R.J. Trade Wings Pvt. Ltd. v. Assistant Commissioner of Income-tax, Circle- 2(3)(2), Mumbai
[Citation -2019-LL-0930-53]

Citation 2019-LL-0930-53
Appellant Name R.J. Trade Wings Pvt. Ltd.
Respondent Name Assistant Commissioner of Income-tax, Circle- 2(3)(2), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 30/09/2019
Assessment Year 2015-16
Judgment View Judgment
Keyword Tags business of banking • disallowance of employees contribution to pf • disallowance of bad debt • write off of bad debts • documentary evidence • rectification application • sale transaction • provision for bad and doubtful debt • reasonable opportunity of being heard
Bot Summary: The Ld. counsel for the assessee submits that the above issue is decided by the Hon ble Bombay High Court in the case of CIT v. Ghatge Patil Transports Ltd. 368 ITR 749 and the same may be followed. During the course of assessment proceedings, the AO observed that in the PL account, the assessee has debited an amount of Rs.9,78,234/- as bad debts written off under the head other expenses. In appeal before the Ld. CIT(A), the AR of the assessee stated that they would not like to pursue the above ground of appeal as they would redress their grievance before the AO u/s 154 of the Act. The Ld. counsel for the assessee submits that a rectification application has been filed on 18.10.2018 before the AO. Along with it the following details were enclosed : 1. In T.R.F. Ltd. v. CIT 190 Taxman 391, it is held that after April 1, 1989, it is not necessary for an assessee to establish that debt has become irrecoverable; it is enough if bad debt is written off as irrecoverable in accounts of assessee. In view of the above position of law, we set aside the order of the Ld. CIT(A) on the above ground of appeal and restore the matter to the file of the AO to make an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO. Thus the 2nd ground of appeal is allowed for statistical purposes.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA No. 5770/MUM/2018 Assessment Year: 2015-16 M/s R.J. Trade Wings Pvt. Assistant Commissioner of Income Ltd. 18/20, Dubash Marg, Vs. Tax, Circle-2(3)(2), Aayakar Kala Ghoda, Fort, Mumbai- Bhavan, M.K. Marg, Mumbai- 400020. 400020. PAN No. AABCR1467J Appellant Respondent Assessee by : Ms. Aniket Shet, AR Revenue by : Mrs. Jothi Lakshmi Nayak, DR Date of Hearing : 23/09/2019 Date of pronouncement : 30/09/2019 ORDER PER N.K. PRADHAN, AM This is appeal filed by assessee. relevant assessment year is 2015-16. appeal is directed against order of Commissioner of Income Tax-6, Mumbai [in short CIT(A) ] and arises out of assessment completed u/s 143(3) of Income Tax Act 1961, (the Act ). 2. 1st ground raised by assessee in this appeal is against order of CIT(A) confirming disallowance of employee s M/s R.J. Trade Wings 2 ITA No. 5770/Mum/2018 contribution to provident fund of Rs.2,31,328/- u/s 36(1)(va) r.w.s. 2(24)(x) of Act. facts are that Assessing Officer (AO) observed on perusal of clause 20(b) of Tax Audit Report that assessee during financial year 2014-15 had deposited amount of Rs.2,31,328/- representing employee s contribution to Provident Fund beyond stipulated due dates. Therefore, he disallowed above amount of Rs.2,31,328/-. 3. In appeal, Ld. CIT(A) followed decision Hon ble Gujarat High Court in CIT v. Gujarat State Road Transport Corporation (Tax Appeal No. 637 of 2013) and confirmed above disallowance made by AO. 4. Before us, Ld. counsel for assessee submits that above issue is decided by Hon ble Bombay High Court in case of CIT v. Ghatge Patil Transports Ltd. (2014) 368 ITR 749 and same may be followed. On other hand, Ld. Departmental Representative (DR) relies on order passed by CIT(A). 