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2016 (5) TMI 708 - ITAT PUNE

2016 (5) TMI 708 - ITAT PUNE - TMI - Sundry balances written off - AO disallowed the same on the ground that assessee could not establish the genuineness of the amount written off - CIT(A) allowed the claim relying on the decision of Hon’ble Supreme Court in the case of TRF Ltd.[2010 (2) TMI 211 - SUPREME COURT ] - Held that:- Held that:- No infirmity in the order of the CIT(A). We find before CIT(A) the assessee had submitted that the amounts were taken into account while computing the profit o .....

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on the said amounts in the income of the preceding assessment order. Since the assessee in the profit and loss account has written off the amount, therefore, in view of the decision of Hon’ble Supreme Court in the case of TRF Ltd. (Supra) assessee is not required to establish that the debt has become irrecoverable. Therefore, the Ld.CIT(A) is justified in deleting the disallowance. - Decided against revenue - ITA No.896/PN/2014 - Dated:- 7-4-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM .....

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ts before the Assessing Officer? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in allowing the sundry balances written off, when the assessee has not established that the debts written off were offered to tax in earlier years. 3. The appellant craves leave to add, amend or alter any of the above grounds of appeal. 3. Facts of the case, in brief, are that the assessee company is engaged in the business of manufacturing glass refills, vacuum f .....

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the details of such write off. The assessee vide letter dated 06-12-2006 submitted the details of sundry balances written off/return back. When asked by the AO to prove the same the assessee only submitted narration of expenses claimed without any documentary evidence. Since the assessee could not establish the genuineness of the amount written off, the AO disallowed the entire amount of ₹ 3,74,58,951/-. 4. Before CIT(A) the assessee submitted that the said amounts were undisputedly taken .....

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vidence is required to be produced by the assessee, deleted the disallowance made by the AO. 6. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 7. The Ld. Departmental Representative while supporting the order of the AO submitted that the order of the CIT(A) is erroneous because the assessee has not brought anything on record to prove that the amounts written off were taken into account for computing the profit of earlier years. The assessee has not given any document .....

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ee to prove that the debt has become bad. But at the time same, the assessee cannot convert any live amount into a bad debt only on the basis of the technical rule of writing off. 7.2 Referring to the decision of the Hon ble Madras High Court in the case of South India Surgical Company Ltd. Vs. ACIT reported in 287 ITR 62 he submitted that the Hon ble High Court in the said decision has held that for claiming bad debt as an allowable deduction the assessee has to prove that those debtors were no .....

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AO at para 3 of the order has mentioned that the assessee company has stopped the manufacturing activities since October 2003 due to heavy accumulated losses. Referring to the decision of Hon ble Supreme Court in the case of TRF Ltd. (Supra) he submitted that the Hon ble Supreme Court in the said decision has held that after 01-04-1989 it is not necessary for the assessee to establish that the debt infact has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in t .....

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le Supreme Court in the case of TRF Ltd. (Supra). So far as the decision of the Bangalore Bench of the Tribunal in the case of Embassy Classic Pvt. Ltd.(Supra) is concerned the Ld. Counsel for the assessee drew the attention of the Bench to Para 17 of the order which reads as under: 17. Even though writing off a debt as bad and doubtful may be a sufficient mode of discharging the proof, the said format of statutory evidence is not an empty formality. It is not necessary for the assessee to prove .....

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filed the return of income only thereafter on 29.10.2005. Therefore, it is very clear that when the return of income was filed by the assessee, no debt was recoverable from the buyers of the property. We find a lot of force in the argument of the learned Commissioner of Income-tax regarding the non-committal of the assessee company in pursuing the legal remedies available before it for the recovery of the amount. Therefore, in these circumstances, we do not find that the debt has become bad debt .....

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of the present case. In that case, the assessee had received back the amounts prior to filing of the return. Under these circumstances the Tribunal had held that the bad debt claimed by the assessee is not allowable since it is not a bad debt but a case of delayed payment. However, in the instant case, the assessee has not received any amount even till today. Therefore, the order of the CIT(A) being in accordance with law should be upheld. 11. We have considered the rival arguments made by both .....

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relying on the decision of Hon ble Supreme Court in the case of TRF Ltd. (Supra). We do not find any infirmity in the order of the CIT(A). We find before CIT(A) the assessee had submitted that the amounts were taken into account while computing the profit of earlier year. In the assessment order although the AO has asked the assessee to prove the genuineness of the claim of bad debt, he has never put any question regarding taking of the amounts written off as bad debt as income of earlier years. .....

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