M.V. Vasudevan, JM - (1.) THE appeals being 48/Pn/1995 and 1035/Pn/1995 are directed by the assessee against the orders dated 7-10-1994 and 22-8-1995, of Commissioner (Appeals)-II, Pune, relating to assessment years 1991-92 and 1992-93, respectively. Since common issues are involved in these appeals and were heard together, we find it convenient to dispose off the same by a consolidated order. First we shall take up the ITA No. 48/Pn/1995, the appeal by the assessee for the assessment year 1991-92.
(2.) The first four grounds of appeal of the assessee read as follows: 1. The learned Commissioner (Appeals) erred in confirming disallowance of the claim of bad debt of Rs. 12,36,412 due from M/s New Sahyadri Industries by taking a narrow and technical view that unless debtors deny, the debt cannot be considered to be bad. He also failed to appreciate that the remission allowed by the appellant was entirely for business consideration and it could be allowed under section 28 or 37 if it could not be allowed as bad debt under section 36(1)(vii). The deduction of Rs. 12,36,412 being properly allowable either as bad debt or as remission may kindly be allowed. 2. The learned Commissioner (Appeals) erred in confirming disallowance of the claim of bad debt of Rs. 75,000 due from Vignahar Sahakari Pani Puravatha Sanstha which was written off more as a sort of remission in the interest of keeping cordial relations and with the hopes of future business. The deduction of Rs. 75,000 being properly allowable at least as remission may kindly be allowed. The learned -Commissioner (Appeals) erred in confirming disallowance of the claim of bad debt of Rs. 85,488 due from Jalvahinin Krishi Udyog. For the same reasons as in Ground No. 2, the claim may kindly be allowed.
(3.) IN considering the claim of bad debt, the Commissioner (Appeals) ought to have appreciated legislative changes in section 36(1)(vii) read with section 36(2). He also should have considered well-settled position in law that in considering such claim, the businessman's point of view should be considered and the matter should not be decided by applying subjective standards. 3. The assessee had claimed bad debts at Rs. 26,36,854. The assessing officer called upon the assessee to justify the claim of bad debts. According to the assessee, since the amount was written off in the books of account as per the amended provision of section 36(1)(vii) of the Act, the same has to be allowed automatically in view of the amended provisions of law with effect from, 1-4-1989. The assessing officer was of the view that even as per the amended provisions of section 36(1)(vil) ought to have become bad debt before it is written off as irrecoverable in the books of accounts of the assessee for the previous year. He therefore called upon the assessee to prove that the debt had in fact become bad. The break of the amounts claimed by the assessee which were disallowed by the assessing officer are as follows: judgement_9483_tlit0_20030.htm The assessing officer disallowed the claim of the assessee by giving elaborate reasons as set out in page Nos. 3 to 12 of the order of the assessment. On appeal by the assessee, the Commissioner (Appeals) substantially confirmed the order of the assessing officer by allowing only part relief to the assessee. 4. IN the present appeal we are concerned with the claim of the assessee and the disallowance made by the assessing officer and confirmed by the Commissioner (Appeals) out of the claim for deduction on account of bad debts which were as follows : (a) Amounts due from M/s New Sahyadri INdustries (hereinafter called as NSI) Rs. 12,36,412 (b) Amount due from M/s Vignahar Sahakari Pani Puravatha Sanstha Rs. 75,000 (c) Amount due from M/s Jalvahini Krishi Udyog Rs. 85,488;