cites: 20050495

Gamesa Renewable Private Limited, ... vs Dcit, Chennai on 13 November, 2017

Ltd. v. ACIT reported in (2006) 287 ITR 62, the Hon'ble High Court of Madhya Pradesh in the case of Binodiram Balchand & Co. v. CIT reported in (2001) 251 ITR 819, Chennai Bench of the Tribunal in the case of M/s. Tractors and Farm Equipments Ltd., v. ACIT in ITA Nos.2094, 2095 & 2096/Mds/2016 vide order dated 28.10.2016 and the Cochin Bench of the Tribunal in the case of Abad Fisheries v. DCIT in ITA No.1002/Coch/2008 vide order dated 12.10.2012. 4.5 Before us the Ld.AR explained that the business model of the assessee company by stating that, M/s. Kal Comm Pvt. Ltd., interacts with the cable operators and raises invoices towards 8 ITA Nos. 889 & 994/Chny/2018 subscription charges on behalf of the assessee company. Thereafter on a specific period mutually agreed upon, M/s. Kal Comm Pvt. Ltd., transfers the entire revenue which is collectable including the deposits to the assessee company. The irrecoverable invoiced amount which was earlier billed are intimated to the assessee company by M/s. Kal Comm Pvt. Ltd., and the accounts are reversed by both the Assessee Company as well as M/s. Kal Comm Pvt. Ltd. in the respective books of accounts. The reversal entry passed by the assessee company being, debiting the irrecoverable dues to the Profit & Loss account which was earlier debited to M/s. Kal Comm Pvt. Ltd's account and crediting M/s. Kal Comm Pvt. Ltd's account. Thus the bad debts are written off in the books of accounts of the assessee company. Since the individual cable TV subscriber's accounts are maintained in the books of M/s. Kal Comm Pvt. Ltd., in the books of M/s. Kal Comm Pvt. Ltd., the assessee's account is debited and the individual cable TV subscriber's accounts are credited with respect to the subscription amount that is not recoverable. Therefore, it is an undisputed fact that the entire subscription invoiced are booked as income in the hands of the assessee company only and M/s. Kal Comm Pvt. Ltd., receives commission from the assessee company for rendering such services. The Ld.AR further pointed out that the business 9 ITA Nos. 889 & 994/Chny/2018 model of the assessee was examined and understood by the Ld.CIT while passing order U/s.263 of the Act for the assessment year 2006-07 and 2009-10. The Ld.AR also submitted before us the Annual Accounts of the assessee company for the relevant assessment year to justify his claim. The Ld.DR on the other hand argued in support of the orders of the Ld.Revenue Authorities but could not controvert to the fact that, subscription charges are billed by M/s. Kal Comm. Pvt. Ltd., on behalf of the assessee company and the same is disclosed as income of the assessee company in the books of the assessee company against which M/s. Kal Comm. Pvt. Ltd., was shown as debtors in the books of accounts of the assessee company. Accordingly bad debts towards irrecoverable subscriptions intimated by M/s. Kal Comm. Pvt. Ltd., are written off in the books of the assessee company by debiting bad debts to profit & loss account and crediting the same amount to M/s. Kal Comm. Pvt. Ltd's account and conversely in the books of M/s. Kal Comm. Pvt. Ltd., irrecoverable subscriptions intimated are debited to individual cable TV subscriber's account and credited to the assessee's account.

