TMI Blog2013 (12) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not filed any evidence to substantiate its claim for deduction on account of bad debts – Decided against assessee. - ITA No.825/Bang/2012 & ITA No.553/Bang/2013 - - - Dated:- 4-10-2013 - N V Vasudevan And Jason P Boaz, JJ. For the Appellant : Shri Praveen Karanth, Jt. CIT (DR) For the Respondent : Miss Girija, GP, CA ORDER:- PER : Bench ITA No.825/B/12 is an appeal by the revenue, while ITA No.553/Bang/13 is an appeal by the assessee. Both these appeals are directed against the order dated 01.03.2012 of the CIT(Appeals)-III, Bangalore, relating to assessment year 2003-04. 2. First we shall take up for consideration the appeal by the revenue. The grounds of appeal raised by the revenue reads as follows: "1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in holding that the bad debts of Rs 1,90,22,677 having been written off in the book of accounts should be allowed ignoring the fact that the assessee failed to prove as to how these debts have been brought into its books before write off, and such debts belong to its subsidiary company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honest Marketing Rs. 3,64,478 7. SKOL Rs. 1,62,52,987 5. Before the AO, the assessee submitted that it engages the services of manufacturers of beer. As per the agreement with such manufacturers, they have to give the assessee the required quantity of beer. The quantity given by the manufacturers is generally less than what was agreed to be given. The manufacturers would claim that the difference is due to loss on account of sedimentation. The process of sedimentation is that certain quantity of beer manufactured becomes unusable because of the formation of sediments which results in the beer being rendered unfit for consumption. According to the assessee, it recognized the liability of the beer manufacturers in its books of accounts, but the beer manufacturers refuse to pay the said liability on the ground that the loss in question was a sedimentation loss. The AO called for the agreement between the assessee and Haryana Breweries Ltd., in which para 11 provided as follows:- " The presence of the SWBL Technical Representative does not absolve HBL of its responsibility to manufacture beer to SWBL specifications and standards. If there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(Appeals), the revenue has preferred this appeal before the Tribunal. 10. We have heard the submissions of the ld. DR, who reiterated the stand of the revenue as reflected in the grounds of appeal. The ld. counsel for the assessee reiterated the submissions made before the CIT(A). 11. We have considered the rival submissions. It is clear from the facts as it emanates from the orders of the revenue authorities that the quantity short supplied by the manufacturers of beer are due to sedimentation. It is no doubt true that as per the agreement between the assessee and the manufacturers of beer, the sedimentation loss has to be borne only by the manufacturers. The assessee has therefore recognized the liability which the beer manufacturer has to pay the assessee on account of short supply of beer due to sedimentation loss in its books of account. This liability has all the ingredients of a debt. It is not in dispute that this debt has been taken into account in computing the income of the assessee in the earlier previous year. The assessee in its wisdom has preferred to treat this debt as not recoverable and accordingly wrote it off as a bad debt. On the facts of the case, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed appeal before the CIT(Appeals). The assessee for the first time submitted before the CIT(A) that it had incurred an expenditure of Rs.3,65,62,625 in the earlier years and the same has to be written off as debts and advances not recoverable. The assessee further submitted that out of the aforesaid sum of Rs.3,65,62,625, a sum of Rs.1,56,46,055 has already been included in the claim of Rs.1,90,22,677 (which is already considered in the appeal of the department). The remaining sum of Rs.2,09,16,570 (Rs.3,65,62,625 minus 1,56,46,055) was claimed as deduction on account of bad debts. On the aforesaid claim made by the assessee before the CIT(A), the CIT(A) took the view that the expenses were not allowable as the expenses were incurred against income pertaining to earlier years. The CIT(A) also observed that the issue was not raised before the AO and rejected the claim of the assessee. 15. On further appeal by the assessee, the Tribunal in ITA No.5355/MUM/2006 by its order dated 29.04.2009 set aside the order of the CIT(A) and directed the AO to examine the claim of the assessee afresh. 16. In the proceedings before the AO after the order of the Tribunal, the assessee did not fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived and apparent misapplication of mind. The appellant has not pointed out any such circumstance in his grounds. The AO is accordingly directed to levy the interest applicable as per law after taking into consideration the findings of this appellate order. Accordingly this ground of appeal is not adjudicated upon." 17. Aggrieved by the order of the CIT(Appeals), the assessee has filed the appeal before the Tribunal raising the following grounds: "1. That the orders of the authorities below in so far as it is against the appellant is against the law, facts, circumstances, natural justice, equity, without jurisdiction, bad in law and all other known principles of law. 2. That the total income and total tax liability computed is hereby disputed. 3. That the authorities below have not appreciated the entire issue in the right perspective and the findings are totally against the facts on record. 4. The authorities below erred in not allowing write off debts amounting to Rs.2,09,15,560/-. 5. The appellant denies the liability for interest u/s 234D. Further prays that the interest if any should be levied only on returned income. 6. No opportunity has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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