Arrow Coated Products Ltd. v. Asstt. CIT

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The Tax Publishers2012 TaxPub(DT) 2141 (Mum-Trib) : (2012) 047 (II) ITCL 0108 : (2012) 136 ITD 0315 : (2012) 150 TTJ 0309 : (2012) 077 DTR 0314 INCOME TAX ACT, 1961 --Business deduction under section 36(1)(vii)--Bad debtsDeduction claimed from amount already debited to profit and loss account--Assessee-company made a provision for doubtful debts in the books of account of Rs. 70,00,000 and debited the same to the profit and loss account in assessment year 2004-05. The provision for doubtful debts was reduced from gross total sundry debtors in the balance sheet. In the return of income, assessee added to the profit and loss account, the provision for doubtful debts. Thus, assessee did not claim any deduction on account of bad debts in assessment year 2004-05. In the assessment year 2005-06 and 2006-07, assessee wrote off in the accounts of the concerned sundry debtors, the provision for doubtful debts already credited in assessment year 2004-05. Revenue rejected the claim of assessee on the ground that amount claimed as deduction on account of bad debts was not debited in the profit and loss account in assessment year 2006-07. Assessee contended that amount of bad debts claimed as deduction in the assessment year 2006-07 was part of the sum which was already debited to the profit and loss account in assessment year 2004-05. Held: The claim of assessee for deduction on account of bad debts had been allowed as it was not necessary that claim for deduction should be routed through only the profit and loss account of the previous year in which the deduction was claimed. Income Tax Act, 1961 Section 36(1)(vii) IN THE ITAT MUMBAI BENCH 'A' N.V. VASUDEVAN, J.M. & N.K. BILLAIYA, A.M. Arrow Coated Products Ltd. v. Asstt. CIT IT Appeal No. 3558 (Mum.) of 2011 A.Y. 2006-07 14 March, 2012 Appellantby : Vipul J. Shah Respondent by : C.G.K Nair ORDER N.K. Billaiya, A.M. This is an appeal by the assessee against the order dated 4-2-2011 of Commissioner (Appeals)-16, Mumbai, relating to assessment year 2006-07. The only issue in this appeal is as to whether the Revenue authorities were justified in denying the claim of the assessee for deduction on account of bad debt a sum of Rs. 20,36,000 while computing the taxable income. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2141 (Mum-Trib) : (2012) 047 (II) ITCL 0108 : (2012) 136 ITD 0315 : (2012) 150 TTJ 0309 : (2012) 077 DTR 0314

INCOME TAX ACT, 1961

--Business deduction under section 36(1)(vii)--Bad debtsDeduction claimed from amount already debited to profit and loss account--Assessee-company made a provision for doubtful debts in the books of account of Rs. 70,00,000 and debited the same to the profit and loss account in assessment year 2004-05. The provision for doubtful debts was reduced from gross total sundry debtors in the balance sheet. In the return of income, assessee added to the profit and loss account, the provision for doubtful debts. Thus, assessee did not claim any deduction on account of bad debts in assessment year 2004-05. In the assessment year 2005-06 and 2006-07, assessee wrote off in the accounts of the concerned sundry debtors, the provision for doubtful debts already credited in assessment year 2004-05. Revenue rejected the claim of assessee on the ground that amount claimed as deduction on account of bad debts was not debited in the profit and loss account in assessment year 2006-07. Assessee contended that amount of bad debts claimed as deduction in the assessment year 2006-07 was part of the sum which was already debited to the profit and loss account in assessment year 2004-05. Held: The claim of assessee for deduction on account of bad debts had been allowed as it was not necessary that claim for deduction should be routed through only the profit and loss account of the previous year in which the deduction was claimed.

Income Tax Act, 1961 Section 36(1)(vii)

IN THE ITAT MUMBAI BENCH 'A'

N.V. VASUDEVAN, J.M. & N.K. BILLAIYA, A.M.

Arrow Coated Products Ltd. v. Asstt. CIT

IT Appeal No. 3558 (Mum.) of 2011

A.Y. 2006-07

14 March, 2012

Appellantby : Vipul J. Shah

Respondent by : C.G.K Nair

ORDER

N.K. Billaiya, A.M.

This is an appeal by the assessee against the order dated 4-2-2011 of Commissioner (Appeals)-16, Mumbai, relating to assessment year 2006-07. The only issue in this appeal is as to whether the Revenue authorities were justified in denying the claim of the assessee for deduction on account of bad debt a sum of Rs. 20,36,000 while computing the taxable income.