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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
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.
The sole issue involved in this appeal is that the CIT(A) erred in
confirming the addition made against bad debts written off u/s.36(1)(vii) of
2 ITA No.29/Rpr/2015 Assessment Year : 2010-2011
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.
The brief facts of the case are that the assessee is a private limited
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/-.
Aggrieved by the assessment order, the assessee carried the matter in
appeal before the CIT(A).
3 ITA No.29/Rpr/2015 Assessment Year : 2010-2011
Before the CIT(A), the assessee submitted that an amount of
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/-.
Before us, ld A.R. submitted that the CIT(A) erred in granting partial
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).
We have heard the rival submissions and perused the materials
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
4 ITA No.29/Rpr/2015 Assessment Year : 2010-2011
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.
In the result, appeal of the assessee is allowed.
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
5 ITA No.29/Rpr/2015 Assessment Year : 2010-2011
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