IBM INDIA PVT. LTD.,,BANGALORE vs. DCIT, BANGALORE

Page 2 of (iii) Whether the tribunal was correct in holding that the expenses like freight, telephone charges and insurance attributable to the delivery of articles or things on computer software outside India reduced from export turnover should be reduced from total turnover while computing deduction under Section 10A of the Act? (iv) Whether the tribunal was correct in holding that the assessee is entitle for write off of a sum of Rs.12,72,91,172/- as bad debts before the debt becoming bad merely on the write off of the assessee without following the law laid down by the Apex Court in the case of TRF Ltd., 323 ITR 397 and recorded a perverse finding? (v) Whether the tribunal was correct in allowing the write off as bad debt in the facts and circumstances of the present case, when invoices were raised few months prior to the write off of the debtors were reputed companies including Government undertakings and business was continued with the debtors by the assessee without establishing the debt has become bad and recorded a perverse finding?”

Hon’ble High Court after considering various decisions observed as under: “4. Thus, from perusal of the aforesaid relevant extract of the order passed by the tribunal, it is axiomatic that the tribunal has not recorded any specific finding whether the assessee has written off bad debt in the books of accounts as irrecoverable. Therefore, the order passed by the tribunal to the extent it records the finding with regard to the bad debts is hereby quashed and the matter is remitted to the tribunal to decide the issue afresh after recording a specific finding whether or not the assessee has written off the bad debt in the books of accounts as irrecoverable. Accordingly, substantial question of law Nos.4 and 5 are answered.”

Based on the above direction this Tribunal called upon the assessee to file details of the bad debts that were written off in the books of account as irrecoverable. The assessee vide Application dated 20/06/2022 filed petition for admission of additional evidence, wherein, the bona fide efforts taken by the assessee before writing off the debts to be bad and various ledger accounts have been filed that runs into 432 pages. It was submitted that these additional Page 3 of Hon’ble High Court.

The Ld.DR submitted that, in the event the additional evidences are being admitted the issue may be remanded to the Ld.AO, as the voluminous documents file needs to be verified.

The Ld.AR did not object for the additional evidence to be remanded to the Ld.AO for proper verification and appreciation of the facts in order to consider the claim of assessee.

Considering the submissions by both sides, we are of the opinion that the additional evidence filed by assessee needs to be admitted and has to be remanded to the Ld.AO. The Ld.AO is directed to verify these documents in the light of the decision of Hon’ble Supreme Court in case of TRF Ltd vs. CIT reported in (2010) 323 ITR 397 and decisions of Hon’ble Karnataka High Court in case of CIT vs. Fusion Software Engineering (P.) Ltd reported in (2012) 18 taxman.com 57 and CIT vs Millenia Developers (P) Ltd reported in (2018) 100 taxman.com 369. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Accordingly the issue remanded by Hon'ble High Court stands partly à allowed for statistical purposes. In the result appeal filed by assessee stands allowed. Order pronounced in open court on 30th June, 2022.