5. We have heard rival submissions and perused relevant materials on record. We find that in Ghatge Patil Transports Ltd. (supra), Hon ble Bombay High Court has held that both employee s and employer s contributions are covered under amendment to section 43B and judgment of Supreme Court in CIT v. Alom Extrusions Ltd. (2009) 319 ITR 306 (SC). M/s R.J. Trade Wings 3 ITA No. 5770/Mum/2018 Following above decision of Hon ble Bombay High Court, we delete disallowance of Rs.2,31,328/- made by AO and allow 1st ground of appeal. 6. 2nd ground raised by assessee in this appeal is against order of CIT(A) in not adjudicating disallowance of bad debts amounting to Rs.9,78,234/-. During course of assessment proceedings, AO observed that in P&L account, assessee has debited amount of Rs.9,78,234/- as bad debts written off under head other expenses . details are as under : Sr. No. Name of Party Address Amount in rupees 1. Alpi USA Inc. 156-15, 146th AVE Suite, 110, 11434, 2,51,166/- Jamaica, N.Y.USA 2. Alpi USA Pacific Los Angeles, 360 North Sepulveda 7,26,727/- Bldg. Suite 1015 USA 3. Miscellaneous Miscellaneous 341/- Total 9,78,234/- AO noted that assessee failed to substantiate its claim u/s 36(2) of Act with supporting documentary evidence. Therefore, he disallowed above sum of Rs.9,78,234/-. 7. In appeal before Ld. CIT(A), AR of assessee stated that they would not like to pursue above ground of appeal as they would redress their grievance before AO u/s 154 of Act. Mentioning that this has been specifically noted on order sheet dated M/s R.J. Trade Wings 4 ITA No. 5770/Mum/2018 30.07.2018, which has been duly signed by AR of assessee, Ld. CIT(A) dismissed said ground of appeal as not pressed. 8. Before us, Ld. counsel for assessee submits that rectification application has been filed on 18.10.2018 before AO. Along with it following details were enclosed : 1. Ledger accounts of Debtors of respective years in which income has been booked (to prove income has been offered to tax). 2. Invoices raised by assessee for above mentioned sale transactions. 3. Ledger of Debtors for year under consideration wherein balances have written off as Bad Debts (to prove bad debts has been actually written off in books). Ld. counsel submits that above matter may be restored to file of AO. 9. On other hand, Ld. DR supports order passed by CIT(A). 10. We have heard rival submissions and perused relevant materials on record. It is well-settled that amount of any debt or part thereof is allowable as deduction subject to following conditions: (a) debt has been taken into account in computing income of assessee of that previous year or of any earlier previous year, or M/s R.J. Trade Wings 5 ITA No. 5770/Mum/2018 represents money lent in ordinary course of business of banking or money-lending which is carried on by assessee; and (b) it has been written off as irrecoverable in accounts of assessee for that previous year (transfer to provision for bad and doubtful debts account is not taken as bad debts written off). In T.R.F. Ltd. v. CIT (2010) 190 Taxman 391 (SC), it is held that after April 1, 1989, it is not necessary for assessee to establish that debt, in fact, has become irrecoverable; it is enough if bad debt is written off as irrecoverable in accounts of assessee. In view of above position of law, we set aside order of Ld. CIT(A) on above ground of appeal and restore matter to file of AO to make order afresh after giving reasonable opportunity of being heard to assessee. We direct assessee to file relevant documents/evidence before AO. Thus 2nd ground of appeal is allowed for statistical purposes. 11. In result, appeal is partly allowed. Order pronounced in open Court on 30/09/2019. Sd/- Sd/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/09/2019 Rahul Sharma, Sr. P.S. M/s R.J. Trade Wings 6 ITA No. 5770/Mum/2018 Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Sr. Private Secretary) ITAT, Mumbai M/s R.J. Trade Wings 7 ITA No. 5770/Mum/2018 R.J. Trade Wings Pvt. Ltd. v. Assistant Commissioner of Income-tax, Circle- 2(3)(2), Mumbai
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