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Income Tax Appellate Tribunal, DIVISION BENCH’A’, CHANDIGARH
Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’A’, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.345/Chd/2018 Assessment Year: 2014-15
M/s Punjab Agro Food Grain Vs. The ITO Corporation Ltd. Ward 4(2), Plot No. 2A, Sector 28A Chandigarh Chandigarh PAN No. AADCP1290P (Appellant) (Respondent) Appellant By Shri. Nayan Jain (Proxy Counsel) Respondent By : Shri. Manoj Kumar
Date of hearing : 11/06/2018 Date of Pronouncement : 13/06/2018
ORDER PER DR. B.R.R. KUMAR, A.M:
The present appeal has been filed by the assessee against the order of the Ld. CIT(A)-2, Chandigarh dated 30/01/2018 pertaining to Assessment Year 2014-15. 2. The assessee has raised the following grounds: 1. That the order of Ld. CIT(A) in dismissing the appeal is bad & against the facts of present case. 2. That the Ld. CIT(A) & Ld. AO are not justified in making the assessment under section 143(3). 3. That the Ld. CIT(A) & Ld. AO has erred in making the addition of Rs. 50,50,000/- on account of recoveries in accounts, whereas the said account has already been added to the income of assessee corporation in March 2016.
The effective ground of appeal pertains to recoveries from the bad debts and accounting thereof.
During the year the assessee has recovered bad debts of Rs. 2,09,21,368as per the auditor’s report.
Before the Assessing Officer, the assessee submitted that an amount of Rs. 1,58,71,368/- received during the year has been reversed in the accounts on receipt of the payments. It was also submitted before the Assessing Officer that
the amount of Rs. 50,50,000/- was reversed in expense account for the year 2015-16 in March 2016.
The Ld. CIT(A) confirmed the addition on the grounds that the recovery of the bad debts have to be accounted on accrual basis.
The ld. DR argued that since assessee is following accrual system the realizations have to be accounted on accrual basis.
The facts on record depict that the amount of Rs. 50,50,000/- has been received during the Financial Year 2013-14 and accounted.
Regarding the recovery of bad debts if in any previous year, the debt has been written off as bad and the relevant deduction has also been claimed but later on the same debt is recovered in full or part, then the amount so recovered will be included as income of the financial year in which such amount has recovered. If in any previous year, the assessee has written off a part of the debt and the said deduction was also allowed by the Assessing Officer and in future, some money is received from the debtors, then the amount so recovered will be treated as a normal realization of debts.
Since the amount of Rs. 50,50,000/- has already been taken as income and offered to tax, in the F.Y. 2015-16, the appeal of the assessee is hereby allowed.
Order pronounced in the open Court.
Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 13/06/2018 AG
Copy to:
The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) The DR 5.