TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 317
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....e income returned by the assessee and assessed the total taxable income at Rs. 5,40,22,640/-. Aggrieved by the assessment order dated 09-12-2011, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order partly accepted the appeal of the assessee. Now, both the Revenue and the assessee are in appeal against the findings of Commissioner of Income Tax (Appeals) before the Tribunal. ITA No. 870/PN/2014 (Appeal by the Revenue) 3. First, we will take up the appeal of Revenue. The Revenue in appeal has raised 5 grounds. All the grounds in the appeal of the Revenue relate to the write off of bad debts. The assessee has claimed Rs. 40,45,951/- as bad debts written off. The Assessing Officer disallowed the same on the ground that with most of the parties, the assessee has done transactions in the subsequent years and all the transactions in respect of which debts have been written off were made by the assessee just one year before. All the parties are in existence and doing their business. Hence, dues therefrom cannot be treated as bad. In appeal, the Commissioner of Income Tax (Appeals) accepted the con....
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....ebt has become bad whereas the real objective of this amendment was to eliminate the dispute as to the year in which a bad debt was to be allowed. 3. On the facts and in the circumstances of the case, learned CIT(A) has not appreciated that even after the amendment w.e.f. 01.04.1989, the allowance is only in respect of 'bad debt' and 'not just a debt written off'. 4. On the facts and in the circumstances of the case, it cannot be said that the assessee exercised its honest judgment in writing off the debts in question as Bad debts. 5. The appellant craves to add, amend or alter any of the above grounds of appeal. 7. We find that the issue raised by the Department in present appeal is similar to the issue that was raised in the assessment year 2007-08. The Tribunal adjudicated the matter as follows: "9. We have carefully considered the rival submissions. Section 36(1)(vii) of the Act provides that subject to the provisions of sub-section (2) of section 36 of the Act, the amount of any bad debt or part thereof which is written-off as irrecoverable in the accounts of the assessee shall be allowed as deduction in computing the income of the relevant previous ye....
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.... assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable. That position got altered by deletion of the word "established", which earlier existed in section 36(1)(vii) of the Income-tax Act, 1961 ("the Act", for short). 3. For the sake of clarity, we reproduce hereinbelow the provisions of section 36(1)(vii) of the Act, both prior to April 1, 1989 and post April 1, 1989 : "Pre-April 1, 1989 : 36. Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- . . (vii) subject to the provisions of sub-section (2), the amount of any debt, or part thereof, which is established to have become a bad debt in the previous year. Post-April 1, 1989 : 36. Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- . . (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the ac....
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....dras High Court relied upon by the Revenue in the case of South India Surgical Co. Ltd. (supra) is concerned, the same, in our view, does not help the Revenue. The Hon'ble Supreme Court in the case of T.R.F. Ltd. (supra) has opined that post-01.04.1989, it is no longer necessary for the assessee to establish that the debt, in-fact has become irrecoverable before claiming deduction u/s.36(1)(vii) of the Act. Thus, canvassing to the contrary, based on the judgment of the Hon'ble Madras High Court in the case of South India Surgical Co. Ltd. (supra), in our view, does not help the Revenue. 14. In conclusion, we hold that on facts and also in law, the entire claim of the assessee for write-off of bad debts u/s. 36(1)(vii) of the Act amounting to Rs. 40,89,838/- was justified and the CIT(A) ought to have allowed it, instead of restricting it to Rs. 22,56,998/- only. Therefore, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the entire disallowance of Rs. 40,89,838/-." We find that there is no change in the facts in the impugned assessment year except for the amounts. The ld. DR has not been able to controvert the findings of the Tribunal on this issu....
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....cted the contention of the assessee in a mechanical manner without appreciating the bills and invoices furnished by the assessee. 10.2 As regards disallowance of un-reconciled balance of Rs. 35,000/- of sundry creditors the ld. AR submitted that the addition has been made by taking into account only the credit balances. There are both debit and credit entries. The authorities below ought to have taken into effect of both the transactions. The ld. AR in support of his submissions referred to the details of creditor's balance reconciliation at pages 75 to 78 of the paper book. 11. On the other hand the ld. DR vehemently supported the findings of the authorities below and prayed for dismissing the appeal of the assessee. The ld. DR submitted that the expenditure incurred by the assessee towards Bihar Relief Fund is not out of any business expediency, therefore, the same should be disallowed. In so far as expenditure towards computer repairs is concerned the assessee was not able to substantiate the expenditure with supporting documents, therefore, the same was rightly disallowed by the authorities below. 12. Both sides heard. Orders of the authorities below perused. The first groun....