TMI Blog2003 (8) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover, foreign exchange in respect of which was brought into India within a period of 6 months from the end of the previous year. The assessee firm had claimed deduction under section 80HHC of the Act on total export sales made during the previous year relevant to assessment year 1991-92 in spite of the fact that sale proceeds in respect of goods worth Rs. 58,91,672 sold to M/s. J.V. Finn, U.K. in the previous year were not brought into India in convertible foreign exchange within the stipulated time. He concluded that deduction claimed by the assessee firm under section 80-HHC of the Act in assessment year 1991-92 was excessive. He accordingly issued a notice under section 148 of the Act, as the income chargeable to tax had escaped in assessment year 1991-92. The assessee filed return of income on 28-11-1993 showing total income of Rs. 74,260 and deduction of Rs. 57,69,725 was claimed under section 80HHC of the Act as in the original return filed on 30-10-1991. The Assessing Officer noted that total sale in the year under consideration was Rs. 7,75,23,343 and deduction under section 80HHC was Rs. 57,69,725. The Assessing Officer issued a letter to State Bank of India, Kanpur o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was able to recover goods worth Rs. 11,45,390 which he supplied to M/s. Shoe International, U.K. The balance amount of Rs. 47,46,282 along with interest of Rs. 1,26,727 and loss on exchange rate difference of Rs. 10,00,230 was claimed as bad debt in the assessment year 1992-93, but in spite of these facts of position, the assessee had now claimed Rs. 47,46,282 as bad debt along with interest of Rs. 86,452. The Assessing Officer was of the view that allowability of bad debt can only be considered in assessment year 1992-93 and assessee's subsequent action of writing off of bad debt in the account books of assessment year 1990-91 was to reflect lower net profit in assessment year 1991-92 after the department had given a notice in this year to disallow deduction under section 80HHC on the turnover of Rs. 58,91,672 because the assessee could not receive foreign exchange of that amount within the stipulated time. He also noted that assessee knew well that it would be advantageous to it if lower net profit is reflected in assessment year 1991-92 as the deduction under section 80HHC was proportionate to the profit of the business. The assessee itself admitted in written reply dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal relate to these issues and argument of the learned counsel for the assessee are the same as were taken before the Assessing Officer and ld. CIT(A). The learned Counsel at the very beginning relied upon the decision of the I.T.A.T., Ahmedabad 'C Bench in the case of Dinesh Chandra ChandulalShah v. ITO[1992] 40 ITD 483 and submitted that facts of that case are identical and I.T.A.T., Ahmedabad had allowed the claim of bad debt. Referring to the factual position of that case, the learned counsel for the assessee pointed out that in that case the assessment was completed under section 143(1) on 24-3-1986 and later on ITO found that sales tax of Rs. 9,07,435 was not paid during the year. The Assessing Officer, after obtaining the approval of the IAC, proceeded to take the case under scrutiny and after getting necessary instruction under section 144A from IAC, the Assessing Officer proposed to make an addition of Rs. 9,07,435. On 19-3-1987, the assessee submitted a revised return of income, in which he added the unpaid sales tax amount as per section 43B to the total income, but claimed a trading loss in respect of irrecoverable amount of outstanding against M/s. Ushan Spinning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.) in which the Lordships confirmed the view of the Tribunal that Rs. 11,10,377 was claimed by the assessee for deduction under section 80HHC, but could not be deducted as the amount was not brought to India within 6 months. This amount was not deducted from the profits. At the same time this amount was included in the total turnover as the denominator. The Tribunal concluded that since this does not form part of profit, it cannot be formed part of turnover also. Their Lordships concluded that since this amount could not be included in the profit, the same cannot also be included in the total turnover. The contention is that the same direction may be given to the Assessing Officer so that amount of deduction under section 80HHC may be claimed at a right way. As against this, the ld. D.R. placed reliance on the decisions of the Assessing Officer and the ld. CIT(A) and submitted that return filed in pursuance to the notice under section 148 cannot be revised. There is no provision under section 139(5) that return filed in pursuance to notice under section 148 can be revised. Further, the ld. D.R. submitted that claim of bad debt was not entertainable as the amount become bad in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of business, which should be carried on by the assessee in the relevant year under consideration; (ii) the debt should have been taken into account in computing the income of the assessee of the accounting year or of an earlier accounting year; (iii) the amount of debt should have really become bad in the year under consideration; (iv) the amount should have been written off as irrecoverable in the accounts of the assessee for the accounting year in which such a claim for deduction is made." Although these conditions were in respect of the provisions of section 36(1)(vii) which stood prior to 1-4-1989 and the relevant amended provisions are as under :- "(vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year : Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause." A perusal of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the amount in question as bad debt, but the year under consideration was not a proper year for claiming the amount as bad debt nor the accounts which were already closed can be reopened to allow the assessee to claim any amount not shown as bad in the original accounts as bad debt. 10. Accordingly, on the basis of our observation, we are of the considered view that the view taken by the Assessing Officer and the ld. CIT(A) in rejecting the claim of the assessee as bad debt in the year under consideration in the revised return of return filed in pursuance to notice under section 148 was not sustainable and the claim of the assessee was rightly rejected by the Assessing Officer and the ld. CIT(A). 11. So far as the alternative plea of the assessee is concerned, this was not raised by the assessee either before the Assessing Officer or before the ld. CIT(A). No doubt, the view relied upon by the assessee is there, but let assessee move to proper authority for getting relief, as the matter has not been dealt upon by the Assessing Officer or by the ld. CIT(A), nor the assessee had raised this ground before us specifically. Had he raised additional ground, it would have been ente ..... X X X X Extracts X X X X X X X X Extracts X X X X
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