The Pr. Commissioner Of Income Tax -6 v. Nilgiri Financial Consultants Ltd

$~2 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 159/2020 THE PR. COMMISSIONER OF INCOME TAX -6..... Appellant Through:Mr.Ruchir Bhatia, Sr.StandingCounsel.Counsel.versus NILGIRI FINANCIAL CONSULTANTS LTD. ..... Respondent Through:Mr.Gautam Jain, Advocate. %Date of Decision: 25[th]July, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): C.M.No.7947/2020 Keeping in view the averments in the application, the delay in re-filing the appeal is condoned. Accordingly, the application stands disposed of. ITA No.159/2020 1.Present appeal has been filed challenging the order dated 04[th]July2019 passed by the Income Tax Appellate Tribunal and for seekingrestoration of the Assessing Officer’s order. 2.Learned counsel for the Appellant states that the ITAT erred indeleting the addition of Rs.4,07,53,938/- made by the Assessing Officer on ITA 159/2020 account of bad debts written off. He points out that the debtor of theassessee, i.e. M/s Max New York Life Insurance Company in response to anotice issued under Section 133(6) of the Income Tax Act, 1961 [for short‘Act’] has shown the amount as a liability in its books of accounts. He alsostates that the Respondent has not closed the account of M/s Max New YorkLife Insurance Company. In support of his contention, he relies upon theRemand Report filed by the Assessing Officer before the CIT(A). 3.Per contra, Mr.Gautam Jain, learned counsel for the Respondentstates that the Respondent had business transactions with M/s Max NewYork Life Insurance Company for the Financial Year 2007-08 and 2008-09.He emphasises that, thereafter, the Assessee company had not entered intoany transactions with M/s Max New York Life Insurance Company.Insupport of his contention, he relies upon the Submissions filed by theRespondent before the CIT(A). 4.Mr.Jain also draws this Court’s attention to the Reconciliation ofInformation/Reply filed under Section 133(6) of the Act by Max andConsultancy Income booked by the Appellant.The same is reproducedhereinbelow:- ITA 159/2020 dt. 10.12.2015)Invoices considered by Max (as39,348,221mentioned at point No.e, in itsreplyfiledon09.02.2016)(16,065,173+11,808,507+11,474,541)Balance amount of invoices,48,430,109which were not considered(claimed) by MaxAmount of Bad Debt claimed by40,753,938the Appellant(emphasis supplied) 5.Having heard learned counsel for the parties, this Court is of the viewthat Section 36(1)(vii) r/w Section 36(2) of the Act provides that in order toclaim deduction on account of bad debts, two conditions have to be met bythe Assessee i.e. (i) the bad debts must have been taken into account incomputing the income of the Assessee of previous year or of anearlier/previous year and; (ii) the bad debts should have been written off inthe accounts of the Assessee. In the present case, the CIT(A) has given afinding of fact that the amounts claimed as bad debts had been taken intoaccount in computing the income of the Assessee in the previous year andoffered for taxation and the unrecovered amounts had been written off in thebooks of account and, consequently, the claim of the Assessee was dulyallowable. 6.This Court is also in agreement with the contention of learned counselfor the Respondent that as M/s Max New York Life Insurance Company hadconsidered Respondent’s invoices to the tune of Rs.4,84,30,109/- as ‘not ITA 159/2020 payable’, the amount of Rs.4,07,53,938/- claimed as bad debts by theAppellant was legal and justified. In any event, in the appeal filed by theDepartment, it has not been averred that the Respondent has received anypayment from M/s Max New York Life Insurance Company against thealleged bad debts in the last seven Assessment Years.7.Accordingly, the present appeal is dismissed. MANMOHAN, J JULY 25, 2022KA MANMEET PRITAM SINGH ARORA, J ITA 159/2020 Page 4 of 4