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TMI Blog2012 (7) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... the same may be taken up. 3. Facts in brief:- The assessee is a company and is in the business of advertisement, market research and information and public relations. The facts relating to the ground no.1, are brought out by the Commissioner (Appeals) at Para-2.1.2/Page-6 of his order, which is extracted below:- "2.1.2 .......... Appellant is engaged in the business of advertising and are one of the top most advertising agencies. During the year ended 31st March 2006, the appellants have received advances from various parties aggregating to Rs. 26,59,88,972. These advances have been received against specific jobs and have been subsequently adjusted against the bills raised on them. Details of advances received from the parties and bills raised in the subsequent period on the said parties were furnished to the ACIT. All the work carried out by Appellant whether relating to advertising or market research is tagged by a job number. All payments received and bills raised are also linked to the specific job nos. Billing is done on the basis of this job number and the same also mentioned on payments received. The system automatically matches these job numbers and is able to generate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) The Appellants have relied on the Bombay High Court decision in the-case of Star Chemicals Ltd. (303 ITR 128) and the decision of the Apex Court rejecting the Departments SLP on this issue in the case of Nelco Ltd. ( 317 ITR 6 ). The ACIT has relied on the Kerala High Court decision in the case of Kerala Transport Co. V/s. CIT (156 TAXMAN 327) and ITO V./s. Oman international Bank to hold that only bonafide bad debts would be allowed under Section 36(1)(vii). He has also mentioned that the assessee is under an obligation to establish at least prima-facie that the debt has become bad. The assessee therefore, in the ACIT's view, cannot arbitrarily treat a good debt as bad and write it off in its account. The ACIT has also relied on the Madras High Court decision in the case of South India Surgical Co. Ltd. V/s. ACIT (287 ITR 62) to hold that "the assessee must honestly feel convinced that the financial position of the debtor was so precarious and shaky that it would be impossible to collect any money from him. iv) The ACIT has accordingly concluded as under:- a. Based on the above discussions, / have good reasons to hold that the debts written off by the assessee company had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment under section 148. The Appellants therefore submit that the Order passed by the ACIT is bad in law and void ab-initio and pray that the same be quashed. 2) Without prejudice to ground no.1, the CIT (A) erred in holding that the Order passed by the ACIT under section 148 was valid despite of the fact that the Notice under section 143(2) was not served on the Appellants within the statutory period of 6 months from the end of the financial year in which the Return was filed in response to the Notice issued by the ACIT under section 148. The Appellants submit that the said fect in not serving the Notice under section 143(2) within the statutorly period is not curable under section 292BB of the Act as held by the CIT (A) and therefore the Order passed by the ACIT is bad in law and void ab-inito and pray that the same be quashed. Without prejudice to ground nos. (1) & (2) above; 3)(a) The CIT (A) erred in confirming the action of the ACIT in holding that payments made to "field agents" for conducting market research surveys in India of Rs. 12,53,99,046 were covered by the provisions section 194J as against the Appellants stand that these were covered under section 194C and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance in respect of the above expenses." 7. The learned Counsel, Mr. Arvind Sonde, representing the assessee, contended that the write-off in question was bonafide and was based on commercial consideration. He referred to the order of the Assessing Officer and submitted that the basis of disallowance was that the write-off in question was arbitrary irrational and malafide. He filed paper book running into 111 pages and tried to demonstrate that there is a bill-wise analysis of the amount written-off against each advance. He pointed out that in many cases, the amounts written-off were minor amount as compared to the billing and this was done as a matter of business prudence and with an intention not to lose the customer. He pointed out that the assessee has many valuable customers like Bharati Cellular, Glaxo Smithkline Consumer Health, Nestle India Ltd., etc. and when the bills have been raised by the assessee, these valuable customers disallow certain portions and passed the bill for certain lesser amounts and in the interest of continued business relationship, the assessee has written-off these small amounts. He vehemently contended that the action of the assessee makes good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011) 7 ITR (Trib.) 287 (Bang.). On a query from the Bench, it is submitted that the Tribunal in the assessee's own case for assessment year 2002-03, has decided the matter in favour of the assessee. He relied on the findings of the Assessing Officer and the Commissioner (Appeals). 12. On grounds no.2(a) and 2(b), the learned Departmental Representative relied on the order of the Assessing Officer and submitted that the issue may be restored to the file of the Assessing Officer. 13. The learned Counsel for the assessee, in reply, distinguished the decision of the Bangalore Bench of the Tribunal in the case of assessee. 14. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record, as well as the case laws cited before us, we hold as follows:- 15. From the paper book filed by the assessee, it can be seen that the assessee obtains job work and it also receives certain advances against specific jobs. Once the job is completed, a bill is raised on the party and the advance adjusted. Every job of advertisement or market research is tagged by a job number. When a bill is raised, the same is treated as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erilyn Shipping & Transport (supra). This ground is allowed for statistical purpose. 18. Grounds no.3, 4(a) and 4(b) are dismissed as not pressed. 19. In the result, assessee's appeal is partly allowed. We now take up Revenue's appeal in ITA no.1865/Mum./2011. Following grounds have been raised:- "1. On the facts and in the circumstances of the case and in law, the Li CIT(A) Mumbai has erred in deleting the disallowance made by the AO of bad debts claimed by the assessee and in ignoring the findings of the AO that the bad debts have been claimed against parties from whom advances have been received and also the fact that assessee company was in future also dealing with the same clients and thus the claim of bad debts is malafide and arbitrary. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Mumbai erred in deleting disallowance made by the AO on account of short deduction of TDS on payment to field agents and payment for event management by invoking provision of 40(a)(ia) of the Income Tax Act 1961 by holding that the nature of payments is such that they are liable for deduction of tax at source under section 194J and not 194C as done by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively, he submitted that if this letter is considered to be a notice, then the same was not issued within a period of six months. He referred to Pages-4 and 5 of the Commissioner (Appeals)'s order at Para-2.1, and relied on the judgment of Hon'ble Supreme Court in CIT v/s Deodhar Electro Design P. Ltd., [2008] 300 ITR 103 (Bom.). 30. On grounds no.3(a) and 3(b), he relied on the arguments made for assessment year 2006-07. 31. Learned Departmental Representative, on the other hand, relied on the order of the Commissioner (Appeals) and submitted that section 292BB introduced w.e.f. 1st April 2008, applies and as the assessee had appeared during assessment proceedings in response to a notice / letter dated 16th November 2010, and co-operated with the assessment proceedings, he cannot take such a plea now. On the other issue, he reiterated his argument made in the earlier assessment years. 32. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record, as well as the case laws cited before us, we find that at Page-13 of the assessee's paper book, reasons of the re-opening have been stated. Before us, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. 2.2.2 In view of the above, it is seen that the assessee has appeared during reassessment proceedings in response to the notice/letter dated 16-11-10 and cooperated in the assessment proceedings. Therefore, it would be deemed that the notice under the provisions of l.T. Act has been duly served upon the assessee in time in accordance with the provisions of the 1.1. Act and, therefore, the appellant cannot take any objection in any proceedings or enquiry under this Act as the appellant has not raised such objection before the completion of said reassessment proceedings. In the light of these facts, the objection of the appellant is without any basis and, therefore, this ground of appellant is liable to be rejected hence, dismissed." In view of the aforesaid findings of the Commissioner (Appeals), we dismiss this ground also. 34. Coming to the ground no.3(a), consistent with the view taken by us in earlier assessment year on similar issue of short deduction of tax, we allow this ground of the assessee. 35. Ground no.3(b), consistent with the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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