ITO, NEW DELHI vs. M/S. NILGIRI FINANCIAL CONSULTANTS LTD., NEW DELHI

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ITA 4/DEL/2017Status: DisposedITAT Delhi04 July 2019AY 2012-135 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee had complied with the conditions of Section 36(1)(vii) of the Act, as the bad debt written off represented income already offered to tax in prior years. The contention regarding admission of additional evidence was also rejected.

What were the facts?

The assessee claimed a deduction of Rs. 4.07 crores for bad debt written off, stating the amount was offered for tax in earlier years. The Assessing Officer disallowed this claim, but the CIT(A) deleted the addition.

What were the issues?

Whether the bad debt written off, which was previously offered to tax, is eligible for deduction. Whether the CIT(A) wrongly admitted additional evidence.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,

Before: SHRI N.K. BILLAIYA, & MS. SUCHITRA KAMBLE

For Appellant: Shri Gautam Jain, Adv, Shri Lalit Mohan, CA
Hearing: 04.07.2019Pronounced: 04.07.2019

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:

1.

With this appeal by the Revenue has challenged the correctness of the order of the ld. CIT(A) – 6, Delhi dated 20.10.2016 pertaining to A.Y 2012-13.

2.

The sum and substance of the grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs. 4.07 crores made by the Assessing Officer u/s 36(1)(vii) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short].

3.

Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed deduction of Rs. 4,07,53,938/- on account of bad debt written off. The assessee was asked to justify its claim and in its reply, the assessee stated that this amount had already been offered for tax in the earlier years and so has been reduced from the income.

Reply of the assessee did not find any favour with the Assessing Officer who made the addition of Rs. 4,07,53,938/-.

4.

The assessee carried the matter before the CIT(A) and explained that all the necessary evidences were furnished during the course of assessment proceedings but the Assessing Officer has not considered the documentary evidences and has made the addition. It was brought to the notice of the CIT(A) that the assessee has complied with all the conditions u/s 36(1)(vii) of the Act and therefore, the bad debt written off should be allowed as such.

5.

After considering the facts and detailed submissions and drawing support from the decision of the Hon'ble Supreme Court in the case of TRF Limited 190 Taxman.com 391, the ld. CIT(A) deleted the impugned disallowance.

6.

Before us, the ld. DR strongly supported the findings of the Assessing Officer.

7.

Per contra, the ld. AR reiterated what has been stated before the lower authorities.

8.

We have given a thoughtful consideration to the orders of the authorities below. Facts on record show that during the F.Ys 2007-08 and 2008-09, the assessee had provided services to its client Max New York Life Insurance Limited [MAX] and offered the same as income and paid taxes thereon. However, the assessee was not able to recover the whole amount from MAX and accordingly, a sum of Rs. 4,07,53,938/- was written off as bad debt. In our considered opinion, the assessee has successfully demonstrated that it has complied with the conditions of section u/s 36(1)(vii) of the Act. Hence, no interference is called for with the finding of the CIT(A).

9.

The revenue has also agitated that the CIT(A) has admitted additional evidences in violation of Rule 46A of the Rules. We do not find any merit in this contention of the revenue since the evidences furnished by the assessee were transmitted to the Assessing Officer by the CIT(A) calling for remand report and the Assessing Officer, in his remand report, admitted vide letter dated 28.10.2014 that all the relevant evidences and explanations were before him. Therefore, in our considered opinion, the CIT(A) has not considered fresh/additional evidences.

10.

In the result, the appeal of the revenue in is dismissed.

The order is pronounced in the open court on 04.07.2019.

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