Income Tax Appellate Tribunal - Mumbai
Dc Agarwal Share & Stock Brokers Ltd, ... vs Department Of Income Tax on 14 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH 'D' MUMBAI
BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND
SHRI T.R. SOOD (ACCOUNTANT MEMBER)
ITA No. 3965/Mum/2011
Assessment Year-2005-06
The ACIT, Range 4(1), M/s. DC Agarwal Share & Stock
Aayakar Bhavan, Brokers Ltd.,
Mumbai-400 020 5, Chamund Heritage,
Vs. Sai Mandir Road,
Andheri(E),
Mumbai-400 069
PAN-AABCD 4227E
(Appellant) (Respondent)
Appellant by: Shri C.G.K. Nair
Respondent by: None
Date of Hearing :14.03.2012
Date of pronouncement:14.03.2012
ORDER
PER B.R. MITTAL, JM :
The Department has filed this appeal for assessment year 2005-06 against order of Ld. CIT(A) dt. 10.3.2011 disputing disallowance of claim of deduction of bad debt of Rs. 13,75,232/-.
2. None appeared on behalf of assessee inspite of notice. Considering the material placed on record and orders of authorities below, we have decided to dispose of this appeal after hearing Ld. Departmental Representative.
3. Ld. DR in his submission relied on the order of AO.
4. We observed that AO disallowed claim of assessee after observing that it is not sufficient to claim the debt to be bad merely on the basis of writing it 2 ITA No. 3965/M/11 off in the books of accounts. That the bonafide assessment by assessee that realization of debt is not possible is definitely to be provided before writing it off in the books of account by assessee. However, in the first appeal, Ld. CIT(A) allowed the claim of Rs. 12,21,569/- after observing that there being no finding that the amount of debit balance had not arisen with respect to transaction undertaken by assessee and the same did not fulfill the conditions to Section 36(2) of I.T. Act. It is observed that Ld. CIT(A) has not allowed deduction of bad debt of Rs. 1,53,663/- on account of Rupa Securities on the ground that assessee has not been able to establish that the amount of Rs. 1,53,663/- has been written off . Therefore, department is in appeal against order of Ld. CIT(A).
5. It is relevant to state that ground of appeal taken by department stating bad debt amount of Rs. 13,75,232/- has been deleted by Ld. CIT(A) is not factually correct as mention hereinabove. Ld. CIT(A) has only deleted the amount of Rs. 12,21,569/- on account of M/s. Rakman V Dalal and not deleted sum of Rs. 1,53663/- on account of Rupa Securities.
6. During the course of hearing, Ld. Departmental Representative has not disputed the fact that said amount of Rs. 12,21,569/- had been claimed as bad debt as assessee was acting as sub-broker of M/s. Raman V Dalal who were members of BSE and on account of some disputes had arisen, assessee could not collect the said amount and therefore, amount has been written off. Ld. DR has not disputed the fact that assessee has fulfilled the condition of Sec. 36(2) of I.T. Act that said amount has been assessed to tax in the preceding assessment year. Further, there is no dispute to the fact that assessee has written off said amount in its books of account in the assessment year under consideration.
7. ITAT, Special Bench has held in the case of DCIT Vs Oman International Bank (SAOG) 100 ITD 285 (SB) that as per existing provisions of Sec. 36(1)(vii) after its amendment with effect from 1.4.1989, it is not 3 ITA No. 3965/M/11 obligatory on the part of assessee to prove that debt written off is indeed bad debt for the purpose of allowance u/s. 36(1)(vii) of the I.T. Act. Thus, it is sufficient if assessee has written off said debt in its books of account to claim deduction as bad debt u/s. 36(1)(vii) of I.T. Act. The Hon'ble Bombay High Court has also held in the case of CIT Vs Star Chemicals (Bombay) P. Ltd. (Bom) that if assessee has written off the debt as bad debt, that would satisfy the purpose of Act. Hence, we do not find any reason to interfere with the order of Ld. CIT(A). Accordingly, we uphold the order of Ld. CIT(A) and reject grounds of appeal taken by department.
8. In the result, appeal of department is dismissed.
Order pronounced in the Open Court at the time of hearing on 14th March, 2012 Sd/- Sd/-
(T.R. SOOD) (B.R. MITTAL )
Accountant Member Judicial Member
Mumbai, Dated 14th March, 2012
Rj
Copy to :
1. The Appellant
2. The Respondent
3. The CIT-concerned
4. The CIT(A)-concerned
5. The DR 'D' Bench
True Copy
By Order
Asstt. Registrar, I.T.A.T, Mumbai