Income Tax Appellate Tribunal - Chennai Cites 51 - Cited by 20 - Full Document

Trf Ltd vs Commnr. Of Income Tax on 9 February, 2010

3. At the time of intimation by M/s. Kal Comm Pvt. Ltd., regarding irrecoverable subscription Bad debts account (debit) _____________ *To M/s. Kal Comm Pvt. Ltd., account (credit) _____ (Thus, *M/s. Kal Comm Pvt. Ltd's account get nullified in the books of the assessee company due to bank/cash settlement and writing off of bad debts) 4.6.4 From the above scheme/nature of entries passed by both the parties in their respective books of accounts it is evident that the assessee company recognize income towards subscription fees collectable by M/s. Kal Comm Pvt. Ltd., on behalf of the assessee company and when a part of the subscription becomes irrecoverable, it is treated as bad debts and written off in the books of the assessee company by giving credit to M/s. Kal Comm Pvt. Ltd., because earlier it was treated as amount receivable from M/s. Kal Comm Pvt. Ltd.,. 15 ITA Nos. 889 & 994/Chny/2018 Therefore from the order of the Ld.AO & the Ld.CIT(A), it appears that they have neither understood the scheme/nature/effect of entries passed by the assessee company and M/s. Kal Comm Pvt. Ltd. in their respective books of accounts nor ventured to examine the same in the right prospective. The Revenue has all the powers under the Act even to examine the books of accounts of M/s. Kal Comm Pvt. Ltd., as well and need not depend on the assessee company to produce the same before them. Therefore, the lame excuse made by the Ld. Revenue Authorities that the assesse company had not produced the books of accounts of M/s. Kal Comm Pvt. Ltd., is not appreciable. It is also not the case that the assessee company had failed to produce its books of accounts before the Ld.Revenue Authorities. Further, from the order of the Chennai bench of the Tribunal dated 21.10.2013 in ITA No. 844/Mds/2011 for the assessment year 2006-07, explanation submitted by the Ld.AR and the annual report produced before us, it is apparent that the assessee company has written off the bad debts in its books of accounts by debiting bad debts to P&L A/c and crediting the same amount to M/s. Kal Comm Pvt. Ltd., account, which is appropriate. Needless to mention that, if the facts discussed hereinabove does not corroborate with the entries passed in the books of accounts of the Assessee Company or M/s. Kal Comm Pvt. Ltd., it would amount to be mistake 16 ITA Nos. 889 & 994/Chny/2018 apparent in the order of the Tribunal against which remedial measures are provided under the Act for the Tribunal to rectify the same and that will not amount to review of its Order. Further, the Hon'ble Apex Court in the case TRF Ltd., vs. CIT reported in 323 ITR 397, has categorically held that it is not necessary for the assessee to establish the debt to have become irrecoverable but it is enough if the bad debts is written off as irrecoverable in the books of the assessee. On perusing the facts of the case, the business model of the assessee, the finding of the Tribunal in its order dated 21.10.2013 of ITA No. 844/Mds/2011 for the assessment year 2006-07, the annual reports produced by the assessee before us and the decision of the Hon'ble Apex Court, cited supra, we are of the considered view that the disallowance of the bad debts of Rs.33,27,52,827/- in the hands of the assessee by the Ld.AO which was further upheld by the Ld.CIT(A) is erroneous. Therefore, we hereby direct the Ld.AO to allow the claim of bad debts of Rs.33,27,52,827/- in the hands of the assessee company which is written off in the books of accounts of the assessee company by crediting to the account of M/s. Kal Comm Pvt. Ltd. Accordingly, the ground raised by the assessee company is allowed in its favour.

Supreme Court of India Cites 2 - Cited by 561 - Full Document

Commissioner Of Income-Tax, Bangalore vs K.Y. Pilliah And Sons on 13 October, 1966

"9. The issue of amortization of cost of movie and serial rights, programme production expenses, consumable and media expenses by treating them as intangible assets u/s.32(1)(ii) has been dealt in detail by the CIT(Appeals) in his order dated 23-02-2013 relevant to the AY 2006-07 and 2007-08. We fully agree with the detailed findings and the reasoning given by the CIT(Appeals) in his order allowing this ground of appeal of the assessee. For the sake of brevity, we are not reproducing the findings of CIT (Appeals) in accordance with the judgment of the Hon'ble Supreme Court of India in the case of CIT Vs. K.Y. Pilliah & Sons reported as 63 ITR 411 subsequently followed by the Hon'ble Delhi High Court in the case of CIT Vs. Global Vantedge (P) Ltd., reported as 354 ITR 21 (Del) .......... 19 ITA Nos. 889 & 994/Chny/2018 Accordingly, the findings of the CIT(Appeals) on the issue are affirmed and this ground of appeal of the Revenue in respect of all the AYs is dismissed." 4.3.2 For the A.Ys 2010-11 & 2011-12 also, on similar issue, the Hon'ble ITAT vide its order in ITA Nos. 1340 & 1341/Mds/2015 dated 19.02.2016 by following the above-mentioned ITAT order, dismissed the appeals of the revenue. The AR has submitted that the department's appeals against the ITAT orders are still pending before the Hon'ble High Court of Madras.

