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TMI Blog2013 (6) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- Goods which were unfit for human consumption in Ukraine will remain unfit for human consumption in India also. - claim of deduction allowed - Decided in favor of assessee. - - - - - Dated:- 6-2-2013 - KRISHN KUMAR LAHOTI, SIDDIQUI M. A. JJ. JUDGMENT Shri Sanjay Lal, counsel for the appellant. This appeal is directed against an order dated October 20, 2011, passed by the Income-tax Appellate Tribunal ("the ITAT") in I. T. A. Nos. 622 to 624/Ind/2010, the assessment years 2004-05 to 2006-07 by which an appeal preferred by the Department was dismissed in so far as the deletion of the addition of Rs. 24,59,783 on account of bad debts and the addition of Rs. 20,19,600 made on account of the expenses debited under the head of qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer it was not correct. The Commissioner of Income-tax (Appeals) found that under section 36(1)(vii) of the Income-tax Act it was not necessary for the assessee to give reasons and writing off the amount itself was sufficient. Reliance was placed by the Income-tax Appellate Tribunal to the judgment of the apex court in T.R.F. Ltd. v. CIT reported in [2010] 323 ITR 397 (SC). In so far as the addition of Rs. 20,19,600 which was directed by the Assessing Officer towards quality rejection, the Commissioner of Income tax (Appeals) had held that the correspondence between the respondent and M/s. Raduja International Ltd. were the part of the record and authenticity of the debit note, filed by the respondent was not questioned or chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country, namely, Ukraine, the same goods was also unfit for human consumption in India. And on this ground the Tribunal had recorded its finding that the aforesaid deletion was rightly made by the Commissioner of Income-tax (Appeals). Sections 36(1)(vii) and 36(2)(i) of the Income-tax Act are relevant and are reproduced, which reads as under : "36.(1)(vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year : Provided that in the case of an assessee to which clause (viia) applied, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt has, in fact been written off in the accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customers account is credited, thus, closing the account of the customer. In the case of companies, the provision is. deducted from sundry debtors. As stated above, the Assessing Officer has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the above mentioned aspect only and that too only to the extent of the write off." In view of the settled position in the case of T.R.F. Ltd. [2010] 323 ITR 397 (SC) th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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