TaxTMI 
TaxTMI 
2019 (12) TMI 435
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....ed in confirming addition made on account of bad debts of Rs. 2706697/- by the Assessing Officer. 2.That the Learned Commissioner of Income Tax (Appeals) erred in confirming addition on the ground that whole of the amount of debtors was not written off as bad debts, but only part of debtors was written off. 3.That the Learned Commissioner of Income Tax (Appeals) erred in confirming addition on the ground that the position of the debtor of whose part amount is written off is good on the basis of return of income filed by the debtor company. 4.That the learned Commissioner of Income Tax (Appeals) as well as Assessing Officer failed appreciate submission of the assessee company and made addition. 05. That addition made is not based on the facts of the case and needs to be deleted. 6.That the assessee company craves leave to add, alter, and/or delete any of the grounds of appeal 4. Brief facts as culled out from the records are that the assessee is Private Limited Company engaged in manufacture of motors and job work. Loss of Rs. 99,35,724/- declared in the e-return of income filed on 30.09.2008. Case selected for scrutiny through CASS fo....
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.... vehemently argued supporting the written submissions filed on 13.06.2019 & 25.07.2019 and submitted that during the period 01.04.2005 to 31.03.2008 the appellant-assessee had entered into transactions with Parag Fans & Cooling Systems Pvt. Ltd. (in short PFCSPL). On some occasions, it supplied goods to PFCSPL and on some occasions, it purchased goods from PFCSPL. However, for all types of transactions, one common account was maintained which is placed at page no.21 to 25 of our paper book. He further submitted that after various reminders and communications with PFCSPL for recovery of its outstanding balance finally on 25.02.2008, the PFCSPL confirmed that out of the total outstanding amount of Rs. 31,90,879/- it will pay only of Rs. 4,84,130/-. For this reason bad debts of Rs. 27,06,697/- is booked as expenses in the profit and loss account. 7. Ld. counsel for the assessee further referring to the following judicial pronouncements submitted that as per the provisions of section 36(1)(vii) of the Act assessee is fully eligible for claim of deduction in respect of the bad debts written off by it:- i) CIT vs. Mysore Sugar Co Ltd. (1962) 46 ITR 649 (Hon'ble Supreme Co....
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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 or whether writing off the debt as irrecoverable in the accounts was sufficient. Hon'ble Court HELD that:- (i) The position in law is well-settled. After 1.4.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of companies, the provision is deducted from Sundry Debtors. (ii) As the AO has not examined whether the debt has, in fact, been written off in accounts of the assessee. the matter is remitted to the AO for de novo consideration of the above-mentioned aspect only and that too only to the extent of the write off. 13. Examining the facts of the instant appeal in the light of the above judgment we find that though it was not necessary for the assessee to establish that the debts, in fact, have become irrecoverable. Still the assessee has pl....
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....see company and made addition/disallowance. 5.That addition/disallowance made is not based on the facts of the case and needs to be deleted. 17. Brief facts as culled out from the records are that the assessee is Private Limited Company engaged in manufacture of pumps, foot valve, electric motors and job work. The return of income declaring total income of Rs. 60,41,950/-. As the case selected for scrutiny, necessary notices u/s 143(2) & 142(1) of the Act served upon the assessee. Learned Assessing Officer (in short Ld. AO) completed the assessment, assessing income at Rs. 98,75,113/- after making various additions totaling to Rs. 38,33,163/-. 18. Against this addition the assessee preferred an appeal before the Ld. CIT(A) and partly succeeded. 19. Now the assessee is in appeal before the Tribunal raising two grounds, firstly relating to disallowance of excise duty payable at Rs. 19,55,702/- and secondly for disallowance of provisions of warranty of Rs. 13,59,256/-. 20. Apropos to Ground No.1 & ground no.2 relating to disallowance of excise duty payable at Rs. 19,55,702/-. Ld. counsel for the assessee submitted that vide order of Addl. Commissioner of Customs, ....
