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TMI Blog2020 (12) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain imported raw material. In order to recover the additional costs incurred, the assessee had raised debit notes on the foreign customers and credited the amount due from them, raised by way of debit notes as income in its books of accounts and had offered the same to tax in earlier years. The customers of the assessee refused to make payment and therefore, the assessee had written off the amount as not recoverable. It is pertinent to mention that Section 36(1)(vii) of the Act mandates that in order to claim bad debts, the assessee has to write off the same in its books of accounts and assessee is not required to prove that the debt as irrecoverable. See VIJAYA BANK [ 2010 (4) TMI 46 - SUPREME COURT ] The Supreme Court in RADHASOAMI SATS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered and assessed to tax in earlier assessment years and the claim is after fulfilling the conditions as envisaged under the provisions of section 36 (1)(vii) r.w.s. 36(2) of the Act and consequently passed a perverse finding on the facts under the facts and circumstances of the case? (iii) Whether, the Tribunal was justified in law in holding there existed no debt in the books and thus the provisions of section 36(1)(vii) of the Act are not applicable when admittedly the amount written off as debt was offered as income and accepted by the department in the earlier years and consequently passed a perverse order on the facts and circumstance of the case? (iv) Without prejudice whether the Tribunal erred in law in not granting deduction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case? 2. Facts leading to filing of this appeal briefly stated are that assessee is a private limited company and is engaged in the business of manufacture of PP FIBC Bags. By a scheme of amalgamation, M/s Big Bags (India) Private Limited was merged with the assessee company with approval of this court with effect from 01.04.2009. The assessee filed its return of income on 15.02.2011 for the Assessment Year 2010-11 declaring a total income of ₹ 1,55,05,270/-. The said return was 6 selected for scrutiny and after the return was processed under Section 143(1) of the Act and the assessment was completed under Section 143(3) of the Act by order dated 22.03.2013 and the Assessing Officer assessed the income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad debts. It is also pointed out that similar claim of bad debts for Assessment Year 2009-10 was accepted by the Commissioner of Income Tax (Appeals) as well as by the Tribunal and the revenue did not challenge the order of the Tribunal before this court and accepted the same. It is also urged that the assessee has written off the bad debts of ₹ 3,33,79,791/- in its books of account. It is also contended that the finding recorded by the Tribunal that the amount written off was never a debt due to the assessee is perverse and Tribunal erred in not following the order of the co-ordinate bench in assessee's own case. In support of aforesaid submissions reliance has been placed on decisions in 'TRF LTD. VS. CIT, 323, ITR 397 (SC), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred unforeseen additional costs on certain imported raw material. In order to recover the additional costs incurred, the assessee had raised debit notes on the foreign customers and credited the amount due from them, raised by way of debit notes as income in its books of accounts and had offered the same to tax in earlier years. The customers of the assessee refused to make payment and therefore, the assessee had written off the amount as not recoverable. It is pertinent to mention that Section 36(1)(vii) of the Act mandates that in order to claim bad debts, the assessee has to write off the same in its books of accounts and assessee is not required to prove that the debt as irrecoverable. In this connection, reference may be made to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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