Income Tax Appellate Tribunal - Ahmedabad
Hi-Tech Elastomers Ltd.,, Ahmedabad vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before Shri N.S.SAINI, ACCOUNTANT MEMBER and
Shri MAHAVIR SINGH, JUDICIAL MEMBER
ITA No.1615/ Ahd/2007
Assessment Year:2003-04
Date of hearing:11.3.10 Drafted:11.3.10
Income Tax Office, V/s. Hi-tech Elastomers Ltd.
W ad-4(3), Ahmedabad 2, Chirag Apptt. B/h
Polyechnic, Ahm edabad
PAN No. AAACH3814N
(Appellant) .. (Respondent)
Appellant b y :- Shri C.K. Mishra, SR-DR
Respondent by:- Shri M.K. Patel, AR
ORDER
PER Mahavir Singh Judicial Member:-
This appeal by the Revenue is arising out of the order of Commissioner of Income-tax (Appeals)-VIII, Ahmedabad in appeal No. CIT(A)-VIII/ITO /4(3)/ 252/05- 06 dated 22-01-2007. The assessment was framed by the ITO, Ward-4(3) Ahmedabad u/s.143(3) of the Income-tax Ac, 1961 (hereinafter referred to as 'the Act') vide his order dated 30-01-2006 for assessment year 2003-04.
2. The first issue in this appeal of the Revenue is against the order of CIT(A) in directing the Assessing Officer to work-out deduction u/s.80-IB as well as u/s.80HHC of the Act in respect to eligible profit of the business independently, ignoring the provisions of Section 80-IA(9) of the Act.
3. At the outset, the Ld. counsel for the assessee fairly stated that the issue is squarely covered against the assessee and in favour of the Revenue by the decision of Special Bench, Delhi, of this Tribunal in the case of ACIT v. Hindustan Mint & Agro Products (P) Ltd. (2009) 119 ITD 107 (Del) (SB) wherein, it was held:
"that in view of the provisions of s. 80-IA(9) deduction under s. 80HHC is to be allowed on profits and gains as reduced by the deduction claimed and allowed ITA No.1615/Ahd/2007 A.Y. 2003-04 ITO Wd-4(3) A'bd v. Hi-tech Elastomers Ltd. Page 2 under s. 80-IB/80-IA. Respectfully following the said decision Hon'ble Special Bench of the Tribunal"
Respectfully following the decision of Delhi Tribunal, we set aside the order of the CIT(A) and restore back to the order of the AO. Therefore, this ground of appeal of the revenue is allowed.
4. The next issue in this appeal of the Revenue is against the order of CIT(A) in directing the Assessing Officer to allow the bad debts written off amounting to Rs.27,000/-.
5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that Assessing Officer disallowed the claim of bad debt of Rs.27,000/- out of Rs.1.95 lakh by stating that the money due from various Port Trusts cannot be held as bad as it is due from a local authority. The CIT(A) allowed the claim of the assessee that what was written off was small amount due from various Port-Trusts being earnest money deposits not refunding despite various reminders and moreover, four years have elapsed. Before us also the assessee sated that the transaction was in normal course of business and this amount is not recoverable despite many reminders and even after 4 years due from these three Port-Trusts and accordingly the same was claimed as bad debt. We find that this issue is now covered in favour of the assessee by the decision of Hon'ble Supreme Court in Civil Appeal No.5293 of 2003 in the case of T.R.F. Ltd. v. CIT, wherein the Hon'ble apex court has interpreted the provisions of Section 36(1)(vii) of the Act as under:-
"In these appeals, we are concerned with Assessment Year 1990-1991 and Assessment Year 1993-1994. Prior to 1st April, 1989, every assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable. That position got altered by deletion of the word "established", which earlier existed in Section 36(1)(vii) of the Income Tax Act, 1961 ['Act', for short].
For the sake of clarity, we re-produce hereinbelow provisions of Section 36(1)(vi) of the Act, both prior to 1st April, 1989:
"Pre-1st April, 1989:
Other deductions.
36.(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 - -
ITA No.1615/Ahd/2007 A.Y. 2003-04
ITO Wd-4(3) A'bd v. Hi-tech Elastomers Ltd. Page 3
(i) to (vi) xxx xxx xxx
(vii) subject to the provisions of sub-section (2), the amount of any debt, or part thereof, which is established to have become a bad debt in the previous year.
Post-1st April, 1989:
Other deductions.
36.(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 -
(i) to (vi) xxx xxx xxx
(vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts in the accounts of the assessee for the assessee for the previous year.
This position in law is well-settled. After 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee."
In view of the ratio laid down by the Hon'ble apex court, we find that the issue is covered in favour of the assessee and we find no infirmity in the order of CIT(A). Accordingly, we uphold the order of CIT(A).
6. In the result, Revenue's appeal is partly allowed. Order pronounced in Open Court on 11/03/2010 Sd/- Sd/-
(N.S.Saini) (Mahavir Singh)
Accountant Member Judicial Member
Ahmedabad,
Dated : 11/03/2010
*Dkp
Copy of the Order forwarded to :
1. The Appellant.
2. The Respondent.
3. The CIT(Appeals)-VIII, Ahmedabad
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
/True copy/
Deputy/Asstt.Registrar
ITAT, Ahmedabad