Income Tax Appellate Tribunal - Mumbai
Utility Powertech Ltd , Mumbai vs Department Of Income Tax on 16 February, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "F" : MUMBAI
BEFORE SHRI D.MANMOHAN, HON'BLE VICE PRESIDENT
AND
SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER
ITA. No. 3348/Mum/2009
Assessment year 2005-2006
ACIT 1 (3) M/s. Utility Powertech Ltd.
Mumbai - 020. vs. Mumbai - 400 055
PAN AAACU-3458-P
(Appellant) (Respondent)
For Appellant : Shri Virendra Ojha, D.R.
For Respondent : Shri Amit Khatiwala
ORDER
PER SHRI D. MANMOHAN, V.P.
1. This appeal, filed at the instance of the Revenue, is directed against the Order dated 16-2-2009 passed by the CIT (A)-XXI, Mumbai and it pertains to the assessment year 2005-2006. The only ground urged by the Revenue reads as under :
"On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to allow bad debts as claimed by the assessee."
2. At the time of hearing learned Departmental Representative submitted that the assessee has to prima facie prove that the debt is bad and written off as irrecoverable in the books of the assessee as per section 36(1)(vii) of the Act and the legislation has not given the assessee a wide discretion to write off any debt at will.
3. On the other hand, learned Counsel appearing on behalf of the assessee submitted that the issue stands covered by the decision of the jurisdictional High Court in the case of DIT vs. Oman International Bank (Bom.) (2009) 313 ITR 128.
24. We have considered the rival submissions and perused the record. The Hon'ble Bombay High Court, in the aforecited decision, observed at page 136 as under :
"Considering the above discussion, in our opinion, to treat the debt as bad debt has to be commercial or business decision of the assessee based on the relevant material in possession of the assessee. Once the assessee records the debt as bad debt in his books of account that would prima facie establish that it is a bad debt unless the Assessing Officer for good reasons holds otherwise. The writing off in the accounts no doubt, has to be bona fide. Once that be the case, the assessee is not called upon to discharge any further burden. In our opinion, therefore, we are in agreement with the view taken by the majority constituting the Bench of the learned Tribunal.
The question as framed will have to be answered by holding that after the amendment it is neither obligatory nor is the burden on the assessee to prove that the debt written off by him is indeed a bad debt as long as it is bona fide and based on commercial wisdom or expediency. Appeal disposed of accordingly."
5. In the instant case there is no dispute with regard to the fact that assessee has written off in the books of account a sum of Rs.8,16,250/- referable to the bill dated 8-5-2000 raised on ITI, Lucknow. In order to prove bonafides of the claim, the assessee submitted that as against the bill raised in the year 2000 no payment was received till 2007. Even after repeated reminders and efforts taken to recover the same, the assessee-company was unsuccessful in 3 recovering the amount and hence it had to take a decision of writing off the same as bad debt.
6. The bonafides of the claim was not disputed by the Assessing Officer. He observed that the onus is upon the assessee that the debt had become bad and irrevocable.
7. On an appeal filed by the assessee, the learned CIT(A) allowed the benefit of write off, by following the decision of the jurisdictional High Court in the case of Star Chemicals 11 DTR 311. Thus the Revenue is in appeal before us. No material whatsoever was placed before us to contradict the claim of the assessee that the write off is based on bonafide decision. Under the circumstances, we are of the considered view that the view taken by the learned CIT(A) is in consonance with the decision of the Hon'ble Bombay High Court in the case of Omen International (supra) and thus it does not call for interference.
8. In the result, appeal filed by the Revenue is dismissed.
Pronounced accordingly
Sd/- Sd/-
(RAJENDRA SINGH) (D.MANMOHAN)
ACCOUNTANT MEMBER VICE PRESIDENT
Mumbai, Dt. 09th February, 2010
VBP/-
Copy to
1. ACIT 1 (3), Room No. 540/564, 5th Floor, Aayakar Bhavan, M.K.Road, new Marine Lines, Mumbai - 400 020.
2. M/s. Utility Powertech Ltd. 3rd Floor, Reliance Energy Centre, Santacruz (East), Mumbai - 400 055 PAN AAACU-3458-P
3. CIT(A)-XXI, Mittal Court, 'B' Wing, R.Nos. 13 & 14, 3rd Floor, Nariman Point, Mumbai - 400 021.
4. CIT, City-1, Mumbai
5. DR "F" Bench
6. Guard File (True copy) By Order Asst. Registrar, ITAT, Mumbai Benches 4 SNo Date Initials 1 Draft dictated on 08-02-2010 Sr.P.S.
2. Draft Placed before author 08-02-2010 Sr.P.S.
3. Draft proposed & placed before the Second Member V.P.
4. Draft discussed/approved by Second Member A.M
5. Approved Draft comes to the Sr.PS/PS Sr.P.S.
6. Kept for pronouncement on Sr.P.S.
7. File sent to the Bench Clerk Sr.P.S.
8. Date on which file goes to the Head Clerk
9. Date of Dispatch of Order