TaxTMI 
TaxTMI 
2013 (11) TMI 965
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....thout any merits or justification requires to be granted as business loss and the order of CIT (A) ought to be quashed. 2. Learned CIT (A) erred in not appreciating the fact that the Hon'ble ITAT in Para 4 of the order after considering the contention of the ld. A.R. of the appellant issued directions that even if the claim of grant of deduction in respect of the bad debts is not admissible the same shall be still deductible as trading loss. Ld. CIT (A) in complete disregard of the direction of the Hon'ble ITAT has held the claim of the appellant to treat the impugned amount as trading loss to be beyond the mandate given in the order of the Hon'ble ITAT. This action of ld. CIT (A) being highly improper deserves to be quashed. 3. Learned CIT (A) has erred in law and on facts in disallowing the claim also on merits ignoring the submissions of the appellant that the amount disallowed being irrecoverable export sale proceeds was incidental to the carrying on of the business of the appellant that deserved to be allowed under the provisions of section 28 of the act as business/trading loss. 4. Learned CIT (A) has erred in law and on facts in confi....
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....isallowance of the bad debts will affect the business profit to be computed in accordance with Explanation (baa) given after section 80HHC. Thus this ground is allowed for statistical purposes" 3.2 In consequence thereupon, the AO has asked the assessee to establish the claim of deduction in the light of the "Explanation" to Section 36(1)(vii) of IT Act. According to AO, as per the "Explanation" any bad debt written off or irrecoverable in the accounts of the assessee is not be allowed if a 'provision' has been made in respect of the bad or doubtful debt. The AO has given a finding that on perusal of P& L Account and Balance- Sheet of the assessee ending on 31st March, 1996, it was found that the assessee had debited an amount of Rs.2,70,22,276/- as a bad debt reserve, which was credited by way of making a 'provision' in the balance sheet as bad debt reserve. According to AO, by making a 'provision' the assessee has a possibility or a ray of hope of the recovery of the debts. Those debts were not written off as bad debts in the books of account. Therefore, as per AO, the assessee had not established that all those debts have become finally a bad debt so irrecoverable. In the res....
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.... has not given any finding on the said issue and the direction was to reconsider the issue of deduction of bad debt in the light of Explanation to Section 36(1)(vii) of IT Act. Therefore, it was concluded by learned CIT(A) that he was of the considered opinion that the impugned alternate plea of considering the bad debt as "trading loss" was beyond the mandate given by the Tribunal. For this legal proposition, reliance was placed on Indian Steel and Wire Products, 208 ITR 740 (Kol) and Mahindra & Co., 269 ITR 426 (Raj.). According to learned CIT(A) in those decisions it was held that if a matter has been remanded with specific direction to re-compute, then the AO is not justified in adjudicating upon the issue other than the issue restored back. Reliance was also placed on a decision of State Bank of Indore, 29 ITR 459 (MP), wherein it was held that the lower authorities have no jurisdiction to pass any order contrary to the directions given by the Tribunal. In spite of fact that learned CIT(A) had held that the alternate plea was beyond the purview of the appellate proceedings, he had also discussed the merits of the issue in the following manner: "6.2 As regards t....
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....write off in such subsequent assessment year. During the course of assessment proceedings u/s. 143(3) r.w.s.250, nobody appeared on behalf of the appellant and no such alternate claim for allowing the impugned amount as trading loss was made. Any claim u/s. 28 can be made provided such a claim is not falling u/s.30 to 36 of the LT. Act. In the instant case the appellant in fact made the claim u/s. 36(1)(vii) and having failed there, the appellant cannot take recourse to section 28. Reliance is placed in this regard in the case of CIT vs. Carborundum Universal Ltd. 110 ITR 621 (MAD.), wherein it was held. " in this particular case, as we have pointed out already, there can be no dispute about the fact that the nature of payment is one as described in S.36(1)(iv) by the said payment cannot be deducted under section 36(1)(iv) because it is not a contribution to an approved superannuation fund. In view of this position it cannot be held though the payment is not deductible under Section 36(1)(iv) still it can be deducted under Section 28 on the general principle of arriving at the true profits and gains of the business in a commercial sense There....
