EPIC ALLOY STEEL PRIVATE LTD.,RAIGARH(C.G) vs. THE DY.CIT-1(1), BILASPUR(CG)

Per Pavan Kumar Gadale, JM

This is an appeal filed by the assessee against the order of the CIT(A)-

Bilaspur dated 25.9.2014 for the assessment year 2010-2011.

confirming the addition made against bad debts written off u/s.36(1)(vii) of

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the I.T.Act, 1961 to the extent of Rs.1,98,472/- on the ground that ledger

account or other evidence of actual writing off bad debt was not filed.

company filed the return of income on 14.10.2010 showing total income of

Rs.24,08,330/-. Subsequently, the case was selected for scrutiny.

Accordingly, notice under section 143(2) of the I.T.Act, 1961 was issued and

served upon the assessee. In compliance to the notices issued, ld A.R.

appeared and produced books of account and they have been test checked.

The Assessing Officer noticed that the assessee company is engaged in the

manufacturing of MS Ingot and trading in Pig Iron, Minerals, Ores & scrap.

The Assessing Officer found that the assessee has claimed deduction of

Rs.7,06,731/- as sundry balances written off. The assessee could not

produce any evidence to show that the debtors were financially not in a

position to make payments and also there is no information about refusal of

payment. Since the assessee could not produce that the sundry debtors are

actually written off, the Assessing Officer was of the view that the assessee

cannot claim deduction. Therefore, he made addition of Rs.7,06,731/-

alongwith other additions and assessed the income at Rs.32,86,330/-.

appeal before the CIT(A).

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Rs.7,06,731/- was written off under the head “sundry balance written off”.

It was submitted that since the amount was not recovered from the parties,

the amount was written off as irrecoverable in the account of the assessee.

He relied on the decision of Hon’ble Supreme Court in the case of TRF Ltd vs

CIT, 323 ITR 397 (SC). The CIT(A) considered the submissions of the

assessee and the findings of the Assessing officer and observed that as

regards to Rs.5,08,259/-, written off as bad debt in the case of Nitesh Udyog

Limited is an admissible amount, however, there is no dispute to the fact

that the ledger accounts and other evidence of actual writing off of the

various sundry debtors have not been filed in regard to balance amount of

Rs.1,98,472/-. Therefore, he confirmed the addition of Rs.1,98,472/-.

relief in respect of the bad debts irrespective of the fact that the assessee

has written off the amount in the books of account. Ld D.R. supported the

order of the CIT(A).

available on record. We find that there is no dispute about the fact that the

amounts have been written off in the previous year. The dispute is confined

to the question whether the assessee has brought on record reasonable

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evidence to substantiate that the amount written off has actually become

bad and incapable of being recovered from the debtors concerned. On these

facts and particularly in view of the Hon’ble Supreme Court judgement in the

case TRF Ltd (supra), wherein, the Hon’ble Supreme Court has held that a

mere write off of the debt is enough to claim deduction as bad debt and that

the assesse is required to establish that amounts have actually become bad,

the assesse must succeed in his claim. Hence, in view of the decision in the

case of TRF (supra), we uphold the grievance of the assessee and direct the

Assessing Officer to delete the disallowance of Rs.1,98,472/- and allow the

ground of appeal of the assessee.

Order pronounced on 19 /01/2018.

Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Raipur; Dated 19 /01/2018 B.K.Parida, SPS

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Copy of the Order forwarded to : 1. The Appellant : Epic Alloys Steel Pvt Ltd.,, 132D, O..P. Jindal Industrial Park, Punjipathra, Raigarh 2. The Respondent. DCIT-1(1), Mahima Complex, Vypar Vihar, Bilaspur 3. The CIT(A)-Bilaspur 4. Pr.CIT-Bilaspur 5. DR, ITAT, Raipur 6. Guard file. //True Copy//

BY ORDER,

SR.PRIVATE SECRETARY ITAT, Raipur