Supreme Court of India Cites 1 - Cited by 105 - J C Shah - Full Document

Cit vs Global Vantedge Pvt Ltd on 27 January, 2014

"9. The issue of amortization of cost of movie and serial rights, programme production expenses, consumable and media expenses by treating them as intangible assets u/s.32(1)(ii) has been dealt in detail by the CIT(Appeals) in his order dated 23-02-2013 relevant to the AY 2006-07 and 2007-08. We fully agree with the detailed findings and the reasoning given by the CIT(Appeals) in his order allowing this ground of appeal of the assessee. For the sake of brevity, we are not reproducing the findings of CIT (Appeals) in accordance with the judgment of the Hon'ble Supreme Court of India in the case of CIT Vs. K.Y. Pilliah & Sons reported as 63 ITR 411 subsequently followed by the Hon'ble Delhi High Court in the case of CIT Vs. Global Vantedge (P) Ltd., reported as 354 ITR 21 (Del) .......... 19 ITA Nos. 889 & 994/Chny/2018 Accordingly, the findings of the CIT(Appeals) on the issue are affirmed and this ground of appeal of the Revenue in respect of all the AYs is dismissed." 4.3.2 For the A.Ys 2010-11 & 2011-12 also, on similar issue, the Hon'ble ITAT vide its order in ITA Nos. 1340 & 1341/Mds/2015 dated 19.02.2016 by following the above-mentioned ITAT order, dismissed the appeals of the revenue. The AR has submitted that the department's appeals against the ITAT orders are still pending before the Hon'ble High Court of Madras.

Supreme Court - Daily Orders Cites 0 - Cited by 20 - Full Document

Binodiram Balchand And Co. vs Commissioner Of Income-Tax on 24 April, 2001

Ltd. v. ACIT reported in (2006) 287 ITR 62, the Hon'ble High Court of Madhya Pradesh in the case of Binodiram Balchand & Co. v. CIT reported in (2001) 251 ITR 819, Chennai Bench of the Tribunal in the case of M/s. Tractors and Farm Equipments Ltd., v. ACIT in ITA Nos.2094, 2095 & 2096/Mds/2016 vide order dated 28.10.2016 and the Cochin Bench of the Tribunal in the case of Abad Fisheries v. DCIT in ITA No.1002/Coch/2008 vide order dated 12.10.2012. 4.5 Before us the Ld.AR explained that the business model of the assessee company by stating that, M/s. Kal Comm Pvt. Ltd., interacts with the cable operators and raises invoices towards 8 ITA Nos. 889 & 994/Chny/2018 subscription charges on behalf of the assessee company. Thereafter on a specific period mutually agreed upon, M/s. Kal Comm Pvt. Ltd., transfers the entire revenue which is collectable including the deposits to the assessee company. The irrecoverable invoiced amount which was earlier billed are intimated to the assessee company by M/s. Kal Comm Pvt. Ltd., and the accounts are reversed by both the Assessee Company as well as M/s. Kal Comm Pvt. Ltd. in the respective books of accounts. The reversal entry passed by the assessee company being, debiting the irrecoverable dues to the Profit & Loss account which was earlier debited to M/s. Kal Comm Pvt. Ltd's account and crediting M/s. Kal Comm Pvt. Ltd's account. Thus the bad debts are written off in the books of accounts of the assessee company. Since the individual cable TV subscriber's accounts are maintained in the books of M/s. Kal Comm Pvt. Ltd., in the books of M/s. Kal Comm Pvt. Ltd., the assessee's account is debited and the individual cable TV subscriber's accounts are credited with respect to the subscription amount that is not recoverable. Therefore, it is an undisputed fact that the entire subscription invoiced are booked as income in the hands of the assessee company only and M/s. Kal Comm Pvt. Ltd., receives commission from the assessee company for rendering such services. The Ld.AR further pointed out that the business 9 ITA Nos. 889 & 994/Chny/2018 model of the assessee was examined and understood by the Ld.CIT while passing order U/s.263 of the Act for the assessment year 2006-07 and 2009-10. The Ld.AR also submitted before us the Annual Accounts of the assessee company for the relevant assessment year to justify his claim. The Ld.DR on the other hand argued in support of the orders of the Ld.Revenue Authorities but could not controvert to the fact that, subscription charges are billed by M/s. Kal Comm. Pvt. Ltd., on behalf of the assessee company and the same is disclosed as income of the assessee company in the books of the assessee company against which M/s. Kal Comm. Pvt. Ltd., was shown as debtors in the books of accounts of the assessee company. Accordingly bad debts towards irrecoverable subscriptions intimated by M/s. Kal Comm. Pvt. Ltd., are written off in the books of the assessee company by debiting bad debts to profit & loss account and crediting the same amount to M/s. Kal Comm. Pvt. Ltd's account and conversely in the books of M/s. Kal Comm. Pvt. Ltd., irrecoverable subscriptions intimated are debited to individual cable TV subscriber's account and credited to the assessee's account.

