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"1. You have written off premises of your company at Poddar Chambers, S.A. Brelvi Road, Fort, Mumbai 400 001 amounting to Rs.1,16,68,640/-. Your reasons are that the building collapsed and has no more commercial value. Your argument is not acceptable. Your rights in the said plot of land on which the building stood continues unabated, with a distinct possibility of reconstruction of the same. Hence, the commercial value of your title to the collapsed structure is now imbibed in the undisputed right over the land. Hence, show cause why write off of Rs.1,16,68,640/- should not be disallowed.

2. It is proposed to treat the sundry creditors written off amounting to Rs.84,04,182/- as income in the hands of the company for assessment year 2001-02. Show cause why the same should not be treated as income."

The assessee company replied its submission vide letter dated 16.2.2004 which is reproduced below:-

"The assessee was having ownership apartments in building known as 'Poddar Chambers' on 5th/6th floor, at S.A. A.Y:01-02 Brelvi Road, Fort, Mumbai 400 001. The "Poddar Chambers' building collapsed in 1993. We have been trying to reconstruct the same for the rest of last 7/8 years but could not do so due to various reasons/factors including that there are lot of litigations of various tenants and our apartments being on upper floor, unless the whole collapsed portion of the building is reconstructed right from ground floor, and agreed to by all the tenants and landlord, as also, applicable permissions and NOCs are received, our portion cannot be reconstructed. In view, interalia, of all these facts and circumstances and after perusing all the efforts in this regard and in view of the relevant facts and developments during the year 2000-2001 as also as advised/opined by the auditors and legal advisors, the Board has taken a decision vide its resolution to write off the amount relating to the 'Poddar Chambers Premises'. This was also necessary to reflect a true and fair view of the Balance Sheet as at 31st March 2001. The write off is based on correct facts and legally allowable under the I.T. Act. Hence, in view of the above explanation/submission, the write off is bonafide and justified and we request you to allow the same.

ITA No.7305/Mum/ 07 (Revenue's Appeal):-

14. The ground taken by the revenue reads as under :-

"The ld. CIT(A) has erred in allowing deduction on account of write off of partially collapsed building without appreciating the facts of the case and the provisions of law."

15. At the time of hearing the ld. DR submits that for the reasons as mentioned in the assessment order the ld.CIT(A) was not justified in allowing the deduction on account of write off of partially collapsed building without appreciating the fact of the case and the provision of law. He, therefore, submits that the addition made by the Assessing Officer be restored.

17. In the rejoinder the ld. DR submits that in any case since the building had collapsed in 1993, therefore, the assessee should have written off the said amendment in the year 1993 and not in the year under consideration and, therefore, the addition made by the Assessing Officer be restored.

18. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as the assessee was having the ownership apartment in the building known as Poddar Chambers on 5th and 6th floor at S.A. Brelvi Road, Fort, Mumbai. The Poddar Chamber building collapsed in year 1993. Before the Assessing Officer it was stated by the assessee that "We have been trying to reconstruct the same for the rest of last 7/8 years but could not do so due to various A.Y:01-02 reasons/factors including that there are lot of litigations of various tenants and our apartments being on upper floor, unless the whole collapsed portion of the building is reconstructed right from ground floor, and agreed to by all the tenants and landlord, as also, applicable permissions and NOCs are received, our portion cannot be reconstructed". We further find that it was also submitted by the assessee that the landlord of the building M/s. G.R. Poddar Foundation vide their letter dated 15.2.2001 have informed the assessee that since the building has collapsed the assessee's rights whatsoever therein stands extinguished. We further find that the revenue has not placed any material on record to controvert the above facts stated by the assessee. This being so and keeping in view that the land does not belong to the assessee, we are of the view that the assessee has rightly passed the relevant entry to write-off the above amount in the year under consideration and hence, the plea taken by the ld. DR that since the building collapsed in 1993, the assessee should have passed the relevant entry in the year 1993 is devoid of any merit and the same is rejected.