TaxTMI 
TaxTMI 
2018 (12) TMI 218
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....le of the flats was Rs. 12,53,30,150/- In respect of the Assessment Year 2003-2004, the assessee filed the return of income claiming a sum of Rs. 6,03,08,000/- as 'bad debts', which are written off. The Assessing Officer disallowed the claim for bad debts. Aggrieved by the same, an appeal was filed before the CIT (Appeals)-VI, Bangalore, which was allowed. The claim of the assessee was allowed and the addition was deleted. Aggrieved by the same, the Revenue filed the appeal before the Tribunal, wherein the appeal was dismissed. Hence, the present appeal. 2. ITA No.734 of 2009 is for the Assessment Year 2003-2004 and ITA No.735 of 2009 is for the Assessment Year 2004-2005. 3. By the order dated 02.06.2010, ITA No.734 of 2009 was adm....
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....lding that during the assessment year 2003-04 the Appellate Commissioner had allowed the claim of Rs. 6,03,08,000/- as a bad debt and therefore the carried forward and set off of loss as claimed by the assessee for the current assessment year 2004-05 has to be allowed? 5. Learned counsels submitted that the substantial question of law as framed in ITA No.735 of 2009 being for the Assessment Year 2004-2005 would be consequential on the answering of the substantial questions of law raised in ITA No.734 of 2009. Hence, learned counsels have addressed arguments insofar as ITA No.734 of 2009 is concerned. 6. The plea of the assessee is that it is a private limited company consisting of two Directors. That even though there was a partition effe....
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....usion that it cannot be said that the balance of sale consideration is not recoverable. That the only ground that there could be future disputes/quarrels/ differences between the members of HUF cannot constitute a ground to hold that the same are bad debts. That the future disputes are only apprehended and it is not a definite event. That even before the debt became due, it came to be written off for the very same year in which the debt arose. Therefore, he came to be conclusion that all these are created documents and hence, disbelieved the case of the assessee. The CIT (Appeals) considered the documents produced by the assessee. In terms of the partition effected, it held that the assessee came to know that the debts could not be ....
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....t justified. He placed reliance on Section 36(1)(vii) of the Income Tax Act, to contend that as long as the bad debts are shown in the books of accounts, no other question would arise for consideration. The bad debts having been reflected in the books of accounts, the same requires to be allowed. That there is no law prohibiting writing off the bad debts even in the very same year it became due. His further submission is that the Central Board of Direct Taxes (CBDT) have issued Circular No.12 of 2016 with regard to "admissibility of claim of deduction of Bad Debt under Section 36 (1)(vii) read with Section 36(2) of the Income Tax Act, 1961". While referring to the judgment of the Hon'ble Supreme Court in the case TRF LTD. vs. COMMISSIONER ....
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....paid in respect of issuance against risk of damage or destruction of stocks or stores used for the purposes of the business or profession; xxx xxx (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 accounts of the assessee for the previous year]; " 12. Therefore, the provisions of law being clear and unambiguous, we are of the view that the CIT (Appeals) as well as the Tribunal have rightly applied the law and have granted relief to the assessee. The contention that the documents produced cannot be accepted was negatived by both the authorities. The CIT (Appeals) came to the conclusion that no such ambiguity came to be indicated by the Assessing Off....
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....crued to him. By adopting a device, if it is made to appear that income which belonged to the assessee had been earned by some other person, that income may be brought to tax in the hands of the assessee, and if the income has escaped tax in a previous assessment a case for commencing a proceeding for reassessment under section 147(b) may be made out. Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. A taxpayer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not upon considerations or morality, but on the operation of the Income-tax Act. Legislative injunction in taxing statues may not, except on peril of pen....