Gujarat High Court
Commissioner Of Income Tax I vs Akar Laminators ... on 27 January, 2015
Author: Jayant Patel
Bench: Jayant Patel, S.H.Vora
O/TAXAP/51/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 51 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE JAYANT PATEL
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, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
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COMMISSIONER OF INCOME TAX I....Appellant(s)
Versus
AKAR LAMINATORS LIMITED....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 JAYANT PATEL
and
HONOURABLE MR.JUSTICE S.H.VORA
Date : 27/01/2015
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE JAYANT PATEL)
1. The Revenue has preferred the present appeal on the following substantial question of law;
- Whether the Appellate Tribunal has substantially erred in law Page 1 of 3 O/TAXAP/51/2015 JUDGMENT in interpreting the provisions of Section 36(1)(vii)?
2. We have heard Ms. Bhatt, learned counsel appearing for the appellant.
3. The relevant facts are that AO for the assessment year of 20002001 disallowed the claim of Rs.2,36,27,765/ as an expenditure on account of reversion pertaining to the transactions on loan, rebate on the ground that such provision could have been made in the earlier year, as the expenditure were incurred during the said period. In Appeal, CIT (Appeals) confirmed the order of AO by observing that the appellant should have shown such expenses as debtors and after that it could be written off. It was also observed that the appellant could not discharge its onus that these are bad debts. The tribunal in further Appeal observed thus;
Paragraph 19:
"We have heard the rival submissions and perused the material on record. The undisputed fact is that the amount which have been written off were shown as sales in earlier years and were also offered to tax in the respective years. The fact in the year under appeal, the assessee has debited its profit and loss account and the amount has been written off has not been disputed by the Revenue. The Hon'ble Apex Court in the case of T.R.F. Ltd. V. CIT (Supra) has held that after 1st April 1989, it is not necessary for the assessee to establish that the debt has in fact become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. In view of the aforesaid facts and respectfully following the decision of Apex Court cited hereinabove, we are of the view that since the assessee is entitled to its deduction. Accordingly, we delete the addition made by the AO. In the result this ground of the Assessee is allowed.
4. The aforesaid shows that the Tribunal while allowing the appeal of the assessee on the aforesaid points relied upon the decision of Page 2 of 3 O/TAXAP/51/2015 JUDGMENT the Apex Court in case of TRF Limited v. CIT, reported in (2010) 323 ITR 397 (SC). The learned counsel contended that as the bad debt which has been written off related to the expenditure of the earlier year it could not be treated as bad debt in the present assessment year. It was also submitted that no material was produced by the assessee to show that the debt had become irrecoverable and, therefore, the tribunal can be said to have committed an error.
5. The contention cannot be accepted for the simple reason that the tribunal by referring to the decision of the Apex Court in case of TRF Limited (Supra), has observed that it is not necessary for the assessee to establish that the debt had infact become irrecoverable. On the aspects of expenditure of the previous year not shown as debt, we do not find that the tribunal has committed error in consideration thereof because the tribunal has clearly recorded that the year under appeal, the assessee has debited its profit and loss account and the amount has been written off as not been disputed by the Revenue.
6. We do not find any substantial question of law as sought to be canvased.
7. In view of above, the present appeal is meritless and hence the same stands dismissed.
(JAYANT PATEL, J.) (S.H.VORA, J.) * Vatsal Page 3 of 3