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TMI Blog2020 (3) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... to discharge its onus. The Bangalore Bench of the Tribunal in the case of Arati Raman vs. DCIT [ 2012 (10) TMI 1045 - ITAT BANGLORE] has held that addition cannot be sustained on the basis of AIR information alone . The onus is on the Department to prove correctness of information by way of bringing cogent evidence - Since the Revenue has failed to lead positive evidence, the addition to be deleted. Non-granting of deduction in respect of provision for bad and doubtful debts while computing book profits under section 115JB - claim was not made by assessee in return of income - HELD THAT:- Since, we have held that provision of doubtful debts is not an allowable deduction while computing income under normal provisions, as a corollary to the aforesaid findings the Book Profits under section 115JB are not required to be reduced by that extent. We do not find any infirmity in the impugned order in rejecting assessee s claim. - ITA No. 7808/MUM/2012 - - - Dated:- 17-2-2020 - Shri Vikas Awasthy, Judicial Member And Shri N.K. Pradhan, Accountant Member For the Appellant : S/Shri Dhanesh Bafna Nishant Shah For the Respondent : Shri Uodal Raj Singh ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to prove functional comparability of the said company. 3.1 The ld. Authorized Representative for the assessee submitted that in the proceedings before DRP the assessee furnished functional comparability analysis of S.S.S. Electricals India Ltd. and also the annual report of the said company to show that the turnover of the company is more than one crore. The assessee had applied turnover filter with minimum turnover of ₹ 0ne crore. As per the Directors report of S.S.S. Electricals (India) Ltd., the turnover of the company during the financial year 2007-08 was ₹ 2,01,32,072/-. The ld. Authorized Representative for the assessee referred to page 132 of the Paper Book in support of his contentions. The ld. Authorized Representative for the assessee pointed that the DRP after considering the contention of the assessee directed the TPO to verify whether the comparable had a turnover of ₹ 2 crore and in case the turnover is more than one crore, the comparable should be included in the list of comparables. However, the TPO /Assessing Officer failed to give effect to the directions of DRP. 3.2 In respect of ground No.2, the ld. Authorized Representative for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative for the assessee to further buttress his contentions, placed reliance on the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Vodafone Essar Gujarat Ltd., 397 ITR 55(Guj). 4. Per contra, the ld. Departmental Representative vehemently defended the impugned assessment order. In respect of ground No.1 the ld. Departmental Representative submitted that it is not only the turnover filter but on account of functional disparity as well S.S.S. Electricals (India) Ltd. was removed from the list of comparables by the TPO . The assessee had not furnished relevant data before the TPO for comparison. The ld. Departmental Representative further contended that assessee is having turnover of more than ₹ 188.00 crores, whereas the turnover of S.S.S. Electricals(India) Ltd. is merely one crore. It is a well settled law that a company with a small turnover cannot be compared with a company having huge turnover. 4.1 In respect of ground No.2 of the appeal, the ld. Departmental Representative submitted that AIR information was received on the basis of TDS deducted in the name of the assessee. Undisputedly, the assessee was able to reconcile 602 entries from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said comparable on two grounds, i.e.: (i) the company is having turnover less than one crore; and (ii) the company is not functionally comparable. The assessee assailed the findings of TPO before the DRP. The ld. Authorized Representative for the assessee has drawn our attention to Para 1.17.5 of the objections filed by the assessee before the DRP. The assessee has answered both the objections taken by TPO for rejecting the aforesaid cross objection as comparable. The ld. Authorized Representative for the assessee has referred to Directors report for F.Y. 2007-08 of S.S.S. Electricals (India) Ltd. at page 132 of the Paper Book to show that the turnover of the company was more than ₹ 2 crores. A close reading of the directions of the DRP reveal that the DRP has not made any comment regarding functional disparity of the said company. As regards turnover the DRP directed the TPO to include the said company in the list of comparables, if turnover is more than one crore. The contention of the ld. Authorized Representative for the assessee is that after the directions of DRP, neither the TPO nor the Assessing Officer afforded any opportunity of hearing to the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during the relevant period. The Revenue has failed to discharge its onus. The Bangalore Bench of the Tribunal in the case of Arati Raman vs. DCIT (supra) has held that addition cannot be sustained on the basis of AIR information alone . The onus is on the Department to prove correctness of information by way of bringing cogent evidence. For the sake of completeness the relevant extract of the findings of the Tribunal on this issue are reproduced herein below:- 13. In the present case, the assessee denies having made any such investment. The onus is on the revenue to show that the assessee made investments. The AIR which is the only basis on which the AO has proceeded to make the impugned addition is not conclusive as to the factum of the assessee having made investments. In this regard, the ld. counsel for the assessee has also filed before us the Frequently Asked Questions Answers on AIR brought out by the Income Tax Department. In answer to question 38 as to under what circumstances the AIR will not be accepted, one of the answers given by the department is that mismatch of name of filer mentioned in Form 68A with AIR file but no document submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear ended 31/03/2008, wherein provision for doubtful debts amounting to ₹ 1,40,22,384/- has been debited to P L Account and the amount has been reduced from debtors in the Balance Sheet. The contention of the assessee is that bad debts have been actually written off in line with the accounting treatment approved by Hon ble Bombay High Court in the case CIT vs. Tainwala Chemicals and Plastics India Ltd.(supra), 9. Upon careful perusal of Schedule -9 of assessee s financial statements as placed on record, we find that on the one hand the assessee has debited provision for doubtful debts amounting to ₹ 140.22 lakhs in the P L Account and has also deducted accumulated provisions from Sundry Debtors in Schedule-3, on the other hand, the assessee in Schedule-9 has also claimed separate deduction of Bad Debts written off. During the relevant period the assessee has written-off bad debts amounting to ₹ 19,55,117/-. Bad debts have been written off in similar manner in the immediately preceding financial year as well. Thus, it is quite evident that the assessee is claiming deduction of actual bad debts written-off and at the same time the assessee is making provision for ..... 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