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....preme Court) v. CIT vs. Ganga Galss Works (P) Ltd. (2005) 276 ITR 394 (All) vi. Standard Mills Co. Ltd. vs. CIT (1998) 229 ITR 366 (Bom) vii. CIT vs. B& A Plantations and Industries Ltd. (2002) 257 ITR 694 (Gua) viii. CIT vs. KR. Ganesh (2003) 259 ITR 174 (Mad.) ix. CIT vs. Kishor Chand Shricharan Lal (2004) 266 ITR 37 (All) 22. Per contra Ld. DR vehemently argued supporting the order of both lower authorities and prayed for sustaining the disallowance. 23. We have heard rival contentions and perused the record placed before us and also gone through the judgment referred and relied by the ld. counsel for the assessee. 24. Apropos ground No.1 & 2 relating to excise duty payable of Rs. 19,55,702/-. we observe that the alleged amount was raised as a demand by the Additional Commissioner Custom and Central Excise and Service Tax, Indore vide order dated 31.03.2011 which was served on the assessee on 08.04.2011. On the basis of this order assessee booked the expenditure in the profit and loss account. This demand was paid in two parts; Firstly Rs. 5,44,680/- was adjusted from the excise duty deposit account during the F.Y. 2011-12 it....
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..... 2018-19 and for the remaining amount the claim was reversed in the excise records. Therefore, the entire amount which was claimed as expenditure during the assessment year 2012-13 has been brought to tax F.Y. 2018-19. We, therefore, in the given facts and circumstances of the case are of considered view that the assessee has rightly claimed the excise duty payable at Rs. 19,55,702/- as expenditure which is raised on account of demand pertaining to earlier years. In the result ground no.1 & 2 of the assessee's appeal is allowed. 27. Apropos to Ground No.3 relating to disallowance of Rs. 13,59,256/- made by the Ld. AO on account of provisions of warranty, Ld. counsel for the assessee referred to the following written submission placed before us: 1.01 That, the appellant is engaged in the business of manufacturing and sales of pumps, foot valves, electric motors and job work thereof. 1.02 That, during the financial year 2009-10, the appellant company had started its Pumps manufacturing facility at Karad. The appellant had entered into a manufacturing contract with one company namely MIs. Kirloskar Brothers Ltd. (KBL). The pumps so manufactured were supposed to b....
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....provision of Rs. 12,60,252/-, the appellant company has actually also incurred a sum of Rs. 9,04,3091- during the subsequent financial year i.e. F.Y. 2012-13 relevant to A.Y. 2013-14 and the remaining excess provision of Rs. 3,55,943/- has been written back and recognized as income by the appellant company in such financial year 2012-13 itself. 2.00 Your Honours, on a perusal of the Schedule-B of the audited financial statements of the appellant company, at page No.30 of PB, it shall be observed that as against the provision for warranty of Rs. 12,60,252/- for the previous year under consideration, the appellant has also claimed the similar warranty expenses in the immediately preceding previous year i.e. financial year 2010-11 at Rs. 8,34,1291-. It is submitted that such provision ofRs. 8,34,1291- is forming part of the short term provisions for Rs. 23,37,035/- shown in the previous year column of the financial statements of the appellant at page 22 of the Paper Book. It shall thus be appreciated that the finding of the learned AO to the effect that such -warranty claim was not made by the appellant company in the earlier years is patently incorrect. 3.00 Honours....
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....ny to KBL under the 'KBL' branding and logo. On the basis of the historic data and past experience it was anticipated that 3 to 4% of the pumps manufactured during the financial year, comes back for repairing or servicing. In order to meet such expenses provisions is created under the head "warranty in each year and the actual expenses incurred during the year are adjusted against the provision. Any amount left is credited back as income. During the year under appeal, Learned assessing officer on examining the records observed that during the year against the provisions of warranty of Rs. 13,59,956/-, no actual expense was incurred or paid during the year. In view of this the Ld. AO considered the nature of the warranty as contingent liability. The assessee was also unable to prove with documents about the basis of such provision in absence of the information for the exact no. of pumps manufactured during the year for which warranty is made. 30. During the course of hearing Ld. counsel for the assessee submitted that in subsequent years substantial amount has been incurred on account of repairing and servicing of the pumps. However, this fact needs to be verified with the necess....