TMI Blog2012 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had earlier claimed the debt as bad debt. Therefore it just and proper to direct the AO to verify from the assessment records of the assessee that whether or not assessee has claimed the debt of “Swadeshi” as bad debt and if the assessee did not claim the debt as bad in earlier years then the claim of assessee will be accepted that he has already been offered as income by the assessee in his computation of income - in favour of assessee for statistical purposes. - ITA NO. 4028 & 3504/MUM/2011 - - - Dated:- 20-6-2012 - SHRI G.E. VEERABHADRAPPA, SHRI I.P. BANSAL JJ. Assessee by : Shri Rajesh Gupta Revenue by : Shri Pravin Varma ORDER PER I.P.BANSAL, J.M These are cross appeals and they are directed against the order passed by CIT(A)-29, Mumbai for assessment year 2007-08. The grounds of appeal raised by the assessee as well as revenue are reproduced as under: Assessee s Grounds: On fact and circumstances of the case and in law: A. The learned CIT (A) erred in calculating accrued income on actionable claim which is not valid in law because the rights to the Debts (arising from a company which was supposed to honour the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forementioned decree. During the process the petition was filed by the deceased assesssee to the Official Liquidator of Bombay High Court for claiming a sum of Rs. 8,33,74,831/- in petition No.3016 of 2001 and the Official Liquidator of Bombay High Court vide order dated 16/2/2006 had admitted the claim of the assessee for a sum of Rs. 8,06,69,709/- as ordinary claim against the claimed amount of Rs. 8,33,74,831/-. It is the case of the assessee that after having resisted 10 years of financial crisis, the assessee was compelled to assign the decree in favour of M/s. Grand View Estate Pvt. Ltd. ( in short Grand ) at present realizable value of the said claim amounting to Rs.4,36,37,583/- ( amount as originally claimed in the decree order of 1997) by way of deed of assignment dated 10/1/2007 and Official Liquidator of the High court was also informed of the said fact. 2.2 It is also the case of the assessee that during the intervening period Swadeshi had supplied the assessee some finished material and in this manner the amount of Rs.4,36,37,583/- was reduced to Rs.2,67,22,963/- and the said amount was recovered from Swadeshi in the form of finished goods. Such recovered amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 3,70,32,126/- to the income of the assessee which has been sustained by ld. CIT(A). The addition has been sustained by ld. CIT(A) on the following grounds: (1) The Official Liquidator of Hon ble High Court vide order dated 16/2/2006 has allowed the claim of the assessee for a sum of Rs. 8,06,69,709/- and no dispute regarding that amount is there and there is no further litigation. The said amount has unconditionally accrued to the assessee. (2) The surplus amount over and above the debt was nothing but interest payable to the assessee for the period of delay and assignment of actionable claim by the assessee to Grand on 10/1/2007 will not change the nature of the income which had already been accrued to the assessee. (3) The award by the Official Liquidator had granted the assessee an undisputed legal right to receive the compensation, therefore, AO was right in adding the same as per decision of the Delhi High Court in the case of Saraswati Insurance Company Ltd., 252 ITR 430(Del) and such view is also supported by the Hon ble Supreme Court in the case of United Province Electric Supply Company 244 ITR 764 (SC). 3. After narrating the facts ld. A.R pleaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the issue should be restored back to the file of AO for examining the same. Arguing about the appeal filed by the revenue, it was submitted by ld. D.R that assessee did not submit any confirmation before the AO. The confirmations with regard to sundry creditors was submitted by the assessee only before Ld. CIT(A). Therefore, he pleaded that Ld. CIT(A) has acted in violation of Rule 46A as the addition has been deleted without referring those confirmations to the AO. Ld. D.R submitted that the matter should restored back to the file of AO for re-adjudication. 5. On the other hand with regard to appeal of revenue ld. A.R relied upon the order passed by CIT(A) and he submitted confirmations have been submitted before CIT(A) and addition has rightly been deleted by him and his order on this issue should be upheld. 6. We have carefully considered the rival submissions in the light of the material placed before us. While making the addition of Rs.3,70,32,126/- it is the main case of AO that Official Liquidator of the High Court had allowed the claim in favour of the assessee of a sum of Rs.8,06,69,709/- and thus the said amount had accrued to the assessee and it does not make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,36,37,583/- vide cheque No.635304 dated 10/1/2007 on account of assignment of the allowance of claim by the Office of Official Liquidator of High Court amounting to Rs. 8,06,69,709/-. After receiving such payment all rights relating to the said debt have been conveyed to the assignee who shall be deemed to be full and absolute legal owner legally entitled to receive the repayment of the debt or part there-of including the right to file a suit or institute such other lawful recovery proceeding and it is clear from the following recital of the deed of assignment. NOW,, THEREFORE, THIS DEED WITNESSETH in furtherance to the consideration, paid by the Assignee vide cheque No.635304 dated 10th January,07 for Rs.4,36,37,583/-(Rupees Four Crores Thirty Six Lakhs Thirty Seven Thousand five Hundred and Eight Three Only) to the Assignor on signing these presents, the Assignor doth hereby unconditionally and absolutely assign unto the Assignee, without the Assignee having any right of recourse to the Assignor, ALL THAT right, title and interest benefit in and to the Debt and incidental rights thereto, unto the Assignee forever from the date hereof to the end and intent that the AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or profession, and accordingly chargeable to income tax as the income of the previous year in which it is recovered, whether business or profession in respect of which the deduction has been allowed is in existence in that year or not. The mention of section 41(4) in the computation of income filed by the assessee suggests that the assessee had earlier claimed the debt as bad debt. Therefore, we consider it just and proper to direct the AO to verify from the assessment records of the assessee that whether or not assessee has claimed the debt of Swadeshi as bad debt. We direct accordingly. If on verification it is found by the AO that in earlier years the assessee did not claim the debt of Swadeshi as bad debt then the claim of assessee in this regard will be accepted by the A.O as the amount received by the assessee over and above the amount of debt outstanding against Swadesh has already been offered as income by the assessee in his computation of income. With these observation we allow the appeal filed by the assessee for statistical purposes in the manner aforesaid. 6.4 Before parting with the appeal filed by the assessee it may be mentioned that assessee has raised some ..... 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