Madhya Pradesh High Court Cites 2 - Cited by 1 - J G Chitre - Full Document

Dcit, Chennai vs Tractors And Farm Equipments Ltd., ... on 27 September, 2017

Ltd. v. ACIT reported in (2006) 287 ITR 62, the Hon'ble High Court of Madhya Pradesh in the case of Binodiram Balchand & Co. v. CIT reported in (2001) 251 ITR 819, Chennai Bench of the Tribunal in the case of M/s. Tractors and Farm Equipments Ltd., v. ACIT in ITA Nos.2094, 2095 & 2096/Mds/2016 vide order dated 28.10.2016 and the Cochin Bench of the Tribunal in the case of Abad Fisheries v. DCIT in ITA No.1002/Coch/2008 vide order dated 12.10.2012. 4.5 Before us the Ld.AR explained that the business model of the assessee company by stating that, M/s. Kal Comm Pvt. Ltd., interacts with the cable operators and raises invoices towards 8 ITA Nos. 889 & 994/Chny/2018 subscription charges on behalf of the assessee company. Thereafter on a specific period mutually agreed upon, M/s. Kal Comm Pvt. Ltd., transfers the entire revenue which is collectable including the deposits to the assessee company. The irrecoverable invoiced amount which was earlier billed are intimated to the assessee company by M/s. Kal Comm Pvt. Ltd., and the accounts are reversed by both the Assessee Company as well as M/s. Kal Comm Pvt. Ltd. in the respective books of accounts. The reversal entry passed by the assessee company being, debiting the irrecoverable dues to the Profit & Loss account which was earlier debited to M/s. Kal Comm Pvt. Ltd's account and crediting M/s. Kal Comm Pvt. Ltd's account. Thus the bad debts are written off in the books of accounts of the assessee company. Since the individual cable TV subscriber's accounts are maintained in the books of M/s. Kal Comm Pvt. Ltd., in the books of M/s. Kal Comm Pvt. Ltd., the assessee's account is debited and the individual cable TV subscriber's accounts are credited with respect to the subscription amount that is not recoverable. Therefore, it is an undisputed fact that the entire subscription invoiced are booked as income in the hands of the assessee company only and M/s. Kal Comm Pvt. Ltd., receives commission from the assessee company for rendering such services. The Ld.AR further pointed out that the business 9 ITA Nos. 889 & 994/Chny/2018 model of the assessee was examined and understood by the Ld.CIT while passing order U/s.263 of the Act for the assessment year 2006-07 and 2009-10. The Ld.AR also submitted before us the Annual Accounts of the assessee company for the relevant assessment year to justify his claim. The Ld.DR on the other hand argued in support of the orders of the Ld.Revenue Authorities but could not controvert to the fact that, subscription charges are billed by M/s. Kal Comm. Pvt. Ltd., on behalf of the assessee company and the same is disclosed as income of the assessee company in the books of the assessee company against which M/s. Kal Comm. Pvt. Ltd., was shown as debtors in the books of accounts of the assessee company. Accordingly bad debts towards irrecoverable subscriptions intimated by M/s. Kal Comm. Pvt. Ltd., are written off in the books of the assessee company by debiting bad debts to profit & loss account and crediting the same amount to M/s. Kal Comm. Pvt. Ltd's account and conversely in the books of M/s. Kal Comm. Pvt. Ltd., irrecoverable subscriptions intimated are debited to individual cable TV subscriber's account and credited to the assessee's account.

Income Tax Appellate Tribunal - Chennai Cites 8 - Cited by 5 - Full Document

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