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2022 (6) TMI 1115 - AT - Income TaxDisallowance of claim of bad debts - amount was worked out on the basis of short realisation from the debtors - Need for establishment of debt - HELD THAT - In view of the ratio laid down in the case of T.R.F. Limited 2010 (2) TMI 211 - SUPREME COURT holding that after 1-4-1989, 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. Examining the facts in the instant case, we find that the assessee has rightly claimed the bad debts in its books of account and claimed it as deduction as bad debts as it has been shown as irrecoverable by the assessee and duly written off in the books of accounts. We, therefore, reverse the finding of the ld. CIT(A) and delete the disallowance of bad debts - Decided in favour of assessee. Disallowance made in respect of PF ESI in respect of employees contribution u/s. 36(1)(va) r.w.s. 2(24)(x) - scope of amendment - HELD THAT - As assessee had made the remittance/payment of employees contribution towards PF ESI before the due date of filing of return of income u/s 139 (1) of the Act. Therefore we are inclined to allow the appeal of the assessee and direct the A.O. to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the Amendment is not applicable to the assessment year under consideration. - Decided in favour of assessee.
Issues Involved:
1. Disallowance of bad debts claim for AY 2012-13. 2. Disallowance of Provident Fund (PF) and Employees State Insurance (ESI) contributions for AY 2013-14. Detailed Analysis: Issue 1: Disallowance of Bad Debts Claim for AY 2012-13 Background: The assessee, a limited company, declared an income of Rs. 28,37,35,921/- for AY 2012-13 and claimed bad debts of Rs. 84,53,517/-. The Assessing Officer (AO) disallowed this claim, which was subsequently confirmed by the Commissioner of Income-tax (Appeals) [CIT(A)]. Tribunal's Findings: - The Tribunal noted that the bad debts were written off in the books of account. - The Tribunal referenced the Supreme Court judgment in T.R.F. Limited vs. CIT, which clarified that post-1-4-1989, it is sufficient for the debt to be written off as irrecoverable in the accounts of the assessee. - The Tribunal concluded that the assessee had rightly claimed the bad debts as they were written off in the books of accounts. Conclusion: The Tribunal reversed the CIT(A)'s decision and deleted the disallowance of Rs. 84,53,517/-, allowing the appeal for AY 2012-13. Issue 2: Disallowance of PF and ESI Contributions for AY 2013-14 Background: The assessee appealed against the disallowance of Rs. 59,01,363/- for late deposit of PF and ESI contributions, arguing that these were deposited before the due date of filing the return under Section 139(1) of the Income-tax Act, 1961. Tribunal's Findings: - The Tribunal highlighted that the contributions were indeed made before the filing of the return of income. - The Tribunal referred to its previous decision in Lumino Industries Ltd. vs. ACIT, where it was held that the amendments brought by the Finance Act 2021, effective from 01.04.2021, are prospective and not applicable to earlier assessment years. - The Tribunal noted that the CIT(A) erred in treating the amendment as retrospective. Conclusion: The Tribunal directed the AO to allow the deduction for the employees' contribution towards PF and ESI, holding that the amendment is prospective and applicable from AY 2021-22 onwards. The appeal for AY 2013-14 was allowed. Final Judgment: Both appeals filed by the assessee for AYs 2012-13 and 2013-14 were allowed.
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