TMI Blog2003 (8) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii). The deduction of Rs. 12,36,412 being properly allowable either as bad debt or as remission may kindly be allowed. 2. The learned CIT(A) erred in confirming disallowance of the claim of bad debt of Rs. 75,000 due from Vignahar Sahakari Pani Puravatha Sanstha which was written off more as a sort of remission in the interest of keeping cordial relations and with the hopes of future business. The deduction of Rs. 75,000 being properly allowable at least as remission may kindly be allowed. 3. The learned CIT(A) erred in confirming disallowance of the claim of bad debt of Rs. 85,488 due from Jalayahinin Krishi Udyog. For the same reasons as in Ground No. 2, the claim may kindly be allowed. 4. In considering the claim of bad debt, the CIT(A) ought to have appreciated legislative changes in s. 36(1)(vii) r/w s. 36(2). He also should have considered well-settled position in law that in considering such claim, the businessman s point of view should be considered and the matter should not be decided by applying subjective standards. 3. The assessee had claimed bad debts at Rs. 26,36,854. The AO called upon the assessee to justify the claim of bad debts. According to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pipes had claimed that the pipes were of inferior quality and there were some breakages. In view of this, M/s NSI did not pay dues for supplies effected by the assessee to M/s NSI. The NSI on the other hand made counterclaim against the assessee for damages. In such circumstances, M/s NSI and the assessee referred the dispute to M/s Parag Patwa Associates, chartered accountants who on scrutiny of the rival claims expressed their opinion that the assessee should give up its claim for amounts due and supplies effected by it and NSI will not make any counterclaim for compensation for damages. Pursuant to this opinion of the mediators, the assessee had written off the debt due by NSI in its books of accounts. According to the assessee the debt had really become bad and all the conditions under s. 36(1)(vii) were fulfilled. The AO however was of the view that some of the partners of the NSI were relatives of the directors of the assessee and therefore the claim for deduction on account of bad debits was not genuine. 5.2. Before the CIT(A), it was contended by the assessee apart from reiterating his submissions as made before the AO, that if the assessee had not accepted settlement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment when the debt is written off in the books of account as bad debts, the same has to be allowed. If at all something is recovered out of the same, the same is to be taxed in the year of recovery as provided in s. 41(4) of the IT Act. 5.4. In this regard the assessee relied on the decision of the Calcutta Bench of the Tribunal in the case of Jayanti Commerce Ltd. vs. Asstt. CIT and the decision of the Hon ble Gujarat High Court in the case of CIT vs. Girish Bhagwat Prasad (1999) 152 CTR (Guj) 199 : (2002) 256 ITR 772 (Guj) wherein it has been held that after the amendment to s. 36(1)(vii) by the Finance Act w.e.f. 1st April, 1989, the assessee is not required to establish that a debt had become bad debt in the previous year and mere writing off of amount in books of accounts as bad debt is sufficient. The learned Departmental Representative relied on the orders of the Revenue and in particular she relied on the decision of Delhi Bench of Tribunal in the case of Dy. CIT vs. India Thermit Corpn. Ltd. (1996) 56 ITD 307 (Del). 5.5. We have considered the rival submissions. It is not in dispute that the debt in question had been written off as bad debt in the books of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the AO to delete the addition of Rs. 75,000. (c) The claim of bad debt of Rs. 85,488 in respect of Jalvahini Krishi Udyog: 5.8. The facts regarding this debtor are that the debtor was a contractor and the assessee had supplied goods worth Rs. 5.5 lakhs. The debtors paid a sum of Rs. 4.55 lakhs and the remaining amount could not be recovered in view of the fact that the pipes sold to him broke while they were installing the same. The debtor had made a counterclaim for damages and hence the assessee thought it fit not to make claim for the balance amount for fear of counterclaim being made against them. The assessee therefore decided to write off in its books of account this debt as bad debt and the necessary resolution of the Board was also passed to this effect. The AO however was of the view that no evidence was adduced by the assessee to prove this fact and nothing was shown to substantiate the fact that the debtor refused payments. On appeal, the CIT(A) confirmed the order of the AO for similar reasons. 5.9. We have already discussed a similar issue while deleting the addition made in respect of M/s NSI that the basis adopted by the Revenue authorities for making dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95,042 under s. 234B in so far as it is levied on disputed addition was not leviable and that the same may kindly be deleted. 9. It is not in dispute that the issue raised in this ground of appeal has already been decided by this Bench in the case of Deshmukh Consultants vs. Dy. CIT in ITA Nos. 46 to 50 and 155 to 157/Pune/1998. This Bench has held that following the decision of the apex Court in the case of CIT vs. Anjum M.H. Ghaswala Ors. (2001) 171 CTR (SC) 1 : (2001) 252 ITR 1 (SC), that charging of interest was mandatory and consequential. In view of the above decision of this Bench, we dismiss this ground of the appeal of the assessee. 10. In the result, the appeal of the assessee is partly allowed. ITA No. 1035/Pune/1995 for asst. yr. 1992-93. 11. The first two grounds of appeal of the assessee reads as follows: 1. The learned CIT(A) erred in confirming disallowance of the claim of bad debt of Rs. 9,73,064 due from M/s New Sahyadri Industries by taking a narrow and technical view unless debtors deny, the debt cannot be considered to be bad. He also failed to appreciate that the remission allowed by the appellant was entirely for business consideration and it coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave sub-contract to M/s Minar Constructions. The payments made on behalf of the sub-contractor was debited to his account and since a final bill was not received a provision was made in the books of accounts against the debit balance of sub-contractor. Thus it was claimed that the liability had accrued and was ascertained liability incurred in the normal course of business. The CIT(A) however did not accept the claim of the assessee. He found that the amount as reflected against the outstanding creditors without the name of the party to whom the amount was payable and since the bills were not received, he concluded that the liability was unascertained. He therefore confirmed the order of the AO. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 15. At the time of hearing before us, it was fairly accepted by the learned counsel for the assessee that the necessary evidence with regard to the contention made by the assessee before the CIT(A) had not been produced by the assessee. He however prayed that the issue may be set aside and the assessee be afforded an opportunity to put forth his claim. The learned Departmental Representative relied on the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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