DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(2), BENGALURU vs. M/S. SNOWMAN LOGISTICS LTD., BENGALURU

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ITA 517/BANG/2017Status: DisposedITAT Bangalore28 September 20172 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 after the amendment to Section 36(1)(vii), it is sufficient for the assessee to write off bad debts in their books of accounts. The Assessing Officer's objection that no effective steps were taken to recover the debts was not justified.

What were the facts?

The revenue appealed against the CIT(A)'s order, arguing that the assessee failed to establish that debts had become bad. The CIT(A) had followed the Supreme Court judgment in TRF Limited.

What were the issues?

Whether the assessee needs to prove debts have become bad or only write them off in books for claiming bad debt deduction. Whether the CIT(A) correctly applied the TRF Limited judgment.

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, “A” BENCH : BANGALORE

For Appellant: Shri K.P. Srinivas, CA
For Respondent: Shri B.R. Ramesh, JCIT (DR)
Hearing: 20.09.2017Pronounced: 28.09.2017

Date of hearing : 20.09.2017 Date of Pronouncement : 28.09.2017 O R D E R

Per Shri A.K. Garodia, Accountant Member

1.

This is a revenue’s appeal directed against the order of ld. CIT(A), Bangalore-6, Bangalore dated 11.11.2016 for Assessment Year 2012-13.

2.

The grounds raised

by the revenue are as under. “1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case.

2. On the facts and in circumstances of the case, the CIT(A) erred in applying the judgment of the Hon'ble Supreme Court in the case of TRF Limited without appreciating that the facts in the instant case are different, in as much as the assessee had failed to establish that the debts have actually become bad.

3. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer be restored.

4. The appellant craves leave to add, alter, amend or delete any of the grounds that may be urged at the time of hearing of the appeal.”

3.

The ld. DR of revenue supported the assessment order whereas the ld. AR of assessee supported the order of CIT(A). He also submitted that the issue Page 2 of 2 involved was decided by CIT(A) by following the judgment of Hon’ble Apex Court rendered in the case of T.R.F. Ltd. Vs. CIT as reported in 323 ITR 397.

4.

We have considered the rival submissions. We find that as per the assessment order, the objection of the AO is this that the assessee company had not taken any effective steps to recover the amount of debts. After the amendment in the provision of section 36 (1) (vii) w.e.f. 01.04.1989, this is not required to be shown by the assessee that the debts in question has become bad and only requirement is this that the assessee should write it off in the books of accounts. This is not the objection of the AO that bad debts are not written off in the books of accounts and therefore, the disallowance made by the AO is not justified. We find no reason to interfere in the order of CIT(A) on this issue because as per the judgment of Hon’ble Apex Court rendered in the case of T.R.F. Ltd. Vs. CIT (supra), this issue is squarely covered in favour of the assessee. We therefore, decline to interfere in the order of CIT(A).

5.

In the result, the appeal filed by the revenue is dismissed.

Order pronounced in the open court on the date mentioned on the caption page.

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