Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by the assessee is against the order of CIT(A)-III, Pune, dated 11.11.2014 relating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following ground of appeal:- On the facts and in the circumstances of the case the learned Assessing Officer and CIT(A)-III have erred in: Disallowing the receivable amount foregone by the assessee from M/s. Country Club Rs.59,81,991/- on a resettlement of receivable with them to help facilitate faster recovery of old sticky debt, by treating it as not allowable as deduction under section 36(1)(vii) of the Income Tax Act, 1961.
ITA No.152/PUN/2015 2 Xebec Communications Pvt. Ltd.
It is prayed that the disallowance as above being bad in law the same be set aside.
The only issue raised in the present appeal is against the claim of bad debts amounting to ₹ 59,81,991/-.
Briefly, in the facts of the case, the case of assessee was picked up for scrutiny and the Assessing Officer noted that there was discrepancy in the receipts shown by the assessee, when compared to the gross receipts as per Form No.26AS. The assessee was asked to explain the same. However, the assessee failed to furnish any reconciliation. Consequently, the Assessing Officer made an addition of ₹ 2,52,03,926/-.
Before the CIT(A), the assessee filed written submissions and also filed reconciliation of differences between the income as per Form No.26AS and income declared in the books of account. The CIT(A) asked the Assessing Officer to consider the additional evidence filed by the assessee and to furnish remand report. In respect of one write off of sum of ₹ 58,81,032/- in settlement with Country Club, the Assessing Officer was of the view that the assessee instead of showing the same in reconciliation should have written off the amount in the books of account in order to meet the requirement of section 36(1)(vii) of the Act. In respect of other differences, explanation of assessee was accepted. However, explanation in respect of amounts written off being bad debts, but straight to the receipts account was not accepted.
The assessee is in appeal against the same.
The learned Authorized Representative for the assessee drew our attention to the copy of accounts of the said concern Country Club in the books of account of assessee placed at pages 8 to 12 of the Paper Book and pointed
ITA No.152/PUN/2015 3 Xebec Communications Pvt. Ltd.
out that four bills were reversed totaling ₹ 59,81,991/-. On the other hand, the said amount was reduced from the gross receipts of the year under consideration. He stressed that the assessee had written off the amount from individual account of the party and as such, had satisfied the conditions laid down in section 36(1)(vii) of the Act. In this regard, he placed reliance on the ratio laid down by the Hon'ble Supreme Court in T.R.F. Ltd. Vs. CIT (2010) 323 ITR 397 (SC).
The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.
We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against the claim of deduction under section 36(1)(vii) of the Act. The requirement of said section is that any amount which has been shown as income by the assessee in preceding year or in the year under consideration, but which has been written off as bad debt by the assessee, then the same is to be allowed as deduction out of business income of assessee under section 36(1)(vii) of the Act. The assessee had not debited any amount to the bad debts account, on the other hand, the said receipts which were due from customers were reduced from the gross receipts of the year under consideration. However, necessary entries were made to the parties account and the amount was squared off from the said account. The assessee has placed on record the copy of account of the said party Country Club in the books of account of the assessee and we have perused the same. The amounts which were due from the said parties have been squared off from the parties account and on the other hand, the same are debited to the receipts. Though the entries have been passed in different manner and no amount has been debited to the bad debts account but the intention of the
ITA No.152/PUN/2015 4 Xebec Communications Pvt. Ltd.
assessee can be clear from the aforesaid entries as recognized that the amounts which were due against business receipts is known to be receipts and hence, debited to the receipts account and simultaneously to the parties account. In this regard, where the amount has been squared off and finding support from the ratio laid down by the Hon'ble Supreme Court in T.R.F. Ltd. Vs. CIT (supra), we hold that the assessee is entitled to claim the aforesaid deduction under section 36(1)(vii) of the Act. Accordingly, we hold so and direct the Assessing Officer to delete the addition of ₹ 59,81,991/-. The ground of appeal raised by the assessee is thus, allowed.
In the result, appeal of assessee is allowed.
Order pronounced on this 23rd day of March, 2018.
Sd/- Sd/- (D.KARUNAKARA RAO) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 23rd March, 2018. GCVSR आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : अऩीऱाथी / The Appellant; 1. प्रत्यथी / The Respondent; 2. आयकर आयुक्त(अऩीऱ) / The CIT(A)-III, Pune; 3. The CIT-IV, Pune; 4. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “ए” / DR 5. ‘A’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune