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Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI
Before: SMT BEENA A PILLAI & SHRI PRASHANT MAHARISHI
Revenue by : Sh. Rajesh Kumar, Sr. DR Assessee by: None Date of Hearing 23/02/2017 Date of pronouncement 10/04/2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by the revenue against the order of the ld CIT(A)-I, Dehradun dated 16.04.2014 for the Assessment Year 2010-11 raising following grounds of appeal:- “1 Whether the ld CIT(A) was correct in allowing deduction for Rs. 4368229/- as bed debts written off without there being anything on record to show that the section 32 of IT Act was satisfied.
2. Whether the ld CIT(A) was correct in allowing deduction for Rs. 593639/- as bed debts which, as per the profit and loss account itself represented other balance written off and there were nothing to show that provision of section 36(2) of the IT Act was satisfied. 3. that the order of the ld CIT (A) be set aside and that of the AO be restored.”
2. The assessee is a non-banking finance company, engages exclusively micro- financing activities, registered under the reserve bank of India act 1934, and has not accepted any public deposit. It is engaged in the business of providing Microfinance services exclusively to women living below poverty line organizing joint liability groups. It filed its return of income for assessment year 2010 – 11 on 05/10/2010 declaring income of Rs. 9782258/-. It is debited a sum of Rs. 4368229/– as provision of bad and doubtful to the profit and loss account and therefore, the Ld. assessing officer asked the detail of the such provisioning. The Ld. assessing officer further noted that the assessee’s is Page 2 of 3 expressed its inability to furnish the expiration with the name and address, PAN, how many years old and what efforts were made to recover the bed debts and doubtful debt. And, therefore, the Ld. assessing officer disallowed the above sum under the bad debt written off. He further disallowed a sum of Rs. 5 92629/– as other balances written off.
3. Aggrieved, assessee preferred appeal before the Ld. CIT appeal who in turn allowed the claim of the assessee holding that there is a change in law, w.e.f. assessment year 1989 – 90 and the assessee merely needs to write off that is bad in his books to claim the same is an outgoing. He further held that the case of the assessee is covered by the decision of the Hon’ble Supreme Court in case of TRF Ltd 323 ITR 397 (S. C). Revenue, Aggrieved with the order of the first appellate authority is preferred an appeal before us.
The first and second ground of appeal
are against the disallowance of Rs. 4 368229/– as bed debts written off and Rs. 5 92629/– as other sums written the off. Ld. DR relied upon the order of the Ld. assessing officer.
5. Despite notice, none appeared on behalf of the assessee. Therefore, we decide the issue on the facts and material available before us will stop 6. we have carefully considered the contentions of the revenue as well as perused the orders of the lower authorities. The assessee is a nonbanking financial companies and during the course of its business. It is advanced certain sums, which were written off to the profit and loss account. The Ld. CIT (A) has examined this issue and has allowed the appeal of the assessee relying on the decision of the Hon’ble Supreme Court of India in case of T. R. F Ltd and further, there is an amendment in the provisions of section 36 (1) (vii) , which provides that subject to the provisions of subsection (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year is allowable to the assessee as deduction in computing the income referred to in section 28 of the income tax act. The Ld. departmental representative could not point out any infirmity in the order of the Ld. first appellate authority. In view of this we confirm the order of the Ld. first appellate authority in deleting the about disallowances of bad debt written off in the books of accounts. Therefore, we dismiss ground No. 1 and 2 all the appeal of the revenue.