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2020 (3) TMI 343
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....Tax Appeal No. 1265 of 2017 relates to assessment year 2001-02, Income Tax Appeal No. 1469 of 2017 relates to assessment year 2003-04. 4. However, for the sake of convenience, we may refer to the facts in Income Tax Appeal No. 1265 of 2017. 5. This appeal under Section 260A of the Income Tax Act, 1961 ("the Act" for short) is preferred by the revenue against the order dated 26.8.2016 passed by the Income Tax Appellate Tribunal, Mumbai "H" Bench, Mumbai ("Tribunal" for short) in Income Tax Appeal No. 7175/Mum/2010 for the assessment year 2001-02. 5.1. As already noted, Income Tax Appeal No. 1469 of 2017 assails the same order but arising out of Income Tax Appeal No. 7176/Mum/2010 for the assessment year 2003- 04. 6. Revenue has p....
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....sessee had claimed bad debts of Rs. 13,01,04,359.00. While in three cases, assessee had written off inter corporate deposits, in respect of four cases, the written off of bad debts pertains to advances given either for purchase of vehicles or plant and machinery. Referring to Section 36(1)(vii) of the Act, Assessing Officer took the view that unless there was an admitted debt it could not be allowed as bad debt when it is written off. Besides, the debt must be incidental to the business or profession of the assessee. Taking such view, Assessing Officer issued notice to the assessee to show cause as to why the amounts covered by the bad debits should not be added to the income of the assessee. Assessee in its reply stated that writing ....
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....me Court held that after 1.4.1989, it was not necessary for the assessee to establish that the debt in fact has become irrecoverable. It was enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Noticing that assessee had written off all the debts in question as irrecoverable in its accounts, Tribunal set aside the findings of the first appellate authority affirming the view of the Assessing Officer and allowed the claim of the assessee. Aggrieved, revenue is in appeal before us raising the above two questions for consideration. 12. Submissions made have been duly considered. 13. Chapter IV of the Act deals with computation of total income. Heads of income are mentioned in Section 14. Profits and gain....
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.... this aspect is relevant, Section 36(1)(vii) as it existed prior to 1.4.1989 and after 1.4.1989 are extracted hereunder:- "Pre-1st April, 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-1st April, 1989: 36. Other deductions-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with....
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....use, as held by this Court, decision to treat a debt as a bad debt is a commercial or business decision of the assessee. Recording of a debt as a bad debt in his books of accounts by the assessee prima facie establishes that it is a bad debt. If the Assessing Officer disputes that the onus would be on him to prove otherwise. 18. Adverting to the facts of the present case, Tribunal recorded from the materials on record that admittedly, the debt in question had been written off as irrecoverable in the accounts of the assessee. 19. If that be the position, then there is compliance to the requirement of Section 36(1)(vii) of the Act and the amount covered by the bad debts would be entitled to be deducted vide computing income under Sectio....