Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Arvind Products Limited, Arvind Mills Premises Versus DCIT Circle-1, Ahmedabad

2016 (2) TMI 628 - ITAT AHMEDABAD

Disallowance u/s 36(1) - denial of claim of bad debts - Held that:- We are of the view that assessee has complied with the requirement of the provisions of Section 36(1)(vii) of the Act and therefore the amount is allowable as deduction as bad debts and therefore we direct the A.O. to allow the same. - Decided in favour of assessee - ITA No. 1067/AHD/2011 - Dated:- 19-2-2016 - Shri Anil Chaturvedi, Accountant Member And Shri Kul Bharat, Judicial Member For the Appellant : Shri P.M. Mehta , A.R. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er the assessment was framed under section 143(3) vide order dated 31.12.2008 and the total income was determined at Rs. Nil but after disallowing the claim of bad debts and prior period expenses and after setting off of unabsorbed depreciation. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 14.12.2010 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the fol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction as claim was in compliance with all the conditions stipulated by the relevant provisions of section 36. 3.1In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding disallowance of Prior Period Expenditure for ₹ 2,35,195. 3.2Without prejudice to above, ld. CIT(A) ought to have directed A.O to allow expenditure in the relevant assessment year to which it pertains. 4. Before us, at the outset, ld. A.R. submitted that 1st gr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y it to recover the debts. In response to the query of A.O., assessee inter alia submitted that considering the costs involved, it had decided not to pursue legal action. The submissions of assessee were not found acceptable to A.O. He also noticed that Assessee had made provision for bad debts of the aforesaid amount. He was of the view that a mere provision for bad debts is not sufficient for making the claim and that unless the amount is written off as irrecoverable in the accounts, the same .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A) who upheld the order of A.O by holding as under:- 3.3 I have considered the facts of the case, assessment order and appellant's submission. Assessing officer made disallowance on two counts namely- 1-appellant has not written off bad debt in the accounts of the debtors and 2-appellant has not established the debt as bad. As regards bad debts not written off in the accounts, appellant submitted that it has debited bad debts in profit and loss account and credit of the said amount is taken .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of IT act. However these decisions have not considered the amendment brought to this section by explanation inserted by Finance Act 2001. Since explanation clarified that bad debts written off as irrecoverable in the accounts .of assesses shall not include any provision for bad and doubtful debts made in the accounts of the assesses; it is mandatory to write off debtors accounts for claiming deduction of bad debts. If the debtor's accounts are not written off, the credit of such bad debts wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

&L account reflects debit for bad debts, the same is not coming from amounts written off in the accounts of debtors. The credit of such separate reserve account for bad debts is not the bad debts written off and therefore appellant did not fulfill the vital condition required for claim of bad debts. In view of this the disallowance of bad debt made by the assessing officer is confirmed. As regards assessing officer's other argument that bad debt was not established to be bad is not relev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

peal before us. 7. Before us, ld A.R reiterated the submissions made before A.O and ld. CIT(A) and further submitted that out of the total bad debts ₹ 34,27,583/- ₹ 22,12,000/- constitutes the amount due from Deluxe Road Lines Pvt. Ltd. on account of the goods that were burnt in fire in riots on 31.10.2002 and the amount was not recoverable and was therefore written off. With respect to the balance amounts, he submitted that it represents the balances which were written off due to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ore it amounts to writing off from the amounts due from the parties and for this proposition, he relied on the decision of Hon ble Apex Court in the case of Vijaya Bank vs. CIT reported in 2010 323 ITR 166. He further submitted that after 01.04.1989, it is not necessary for the Assessee to establish that the debt has in fact become irrecoverable and it is enough if the bad debt is written off as irrecoverable in the accounts of the Assessee. He therefore submitted the ratio of decision in the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

other hand supported the order of A.O and ld. CIT(A) and further submitted that the Assessee has to demonstrate that the debt has become bad for claiming the deduction. He thus supported the order of A.O and ld. CIT(A). 8. We have heard the rival submissions and perused the material available on record. The issue in the present case, is with respect to write off of bad debts. On perusing the Schedule 12 of the Profit and Loss account which is placed at page 2 of the paper book, it is seen that u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version