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2021 (10) TMI 1202 - AT - Income TaxSundry debtors written off - assessee has not demonstrated how the debts have become bad or what efforts have been taken for recovery - HELD THAT:- CIT(A) has given finding that it is clear that the ledger accounts and sales invoices along with a detailed chart has been furnished by the assessee which demonstrates that the amount involved in the debts have been offered as income in the earlier years. CIT(A) has rightly rejected the AO’s plea that the assessee has not demonstrated how the debts have become bad or what efforts have been taken for recovery. As the said issue is duly covered by the decision in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] wherein it was held that after amendment in the Act write off in the account is sufficient for the claim of debts written off. Hence, in our considered opinion there is no infirmity in the order of learned CIT(A). Moreover, this ITAT in assessee’s own case for A.Y. 2011-12 & 2012-13 in [2021 (6) TMI 615 - ITAT MUMBAI] on the issue of bad debts similarly raised, has allowed the same in favour of the assessee. Finished goods written off - HELD THAT:- In order to bring out the effect of the change in the method of accounting the assessee had reduced the effect which is ₹ 37.41 cores from the consumption which would decrease valuation of opening stock and increase the profit. Further in order to negate this effect the assessee had debited the same amount to the profit and loss account as exceptional items written off. Thus there is no effect on the profit and loss account and the assessee has not tinkered with the opening stock. To recapitulate, the assessee has reduced the value of opening stock by a sum of ₹ 37.41 crores which is a credit effect increasing the income and has simultaneously debited the profit and loss account by the same amount as exceptional items written off to nutralize the effect. Thus actually there is no effect and this has also been detailed in Note No. 4 given by the auditors in the notes to accounts. In this view of the matter in our considered opinion, we do not find any infirmity in the order of learned CIT(A). We note that in the present case before us aforesaid amount added by the AO is erroneous as assessee’s adjustment has not affected to the profit and loss account. In this view of the matter we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same.
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