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....btful debt should not be allowed. Even, before us the argument of learned AR is not that there was no provision for bad and doubtful debt made by the assessee. Even, the Tribunal has restored the issue back to the file of the AO with the direction to consider the latest amended provision of the Act because an Explanation was inserted by Finance Act, 2001. It is worth to mention that one thing is clear that the direction of the Tribunal was limited to the application of the Explanation to Section 36(1) of IT Act. Since, the amended provisions are unambiguous, therefore, the assessee is not entitled for claim of bad debt under the facts and circumstances of the case. This ground of the assessee is dismissed. 7.1 As far as the alternate claim of the assessee, that the same is to be allowed as a "trading loss", is concerned, we have noted that the learned CIT(A) has commented that the assessee was unable to furnish any detail regarding the actual plight of the debt. No claim was made that the amount in question was a "trading loss". According to us, once a particular claim has been expressly dealt with under a particular provision of the statute then the same should be considered in....
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.... has noted that as per the original assessment completed u/s. 143(3) of IT Act, the deduction u/s.80HHC was allowed at Rs.1,81,50,397/-. This was the calculation which was furnished by the assessee along with the return. Only a minor arithmetical correction was made. Subsequently, on account of an assessment made u/s. 143(3) r.w.s. 250, order dated 20th of August, 2001, the deduction u/s. 80HHC was allowed at Rs.1,56,66,460/, which was equal to the income available to cover-up the said deduction u/s. 80HHC of IT Act. Now, the AO is again required to re-compute the deduction u/s. 80HHC because the Tribunal has directed that in a situation if a bad debt is not to be allowed then the disallowance of bad debt is going to effect the "business profit" of the assessee. 8.1 In this connection, the AO has noted that the assessee is a "trading exporter". The Export turnover was at Rs.3,18,68,248/-. The "Export Profit" was arrived at after reducing the direct cost and indirect cost attributable to the export turnover, we refer Sec. 80HHC(3)(b). According to AO, the "profit of the business" means the profit computed under the head "profits and gains of the business". According to AO, the as....
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....d come to our notice as per the paper book page 13 containing the written submission made before the learned CIT(A), relevant portion is reproduced below: "The assessee company's total export turnover for the relevant year was Rs.6,01,49,288/- out of which the assessee received export proceeds of Rs.3,18,68,248/- during the year. On this amount the company claimed deduction u/s. 80HHC of the Act. Out of remaining Rs.2,82,81,040/- the assessee company claimed bad debt of Rs.2,70,22,276/-" 9.1 Undisputedly, the assessee had debited an amount of Rs.2,70,22,276/- as "bad debt reserve account" which was transferred to balance sheet. The balance sheet was credited by way of a provision of bad debt reserve. As we have already held that the expression "provision for bad and doubtful debt" should not be construed as "writing off bad debt". Where the export out of India is of 'trading goods' , the profits derived from such export shall be entitled for the deduction, but as per explanation (b) under sub-sec (4C) of sec. 80HHC the export turn over means the sale proceeds brought into India in convertible foreign exchange. When the admitted factual position is that the amo....
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....sed. B. ITA No. 997/Ahd/2012 (for A.Y. 1996-97) 10. The assessee has challenged the levy of penalty confirmed by learned CIT(A)-XI, Ahmedabad of Rs. 1,20,47,061/- as per the order dated 18.07.2011. At the outset, it is worth to mention that the learned CIT(A) had passed an ex-parte order. As per the penalty order u/s. 271(1)(c), dated 30th of December, 2010, the assessee has deliberately claimed bad debt of Rs.2,70,22,276/- which according to A.O. was not a genuine claim. We have noted that few notices were issued but those remain not complied with, hence the AO had no alternative but to impose penalty on the impugned addition. Resultantly, a penalty of Rs.1,20,47,061/- was imposed. 11. When the matter was carried before learned CIT(A), it was held as under: "It is observed that the assessee has not furnished any reply in response to three notices issued by AO during the penalty proceedings and even before me during the appellate proceedings. In view of non-compliance, the AO had no alternative but to impose the penalty. It is now well settled that Explanation 1 to Sec. 271(1)(c) of the Act automatically comes into operation when in respect of any facts mat....