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TMI Blog2017 (6) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... ation laws with effect from 01st April, 1989, the requirement of demonstrating that the debts has become bad has been dispensed with and only requirement remains that it should be “written off” in books of accounts of the assessee, which has been further clarified by CBDT Circular No.551 dated 23/01/1990. Our view find support from the ratio laid down in CIT vs Brilliant Tutorials Pvt. Ltd. (2007 (1) TMI 147 - MADRAS High Court ). Hon’ble Apex Court, later on, in T.R.F. Ltd. vs CIT (2010 (2) TMI 211 - SUPREME COURT ), considering the provision of section 36(1)(vii), prior to April, 1, 1989 and post amendment held that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. Mere written off in its accounts is enough, thus, following the aforesaid we allow the ground of the assessee. - ITA NO.3885/Mum/2014 - - - Dated:- 7-4-2017 - Shri Joginder Singh, Judicial Member, And Shri Ramit Kochar, Accountant Member For The Assessee : Shri Shankarlal Jain For The Revenue : Shri Suman Kumar-DR ORDER Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 10/04/2014 of the Ld. First A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, in view of the above, we are reproducing hereunder the relevant portion of the order from the decision of the Co-ordinate Mumbai Bench in the case of Digital Electronics Ltd. vs CIT (supra) for ready reference and analysis:- 6. In Ground No.2, the assessee is aggrieved that the CIT (A) erred in upholding the order of the AO and not allowing the assessee the set off the brought forward business loss of earlier years of `` 39,85,596/- against the profit realized on sale of business assets. 7. As far as this ground of appeal is concerned, the relevant material facts are like this. In the course of assessment proceedings, the Assessing officer noted that the assessee has set off brought forward losses amounting to Rs .39,85,596/- against short term capital gains on sale of factory building and plant machinery. The Assessing officer was of the view that in terms of the provisions of section 72, which governs the carry forward and set off of business losses, so m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Income tax Act, 1961, classifies the taxable income under different head for the purpose of computation of the net income of the assessee. Though, for the purpose of computation of the income, profit on sale of depreciable assets is separately classified, the said profit on sale of assets does not cease to be part of income from business if the assets are part of the business assets. Whether a particular income is a part of the income from a business falls to be decided not on the basis of the provisions of section 14 but on commercial principles. Reliance in this regard is placed on decisions of Supreme Court in the case of CIT v. Cocanada Radhaswami Bank ltd.(1965) 57 ITR 306. 5. It is also submitted that the heads of income described in section 14 of the Indian Income tax Act, 1961 and further elaborated for the purposes of computation in various sections are intended merely to indicate the classes of income. The heads do not exhaustively delimit sources from which arises. Business income is broken up under different heads only for the purpose of computation of the total income. By that breaking up the income does not cease to be the income of the business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m one source and carry forward a loss from other source of income to the next year. The CIT (A) also referred to the judgement of the Hon ble Supreme Court in the case of CIT v. Urmila Ramesh, 96 Taxman 533 (SC), holding that provisions of section 41(2) as also section 50 cannot apply to the same amount. It was in this backdrop that the CIT (A) concluded that the income which is to be assessed under the head capital gains cannot be set off against business losses only because it has been generated from the sale of business assets. The action of the Assessing Officer was thus upheld and in fact fortified by the CIT(A). The assessee is aggrieved and is in appeal before us. 9. We have heard the rival contentions and perused the material on record. Section 72 of the Income tax Act, inter alia, provides that Where for any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of business profits and gains, and even if these profits are liable to be taxed under a head other than income from business and profession, the loss carried forward can be set off against such profits of the assessee. In this view of the matter, the objection raised by the authorities below, in our humble understanding, are devoid of any legal substance. Coming to the judicial precedents cited by the CIT (A), we find that in the case of Millind Trading Co. P.Ltd, 211 ITR 690 (supra), Their Lordships were concerned with the question whether or not the assessee had option of not setting off the losses incurred against the income from difference sources under the head business income . The issue was thus confined to the question as to how the total income for a particular assessment year is to be computed. This decision has no bearing on the issue in appeal before us. So far as the Hon ble Supreme Court judgement in the case of CIT v. Urmila Ramesh (supra) is concerned, it will have no bearing on the issue before us, because it refers to simultaneous application of section 41(2) and Section 50 on the same amount. In contrast to that position, the short reference to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad debt amounting to ₹ 90,35,880/- (including the bad debt written off amounting to ₹ 87,78,922/- in respect of M/s TATI SA, Paris, France). The assessee was asked to furnish the complete details along with supporting correspondence etc in support of its claim. The assessee filed the details showing that the bad debt written off during the Financial Year 2009-10 relevant to Assessment Year 2010-11. The assessee was asked with respect to bad debt written off amounting to ₹ 1,91,280/- in respect of certain parties as has been detailed in the assessment order. The assessee vide letter dated 21/03/2013 replied as under:- With reference to Assessee s claim for write off of bad debt and details of written off of ₹ 1,91,279/-, we have honour to submit that advance given by the assessee during the course of business for business transactions which advance could not be adjusted as the party did not supply the material or raised counter claim against the assessee. The necessary details of the same is enclosed herewith. The said amount of ₹ 1,91,279/- will be allowable as reduction either as business loss under provision of section 28 read with 37(1) or as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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