ADDL. CIT, NEW DELHI vs. M/S. NORTEL NETWORKS INDIA PVT. LTD., NEW DELHI

PER BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER

1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs.71,03,752/- out of total disallowance of bad debt of Rs.7,58,74,347/- even when the assessee had not 36(1)(vii) r.w.s. 36(a) of the Income Tax Act 1961 (the Act)? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs.71,03,572/- out of total disallowance of bad debt of Rs.7,58,74,347/- u/s 36(1)(vii) of the Act ignoring the fact that the assessee had not furnished any evidence either before the AO or CIT(A) that bad debts of Rs.71,03,572/- were actually written off in the books of accounts? 3. Whether in facts and circumstances of the case and in law, the Ld. CIT(A) is legally justified in admitting additional evidence under Rule 46A of the Income Tax Rules 1962 (the Rule) even when the case of the assessee did not fall in clause (a) to (D) of Rule 46A of the Rule? 2.1. During the course of hearing, the Ld. AR submitted a computation of tax effect in respect of the disputed amount of Rs.71,03,572/- as under:-

Particulars Reference Amount (in INR) Returned Loss (-)3,04,13,254 Assessed Loss (-)2,95,52,230

Disputed addition (A) 71,03,572 Tax @30% (B=30%*A) 21,31,072 Surcharge @7.5% (C=7.5%*B) 1,59,830 Cess @ 3% [D=3%*(B+C) 68,727 Notional Tax Effect on (E=B+C+D) 23,59,629 Disputed Addition 2.2. On perusal of the above computation of the tax effect and grounds, it was noticed that in the appeal filed by the Revenue, admittedly, has a tax less than Rs.60 lakhs and the same falls into the category of low tax effect appeals after the enhanced monetary limits of Rs.60 lacs, for which the appeal is to be filed by the Department before this Tribunal, as laid down by the CBDT vide Circular Nos.5/2024 dated 15.03.2024 and 09/2024 dated 17.09.2024. The Ld. DR did not controvert to the above fact.

3 In the light of the aforesaid, the appeal of the Revenue is dismissed being a low tax effect appeal with a rider that in case the issue falls in the category of exceptions to the low tax effect appeals or if there is any valid reason, the Department shall be entitled for restoration of the appeal.

Order pronounced in the open court on 11/11/2024.