2006 (2) TMI 61

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..... on the following substantial question of law : "1. Whether the Income-tax Appellate Tribunal was justified in allowing the deduction amounting to Rs. 4,13,108 treating it to be bad debts, as required under section 36(1)(vii) of the Income-tax Act ?" 2 Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant and Shri S. C. Bagadia, learned senior counsel with Shri D. K. Chhabra, learned counsel for the respondent. 3 At the outset, learned counsel for the assessee/respondent placing reliance on section 260A(4) of the Act and the decision of Supreme Court in Travancore Tea Estates Co. Ltd. v. CIT [1998] 233 ITR 203 contended by raising an objection that the appeal does not involve any s .....

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..... ndent to urge this ground at the time of hearing. We are, therefore, under legal obligation to deal with this issue if urged by the respondent at the time of hearing notwithstanding the fact that we have admitted the appeal and framed substantial question. 6 The question involved in this appeal relates to certain debts being declared as bad debts by the assessee in the assessment year in question and in consequence written off in the books of account. This issue was dealt with by the Tribunal in paragraphs 17 and 18 as follows : "17. The next grievance of the assessee is that the Commissioner of Income-tax (Appeals) erred in maintaining disallowance of bad debts of Rs. 4,33,776. 18. We have heard the arguments advanced by the partie .....

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..... erversity in declaration of debt to be a bad debt, there arose no occasion for the Assessing Officer for not accepting the stand of assessee on this issue. It is essentially for the assessee to decide as to whether they are able to recover the debt or that whether there are any viable chances to ensure its recoveries or that all hopes have come to an end for recovery. This being in the nature of what is called commercial expediency depending upon the nature of the transaction, capacity of debtor, etc., the stand of assessee cannot be ignored by the Revenue unless there are very cogent reasons to reject it. 8 In view of foregoing discussion and keeping in view the law laid down by the Supreme Court, quoted supra, we concur with the findi .....

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