M/S. MEC ELECTRIC CONTRACTS PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 4730/DEL/2014Status: DisposedITAT Delhi31 May 2017AY 2010-113 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amount written off constituted a debt due to the assessee from its principals, which was subsequently written off. Therefore, it fulfilled the conditions for deduction as bad debt under the Income Tax Act.

What were the facts?

The assessee, an electric contractor, wrote off Rs. 2,28,026/- from its debtors which represented amounts deducted by principals for PF/ESI but not paid to the assessee. The assessee claimed this as a bad debt.

What were the issues?

Whether amounts deducted by principals for PF/ESI, which were not paid to the assessee and subsequently written off, qualify as bad debts deductible under the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii),Section 36(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI

Before: SHRI I.C.SUDHIR & SHRI PRASHANT MAHARISHI

Hearing: 30/05/2017Pronounced: 31/05/2017

O R D E R PER PRASHANT MAHARISHI, A. M.

1.

This appeal is filed by assessee against the order of Ld. CIT (A) –IX, New Delhi dated 10/06/2014 raising the solitary ground that confirmation of disallowances of Rs 228026/- on account of disallowance of right of under recovered. ESI/PF from sundry debtors being bad debts on hypothetical grounds and therefore the order of the lower authorities are against the provisions of the income tax act.

2.

Brief facts of the case are that assessee company is engaged in the business of electric contractor and filed its return of income on 05/10/2010 declaring income of Rs. 6 496980/–. Assessment under section 143 (3) of the act was made on 19/02/2013 at an income of Rs. 6 893100/–. Amongst other addition a sum of Rs. 228026/– on account of amount outstanding from principal on account of PF / ESI written off was disallowed by AO and Confirmed by CIT (A) and therefore assessee is in appeal before us.

3.

The Ld. authorized representative submitted that that assessee is engaged in the business as a contract and therefore it provides manpower to carry on installation job work at different sites. If the contractor is not registered under the respective labour law, such as provident fund and ESI then the principle of the appellant are required to pay the above dues to respective government authorities. The principles of the appellant have deducted the amounts on account of above dues from the bills raised by the appellant and have not been paid. Therefore, assessee submitted the

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