was accepted. 5. The appeal preferred by the Revenue has been dismissed by the tribunal. The tribunal went into the factual matrix of the case and observed that full details of bad debt along with the dates on which invoice for sale was raised, copy of bill and copy of accounts for earlier years with efforts made by the assessee for recovery, were filed before the Assessing Officer, but these were ignored. The assessee had given full details of the transactions with the respect....

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....f such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee." 8. A combined reading of the aforesaid two clauses shows that two conditions are stipulated. (i) The amount should be written off as irrecoverable in the accounts of the assessee for the previous year. (ii) The amount, which is sought to be written off, should have been taken into account as income of the assessee in the previous year relevant to the assessment year or in the earlier previous years. 9. The tribunal has noticed that the assessee had made sales of Rs.231.57 crores to the parties in the seven previous years. In some cas....