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TMI Blog2012 (9) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... see company filed the return on 01-11-2004 declaring loss of Rs.13,07,13,760/-. The AO made the assessment vide order dated 15-12-2006 u/s. 143(3) of the Act at a loss of Rs.5,34,87,152/-. 5. In the appeal filed, the Ist ground relates to disallowance of bad debt of Rs.6,32,41,821/-. 6. The AO has stated that the assessee debited a sum of Rs.6,32,41,821/- as bad debt to its P & L account. During the course of assessment proceedings, the assessee submitted a list of parties who were appearing in the books of the assessee as sundry debtors which have been written off by the assessee as not recoverable. He has stated that the assessee was asked to justify the claim of bad debt, but despite sufficient opportunities given, the assessee did not justify its decision to write off the said amount during the year under review. The AO stated that in order to take advantage of the provisions of sec. 36(1)(vii), the assessee, having regard to the facts and circumstances of the case, makes a bona fide assessment to the effect that the realization of the debt is not possible. He has stated that the assessee is required to show that on the facts and circumstances pertaining to a particular debt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O in disallowing the deduction claimed by the assessee as bad debt. Hence, the assessee is in further appeal before the Tribunal. 9. On behalf of the assessee, the ld. AR submitted that the assessee enclosed the details of bad debts written off, and referred to page 10 of the paper book. He submitted that it contains details of the list of bad debts written off and from which it could be revealed that few parties are those from whom the balance amounts on account of sale were not recoverable. He further submitted that the assessee had a division which had been acting as a full-fledged money changer approved by RBI and subsequently the assessee surrendered the licence. He submitted that amount was also recoverable from some of the parties in respect of the assessee's business of foreign exchange. The ld. AR referred to page 9 of the paper book, which is a copy of Schedule-P and forming part of P & L account, and stated that the assessee has written off "sundry balance" of Rs.6,32,41,821.67. The ld. AR submitted that after the amendment with effect from 01-04-1989, it is not necessary for the assessee to establish that a debt had become bad in the relevant previous year for claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile of AO. Hence, we restore this issue to the file of AO with a direction that he will decide the same afresh after considering such evidences as may be filed by the assessee before him and after giving due opportunity of being heard to the assessee as per law. Therefore, ground no. I taken by the assessee is allowed for statistical purposes. 12. In ground no. II, the assessee has disputed the order of ld. CIT(A) in confirming the disallowance of share issue expenses of Rs.2,49,477/-. 13. At the time of hearing, the ld. AR submitted that the above ground is not pressed for. In view of the above submission of the ld. AR, ground no. II of appeal is dismissed as not pressed. 14. In ground no. III, the assessee has disputed the order of ld. CIT(A) in confirming the disallowance of Rs.1,36,86,720/- being rebates claimed by the assessee. The AO has stated that the assessee debited a sum of Rs.1,36,86,720/- to the P & L account under the head "Rebate and Claims". He has stated that during the course of assessment proceedings the assessee was asked to justify the same and the assessee filed the details. The AO observed that the entire rebates and claims are given to only one party, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submitted that the said amount was receivable prior to assessment year 2000-01. He submitted that the rebate was given due to business expediency and, therefore, the same is to be allowed u/s. 37(1) of the Act. 18. On the other hand, the ld. DR supported the orders of the authorities below and submitted that the said letter at page 49 of the paper book is dated 27-02-2010 which is an afterthought to justify the claim. The ld. DR submitted that there is no material indicating that there was any defect in the goods or there was any dispute between the parties for which the said rebate of Rs.1,36,86,720/- was given by the assessee to only one party. The ld. DR further submitted that there is no other correspondence placed on record to support the stand of the assessee. 19. We have carefully considered the submissions of the ld. representatives of the parties and the orders of the authorities below. We find substance in the submissions of the ld. DR that there is no document placed on record to justify that the assessee has granted rebate of the substantial amount of Rs.1,36,86,720/- to M/s. Shreeji S.M. & T. Pvt. Ltd. on account of defect in the goods, damage of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance u/s. 43B is restricted to Rs.8,71,97,435/- as per the details submitted by the assessee during the course of assessment proceedings. Accordingly, the AO restricted the disallowance u/s. 43B of the Act to Rs.8,71,97,435/- as against Rs.6,11,02,968/- contended by the assessee. Being aggrieved, the assessee filed appeal before the first appellate authority. 23. The ld. CIT(A) has confirmed the action of the AO stating that the fresh certificate given by the Auditor restricting the disallowance to Rs.6,11,02,968/- is not supported by the evidence on record and, therefore, confirmed the action of the AO in making the disallowance of Rs.8,71,97,435/-. Hence, the assessee is in appeal before the Tribunal. 24. During the course of hearing, the ld. AR referred to pages 11 & 12 of the paper book and submitted that in the original Form there was a mistake due to oversight and the same was realized during the assessment proceedings and, therefore ,the disallowance to be made u/s. 43B is Rs.6,11,02,968/-. However, during the course of hearing, the ld. AR admitted that in the P & L account the amount debited is Rs.8,71,97,435/-. Further, the ld. AR was requested as to whether there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and perused the orders of the authorities below. The Hon'ble jurisdictional High Court has held in the case of Godrej & Boyce Mfg. Ltd. vs. DCIT (2010) 328 ITR 81 (Bom) that Rule 8D is applicable from assessment year 2008-09 onwards and not for the earlier assessment year. Therefore, we hold that the ld. CIT(A) is not justified to direct the AO to make disallowance for the purposes of sec. 14A by applying Rule 8D of I.T. Rules as the said Rule is not applicable to the assessment year 2005-06 in view of the decision of the Hon'ble jurisdictional High Court (supra). Hence, we set aside the order of ld. CIT(A) and restore this issue to the file of AO with a direction to decide the same afresh on the basis of the documents as may be produced before him and after giving due opportunity to both the parties. Therefore, ground nos.6 & 7 of Part III of the appeal are allowed for statistical purposes. 31. In ground nos.8 to 10 of Part IV of the appeal, the assessee has disputed the order of ld. CIT(A) in upholding the disallowance of share issue expenses of Rs.2,35,698/-. 32. At the time of hearing, the ld. AR submitted that the above grounds are not pressed for. Hence, ground nos. 8 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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