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TMI Blog2020 (3) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai for A.Y 2014-15 [ 2019 (9) TMI 1339 - ITAT MUMBAI] - Accordingly, in terms of our aforesaid observations and finding no reason to take a view different from that arrived at by the Tribunal in the case of the sister concern of the assessee company, we herein set aside the order of the CIT(A) and vacate the disallowance of the assesses claim for bad debt - Decided in favour of assessee. - ITA No.3649/Mum/2018 - - - Dated:- 10-1-2020 - Shri G. Manjunatha, Accountant Member And Shri Ravish Sood, Judicial Member For the Appellant : Shri Sh ankarla l Jain, A.R For the Respondent : Shri H.N. Singh, C.I.T, D.R ORDER PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the CIT(A)-21, Mumbai, dated 06.03.2018, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short Act ), dated 28.12.2016 for A.Y. 2014-15. The revenue has assailed the impugned order on the following grounds of appeal before us: I. Bad debt written off ₹ 1,98,70,000/- 1. Because, the Ld. CIT(A) erred in law and on the facts of the case in confirming the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite the amendment, disputes on the issue of allowability continue, mostly for the reason that the debt has not been established to be irrecoverable. The Hon ble Supreme Court in the case of TRF Ltd. In CA Nos. 5292 to 5294 of 2003 vide judgment dated 9.2.2010 (available in NJRS 2010 LL-209-08) , has stated that the position of law is well settled. After 1.4.1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1)(vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee d) In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act. e) Accordingly, no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn /not pressed upon. f) Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, the management of the assessee company had decided to write off 25% of the outstanding amount i.e. ₹ 1,98,70,000/- as bad debts on 30.09.2013. Accordingly, after writing off the bad debts of ₹ 1,98,70,000/- in its books of accounts, the outstanding balance of NSEL towards the assessee as on 31.03.2014 stood reflected as ₹ 5,67,77,130/-. It was the claim of the assessee that as it had duly shown the income from the aforesaid trading transactions as its business income in its profit and loss account, therefore, the writing off the aforesaid amount of ₹ 1,98,70,000/- as bad debts was allowable under Sec. 36(2) of the Act. However, the A.O was not inclined to accept the aforesaid claim of bad debts that was raised by the assessee. The A.O observed that the matter was under investigation by the Economic Offenses Wing (EOW) and the recovery process was being monitored by a committee appointed by the Hon ble High Court of Bombay. Also, it was observed by the A.O that as per the information available in the public domain NSEL had sufficient assets to liquidate and repay the outstanding amounts. It was also noticed by him that the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities and Engineering Limited vs. ACIT, Circle 13(3)(1), Mumbai [ITA No. 3650/Mum/2108; dated 06.09.2019] for A.Y 2014-15 (Copy placed on record). 6. Per contra the Learned Departmental Representative (for short D.R ) relied on the orders of the lower authorities. It was submitted by the Ld. D.R that as the issue was sub judice and recovery work from NSEL was also in progress, therefore, the writing off a part of the outstanding debt due towards the assessee from NSEL was premature and had rightly been rejected by the lower authorities. 7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities, material available on record, as well as the judicial pronouncements relied upon by them. Admittedly, the assessee had been carrying out purchase and sale of commodities on the platform of NSEL through M/s Motilal Oswal Commodities Broker Private Limited. The assessee company as on 30.09.2013 had an outstanding receivable of ₹ 7,94,79,966/- from NSEL. The NSEL which had started functioning in the year 2007 was an exchange for trading in commodities, acting as a platform for automated trading system for conducting spot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be recovered from NSEL, had thus written off 25% of the aforesaid amount i.e. ₹ 1,98,70,000/- as bad debts in its books of accounts on 30.09.2013 9. Our indulgence in the present appeal has been sought by the assessee for adjudicating the solitary issue as to whether the writing off of 25% of the outstanding amount from NSEL as bad debt by the assessee is in order, or not. As observed by us hereinabove, it is a matter of fact borne from the records that pursuant to a scam unearthed in July, 2013, it surfaced that NSEL had defaulted in meeting out its payment obligations towards the various investors and traders from August, 2013. Admittedly, the recovery process from NSEL was being monitored by a committee appointed by the Hon ble High Court of Bombay. Also, the matter was under investigation of EOW of Mumbai Police, SFIO and SEBI. Apart from that, it is matter of fact borne from the records that the assessee had recovered an amount of ₹ 58 lacs from NSEL. As observed by us hereinabove, both the lower authorities had declined the assesses claim of bad debt , for the reason, that as the matter was under investigation and the seized assets of NSEL and its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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