Gujarat High Court
Principal Commissioner Of Income Tax 2 vs Hitachi Home And Life Solutions (India) ... on 27 April, 2015
Bench: M.R. Shah, S.H.Vora
O/TAXAP/281/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 281 of 2015
For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE S.H.VORA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any
order made thereunder ?
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PRINCIPAL COMMISSIONER OF INCOME TAX 2....Appellant(s)
Versus
HITACHI HOME AND LIFE SOLUTIONS (INDIA) LTD....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE S.H.VORA
Date : 27/04/2015
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.08.2014 passed by the learned Income Tax Appellate Tribunal, 'B' Bench, Ahmedabad in XObjection No.148/Ahd/2011 for the Assessment Year 200607, the Revenue has preferred the present Tax Appeal with the following proposed substantial question of law.
"Whether the Appellate Tribunal has substantially erred in law and on facts in allowing the amount of Rs.1,58,529/ on account of disallowance made of deduction in respect of writing off of the Page 1 of 3 O/TAXAP/281/2015 JUDGMENT irrecoverable advances and other debit balances claimed by assessee u/s 36(1)(vii) of the Act?"
[2.0] That the assessee filed the return of income for Assessment Year 200607 declaring total income of Rs.15,62,01,340/. The case was selected for scrutiny under CASS. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "Act") was issued and served upon the assessee company. That during the assessment proceedings the AO found that the assessee had written off advances amounting to Rs.1,58,529/. The AO was of the opinion that it was not allowable as the assessee had not justified as to how the debts had become bad. That the AO having not satisfied with the explanation given by the assessee the AO added Rs.1,58,529/ back to the income of the assessee. That on an appeal by the assessee, the learned CIT(A) confirmed the addition made by the AO holding that the amount of Rs.1,58,529/ representing the advance given to different parties was not arising out of sale and accordingly it was not in the nature of bad debts. Further, the learned CIT(A) deleted the disallowance made by the AO against which the Revenue preferred appeal to which we are not concerned in the present appeal. Against confirming the addition made by the AO of Rs.1,58,529/, the assessee preferred Xobjection being CO No.148/Ahd/2011 and relying upon the decision of the Hon'ble Supreme Court in the case of T.R.F. Ltd. v. Commissioner of Income Tax reported in 323 ITR 397 (SC), the learned Tribunal has deleted the addition of Rs.1,58,529/.
[2.1] Feeling aggrieved and dissatisfied with the impugned order passed by the learned Tribunal, in allowing an amount of Rs.1,58,529/ on amount of disallowance made of deduction in respect of writing off of the irrecoverable advances and other debit balances claimed by the assessee under section 36(1)(vii) of the Act, the Revenue has preferred the present Tax Appeal with the aforesaid proposed substantial question of law.
Page 2 of 3O/TAXAP/281/2015 JUDGMENT [3.0] Mrs. Bhatt, learned Counsel appearing on behalf of the Revenue has vehemently submitted that the learned Tribunal has materially erred in not appreciating the fact that the amount of Rs.1,58,529/ representing the advance given to different parties was not arising out of sale and accordingly, it was not in the nature of bad debts. It is submitted that therefore the impugned order passed by the learned Tribunal deserves to be quashed and set aside.
[4.0] Having heard learned advocate appearing on behalf of the appellant - Revenue it appears that by impugned order the learned Tribunal has deleted the addition made by the AO and not allowing the deduction in relation to the aforesaid amount as bad debts and/or it become irrecoverable. It is not in dispute that as such the assessee written off the said debt in the balance sheet. In the case of T.R.F. Ltd. (Supra), the Hon'ble Supreme Court has observed and held that for claiming deduction in relation to bad debts, the assessee is only required to establish that the debt has been written off and it is necessary to establish that the debt has infact become irrecoverable. In view of the aforesaid decision of the Hon'ble Supreme Court, it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the AO of Rs.1,58,529/ of which the deduction was claimed as written off and as irrecoverable in the accounts of the assessee.
[5.0] No substantial question of law arise in the present Tax Appeal and the same deserves to be dismissed and is, accordingly, dismissed.
Sd/ (M.R. SHAH, J.) Sd/ (S.H. VORA, J.) Ajay Page 3 of 3