Delhi High Court
Cit vs Esconet Services Ltd on 21 May, 2012
Author: Sanjiv Khanna
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 21st May, 2012
+ ITA 261/2012
CIT ..... Appellant
Through: Mr. Sanjeev Sabharwal, Sr.
Standing Counsel
versus
ESCONET SERVICES LTD ..... Respondent
Through:
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
R. V. EASWAR, J: (ORAL)
This appeal filed by the Revenue relates to the assessment year
2003-04. The assessee is the Esconet Services Ltd. and in the return of
income it claimed deduction on account of write off of bad debts of
`1,52,28,630/- under Section 36(i)(vii) read with Section 36(2)i) of the
Income Tax Act, 1961.
2. The Assessing Officer disallowed the entire amount on the ground
that the assessee did not make sufficient efforts to recover the money and
that the entire transaction was only a paper transaction.
3. On appeal the CIT(Appeals) examined the matter in great detail and
found that the assessee has been debiting the sister concern M/s. Escolife
IT Services P. Ltd. in respect of services rendered to it and these amounts
have been shown as the assessee's income as service charges in the earlier
assessment year 2002-03 and the current year. He therefore, held that the
amount written off is entitled to be allowed as a bad debt and that the
Assessing Officer was not justified in examining the question whether the
debt became bad in the relevant previous year.
4. The Revenue carried the matter in appeal before the Income Tax
Appellate Tribunal ('Tribunal', for short). From the ledger account of the
sister concern filed before the Tribunal it was found that the total debit of
service charges amounting to `2,48,87,291/- included an amount of
`92,27,630/- charged on 27.1.2003 and this entry was reversed as amount
written off in the ledger account itself. The Tribunal therefore, held that
the assessee was able to show that an amount of `92,27,630/- had earlier
been taken into account as income earned by the assessee and was written
off from the account of the sister concern and the same was therefore
allowable as bad debt. As regards the balance of amount of `60,10,000/-
the assessee was not able to show that this amount was earlier assessed or
taken into account as the assessee's income. Accordingly, the Tribunal
sustained the disallowance of `60,10,000/-.
5. The discussion above shows that the entire matter is one of fact and
the question as to whether the amounts were actually written off in the
books of accounts by the assessee is a factual finding arrived at by the
Tribunal on a perusal of the ledger account of the debtor in the books of
the assessee. Once the factual position is admitted/ accepted, the
challenge by the Revenue must fail in view of the decision of the Supreme
Court in T.R.F. Limited v. CIT, (2010) 323 ITR 397 (SC). We do not
think under the above circumstances, that any question of law arises for
consideration. The appeal is accordingly, dismissed with no order as to
costs.
R.V.EASWAR, J
SANJIV KHANNA, J
MAY 21, 2012
vld
