TMI Blog2019 (1) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... and accrued loss in the business of financing. In case of CIT V CITI CORP Maruti Finance Limited [2010 (11) TMI 802 - Delhi High Court] has held that even loss on repossessed vehicle sold is also allowable to the assessee u/s 36(1) r.w.s 36 (2) of the act. Honourable Delhi High court also held that such deduction was also covered in favour of the assessee. - Decided in favour of assessee. Write off of recoverable - Held that:- In order to claim the aforesaid amount either as loss u/s. 28, or as bad debt u/s. 36(1)(vii) read with section 36(2), the onus was on the assessee to produce the party-wise details alongwith their complete addresses, PANs, TANs so as to enable the Assessing Officer to make verification as to the correct nature of amount claimed by the assessee. It is also made clear that once the assessee proceeds to set off the receivables (TDS) from the total tax liability, the nature of such receivables no more remains in the nature of bad debts/receivables. On perusal of year-wise details of irrecoverable TDS, we find that such irrecoverable receivables are shown to have been pending since assessment years 1997-98 to 2007-08, but the assessee has not been able to fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of ₹ 62,47,393/- being claim of TDS recoverable written off by completely ignoring the reasons given by the assessing officer? 3 Whether in the facts and circumstances of the case in law, the Ld. CIT(A) erred in deleting the disallowance of ₹ 1,66,88,812/- on account of bed debts written off without appreciating the detailed reasons given by the assessing officer? 4 That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 5 That the grounds of appeal are without prejudice to each other. 2. The brief facts of the case are that M/s. Maruti Country Wide Auto Financial Services Pvt. Ltd. is a non-banking Financial Co. (NBFC), inter alia, engaged in business of providing financial assistance to the customers in acquiring wide range of consumers and auto products. The assessee filed return of income declaring income of ₹ 8,43,23,046/- on 21.09.2010. Subsequently, the return was revised on 29.03.2010 by the assessee company declaring same income, but excess amount claimed as refund of ₹ 38,76,621/- which was more than the refund claimed in the original return. In the assessment proceedings, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on account of defaults due to non payments by the customers/borrowers and losses in the normal course of business. From the above submissions, the Assessing Officer observed that the assessee company is an NBFC which is authorized to lend for earning interest on advances as per Government Rules, RBI and statutory regulations. The foreclosure of loans is nothing but it is a discount offered to lonee on negotiation of pre-payment of principal amount when the loss of principal is expected if the loan is recovered over the contracted tenure. The loan is an asset on which the yield is by way of interest. The foreclosure loss is a loss equated to erosion of the loan asset. The claim of loss on foreclosure is, therefore, equivalent to write off of an asset which is capital in nature and not allowable u/s. 37(1) since it is not a Revenue write off. He also observed that it is not a business loss which happens automatically and in regular course of business beyond the assessee s control. It is a situation brought by the assessee itself to save future capital loss. He also observed that it is not a bad debt because it has not been accounted for as per the mandatory provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the such loss which has been incurred by the assessee is a resultant accumulation over a period of time. 4. The Assessing Officer observed that the assessee has not furnished the details party-wise and reply regarding the transaction with said party. Further, he noticed that this amount also not in the nature of bad debts as per mandatory provisions of section 36(1)(vii) and 36(2). Accordingly, the Assessing Officer disallowed the claim of assessee for the amount of ₹ 62,47,393/- and added to the total income of the assessee. 5. Further, on scrutiny of accounts, the Assessing Officer observed that the assessee has debited as a bad debt to the tune of ₹ 1,66,88,812/-. In this regard, the Assessing Officer issued detailed questionnaire and asked the assessee to submit information, i.e., name and address of the debtors and total amount written off during the financial Year 2009-10, copy of ledger accounts of the debtors from the date when relevant transaction was undertaken to the date of ultimate write off and the brief note as to how the amount is irrecoverable became bad debt during the year and efforts made for making recovery thereof. In response, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of submissions made by the assessee before him. Therefore, the order of the Assessing Officer should be restored. 10. On the other hand, the ld. AR relied on the order of the CIT(A) and reiterated the submissions made before him. He also furnished a paper book containing 84 pages. The assessee has also submitted in respect of ground No. 1 that this issue is squarely covered in favour of the assessee in his own case for the assessment year 2009-10 in ITA No. 5894/Del/2013. In respect of ground No. 2, it was submitted that the issue is covered in favour of the assessee in ITA No. 5435/Del/2011 for the assessment year 2008-09. Therefore, the ld. CIT(A) has done a good reasoned order and therefore, the order of the ld. CIT(A) should be upheld. 11. After hearing both the sides and perusing the entire materials available on record and the case laws cited by both the parties, we observe that in ITA No. 5894/Del/2013 for the A.Y. 2009-10 in the case of assessee itself, the coordinate Bench of Tribunal has decided the issue in favour of the assessee as under : 08. We have carefully considered the rival contentions and also the various decisions relied up on by the assessee. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to section 36(1) (vii) of the act any bad debt or part of the bad debt if written off in the books of accounts as irrecoverable, same shall be allowed to the assessee as deduction. It is admittedly written off in the book of accounts of the assessee as loss on foreclosure of loan assets . In view of this the assessee satisfies all the conditions of allowabaility of this sum as deduction u/s 36(1) (vii) rws 36(2) of the Income Tax Act. As the sum is written off in the books of accounts by writing of the loan amount of the borrower on negotiation cannot be called a future or probable loss but ascertained and accrued loss in the business of financing. Though the cases relied up on by the assessee relates to the issues of loss on sale of repossessed vehicle, Honourable Delhi High court in case of CIT V CITI CORP Maruti Finance Limited in ITA No 1712 1714 /20109/11/2010 has held that even loss on repossessed vehicle sold is also allowable to the assessee u/s 36(1) rws 36 (2) of the act. Honourable Delhi High court also held that such deduction was also covered in favour of the assessee by the decision of Honourable Calcutta High court in case of A W Figgies Co Pvt Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-98 to 2007-08, but the assessee has not been able to furnish Form 16A from the parties who deducted TDS nor could he prove that any efforts were made by the assessee to recover the impugned of TDS amount so as to claim its credit. The amount of TDS has to be deposited in the government treasury by the deductors on behalf of the deductee for which the Income-tax law provides procedure to furnish TDS certificate by the deductee for claiming its credit, which the assessee failed to do here. Once the TDS was deducted by the deductors and the assessee was not in possession of TDS certificates, he should have made a request to verify the same from the parties who deducted the TDS, but the assessee has also failed to do so as he did not furnish even the details of the deductors before the Assessing Officer. In these peculiar facts of the case on hand, the decision relied by the assessee are not found applicable due to disparity of facts. We accordingly, conclude that the ld. CIT(A) was not justified in giving relief to the assessee u/s. 37 of the IT Act. Accordingly, ground No. 2 of appeal deserves to be allowed. 13. Regarding last issue, we find that the ld. CIT(A) has rightly given ..... 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