ASSISTANT COMMMISSIONER OF INCOME TAX (OSD) Vs. FAIRDEAL SUPPLIERS
INCOME TAX APPELLATE TRIBUNAL
Assistant Commmissioner Of Income Tax (Osd)
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(1.) THE Revenue's appeal is emanating from the order of Ld.SECTION 40A(3) CIT(A) -XX, Ahmedabad dated 08.11.2010 for A.Y. 2004 -05.
(2.) THE sole ground of appeal is against the deleting the addition of Rs. 13,15,969/ - made by the Assessing Officer on account of bad debts. The A.O. observed that the Assessee had claimed bad debts of Rs.
13,15,969/ - in Profit and Loss account. He asked to file details of parties during the assessment proceeding, the Assessee filed the details partly and also gave the justification for claiming bad debt. That
the Assessee had written off these bad debts as irrecoverable and there no need to prove debt had been
became bad on the appellant. The A.O. found that in case of Shasum Chemical & Durgs Ltd. that this
amount pertain to penalty for delayed dispatch of good by the appellant and this amount was deducted by
the party for breach of contract by the assessee. The remaining details were not furnished before the A.O.
In absence of details as well as not proving recovery efforts and debt became bad, he made an addition of
Rs. 13,15,969/ -.
(3.) BEING aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who had allowed the appeal in favour of the Assessee by observing as under: -
4.2 I have gone through the assessment order as also the submissions of the A.R carefully. It is seen that the debts have actually been written off in the books of accounts of the appellant. In view of the recent decision of the Honorable Supreme Court in the case of TRF Ltd. v. CIT reported in 323 ITR 397 (SC) wherein the honorable Supreme Court has held that it does not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt written off as irrecoverable in the account of the assessee.
In view of the above, the addition of Rs. 13,15,969/ - made by the A.O is not justified. The same is deleted.
Now Revenue is before us ld. D.R. relied upon the order of the A.O and argued that Assessee did not furnish the details of the debt before the A.O at time of assessment proceedings. Therefore he had not
fulfilled the condition laid down under section 36(2) of the I.T. Act and genuineness of this debt had not
proved before him.;
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