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TMI Blog2023 (11) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Revenue and ITA No. 3591/Ahd/2015 filed by the respondent assessee for the assessment year 2011-12. 2. The Revenue has raised the following question of law as substantial question of law in Tax Appeal No. 496 of 2023 arising out of ITA No. 103/Ahd/2016: "Whether on the facts and circumstances of the case and in law, the Appellate Tribunal has erred in deleting the addition of Rs. 5,92,43,933/- on account of bad debts and also the unverifiable amount of deduction from customers, relying upon the decision of the Hon'ble Apex Court, without appreciating the fact that the facts of the case in hand and M/s. TRF Limited are distinguishable? 2.1 The following substantial questions of law are raised in Tax Appeal No. 497 of 2023 aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Investigation Wing at several premises of the respondent assessee and various incriminating papers/documents, diaries including pocket diaries etc. were found and impounded as per impounding orders. Statement of Managing Director of the assessee company was recorded wherein he admitted voluntarily undisclosed income of Rs. 27 crores on various heads for different assessment years. 3.2 For assessment year 2011-12, out of the voluntary disclosure made during the course of survey, an amount of Rs. 17 crores pertained to the said assessment year. The amount of Rs. 17 crores comprises of repair expenses of Rs. 2.5 crores, miscellaneous receivables of Rs. 1.5 crores and inflation/bogus expenditure under the head salary and wages of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the bad debts claimed and submitted that out of the sum of Rs. 6,90,01,038 an amount of Rs. 97,51,105 was relating to current year and the balance of Rs. 59,24,39,933 pertained to earlier years. The Assessing Officer however added Rs. 5,92,43,933 back to the total income of the assessee on the ground that the same is not allowable under the provisions of Section 36(1)(vii) of the Act. 3.5 The assessee being aggrieved preferred an appeal before the Commissioner of Income Tax (Appeals) who confirmed the addition of Rs. 2.5 crores in respect of renovation and repair expenses and sum of Rs. 1.5 crores in respect of miscellaneous receivables, however, deleted addition of Rs. 5,92,43,933 which was added under section 36(1)(vii) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter considering all materials on record and the statement recorded of the Managing Director of the assessee during the course of survey to the effect that no records or books of accounts is produced and no transactions by showing co-relation are demonstrated by the assessee, the opinion of the Assessing Officer cannot be disturbed. However, the Tribunal accepted the alternative claim of the depreciation on the assets capitalized on renovation and repair expenses of Rs. 2.5 crores. 5. We are of the opinion that the Tribunal has rightly considered the alternative claim of the assessee to grant depreciation and remanded the matter back to the Assessing Officer to verify such claim which the assessee has already disclosed the unaccounted expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the clients are in the nature of bad debt only. The entire bill for sales raised by the appellant had been accounted for in the profit and loss account. Once a part of such sales is not paid by the clients, it takes the nature of bad debts though it may be regarded as deductions made by the clients in the books of accounts. Moreover, the provisions of section 36(1)(vii) read with section 36(2) makes it clear that even a part of the income accounted for in the current year also can be claimed as a bad debt. Once the deduction made by the clients account is debited and the clients' accounts are credited, the conditions laid down by these sections are fulfilled and such amounts are allowable as a bad debt in the computation of total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowable as a bad debt in the computation of total income. Further the assessee is not required to establish that such debts have actually become bad before writing off the same in the books of accounts. Therefore the findings arrived by the Ld. CIT(A) does not require any interference. Thus the grounds raised by the Revenue does not hold merits and the same is hereby rejected." 10. In view of the above concurrent findings arrived at by the Tribunal with regard to the undisputed facts that the assessee has debited the amount of bad debts in the books of account and considering the provisions of Section 36(1)(vii) read with Section 32 of the Act which makes it clear that even a part of the income accounted for in the current year also can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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