Anang Polyfil Pvt.Ltd.,, Ahmedabad v. The Dy.CIT.,Circle-1,, Ahmedabad

ITA 3482/AHD/2008 | 2004-2005
Pronouncement Date: 26-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 348220514 RSA 2008
Assessee PAN AABCA7791C
Bench Ahmedabad
Appeal Number ITA 3482/AHD/2008
Duration Of Justice 1 year(s) 7 month(s) 4 day(s)
Appellant Anang Polyfil Pvt.Ltd.,, Ahmedabad
Respondent The Dy.CIT.,Circle-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 26-05-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 2004-2005
Appeal Filed On 22-10-2008
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S.SAINI ACCOUNTANT MEMBER DATE OF HEARING: 20.05.10 DRAFTED ON:20.05.10 ITA NO.3482/AHD/2008 ASSESSMENT YEAR : 2004-2005 ANANG POLYFIL PVT. LTD. 100 ASHIMA HOUSE NR. M.J.LIBRARY ASHRAM ROAD AHMEDABAD. VS. DCIT CIRCLE-1 3 RD FLOOR JITENDRA CHAMBER ASHRAM ROAD AHMEDABAD. PAN/GIR NO. : AABCA 7791C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI VARTIK R.CHOKSHI RESPONDENT BY: SMT. NEETA SHAH SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- 6 AHMEDABAD DATED 29.09.2008. 2. GROUNDS OF THE APPEAL READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN REJECTING THE ASSESSEE'S CLAIM FOR DEDUCTION OF BAD DEBTS OF RS.19.37 LACS (RS.19 36 719 TO BE PRECISE). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN REJECTING THE ASSESSEE'S CLAIM THAT IT WAS ALLOWABLE AS BAD DEBT AND/OR EVEN U/S.28 AS LOSS INCURRED. - 2 - 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THIS ISSUE AS UNDER:- 3. THE ASSESSEE IS A PVT. LTD. CO.. IT IS DEALING IN TRADING OF COTTON FABRICS & TEXTURISED YARN. DURING THE YEAR UNDER CONSIDERATION IT WAS NOTICED THAT THE ASSESSEE HAS GRANTED ADVANCES OF RS.1.50 CRORES TO ITS GROUP CONCERN CO. NAMELY NACHMO KNITEX LTD. IN MARCH 2003. ASSESSEE ACCOUNTED FOR RECEIPT OF INTE REST ON ABOVE ADVANCES OF RS.17 88 704/- ON 31.12.2003 AND RS.6 46 704/- ON 31.03.2004 AGGREGATING TOTAL OF RS.24 35 405/-. THE INTEREST WAS RECEIVED BY ASSESS EE BY BOOK ADJUSTMENTS ENTRIES ONLY AND OUT OF THIS RS.19 36 719/- WAS WRITTEN OFF AS BAD-DEBTS STATING THAT DUE TO POOR FINANCIAL POSITION ON NACHMO KNITE X LTD. ON 31.03.2004. THE SAID AMOUNT WAS FOUND AS IRREGULAR IN THE BELOW MENTIONED MANNER. (A) NO SUPPORTING EVIDENCES ARE AVAILABLE ON RECORD S AS TO SUGGEST THE POOR FINANCIAL POSITION OF NACHMO KNITEX LTD. (B) IT WAS NOT JUSTIFIABLE THAT DEBT PERTAINS TO INTEREST HAVING THE AGE OF O TO 3 MONTHS COULD BE A BAD-DEBT. (C) NOTHING WAS AVAILABLE ON RECORDS THAT BEFORE WRITING OFF THE INTEREST THE ASSESSEE HAS TAKEN AN Y PROMPT AND CONCRETE ACTION FOR ITS RECOVERY. (D) IT WAS REVEALED FROM THE RECORDS THAT ASSESSEE OBTAINED A SECURED LOAN OF RS.19.54 LACS DURING THE A.Y. UNDER CONSIDERATION IN WHICH ASSESSEE GRANTED AN ADVANCE TO NACHMO KNITEX LTD. AND INTEREST DUE THER E ON WAS ALSO WRITTEN OFF. IT SEEMS THAT THIS WAS PLA NNING TO HELP THE CONCERNED GROUP ASSESSEE. THIS WAS CONTRARY TO BASIC CONCEPT OF SECTION AND DECISION. IN VIEW OF THE ABOVE IRREGULARITIES THE ASSESSEE W AS ASKED VIDE NOTICE U/S.142(1) OF THE I.T. ACT TO SUBSTANTIATE THE CLAIM OF BAD DEBTS BY WAY OF FURNISHING DOCUMENTARY EVIDENCES/BOOKS OF ACCOUNTS. IN RESPONSE TO THE ABOVE THE ASSESSEE BAS FURNISHE D - 3 - THE WRITTEN SUBMISSION VIDE LETTER DTD.05/07/2007 WHICH IS REPRODUCED AS UNDER: '1. WITH REFERENCE TO THE CAPTIONED SUBJECT TH E ASSESSEE COMPANY HAD RECEIVED NOTICE UNDER SECTION 148 OF THE ACT FOR THE ASSESSMENT YEAR 2004-2005 DATED 15-12-2006 ON 19.12.2006. IMMEDIATELY ON RECEIPT OF THE NOTICE SO RECEIVED THE ASSESSEE HAD FILED A LETTER VEHEMENTLY OBJECTING THE REOPENING OF THE ASSESSMENT AND ASKING FOR COPY OF REASONS RECORDED FOR SUCH REOPENING. 2. THEREAFTER THE ASSESSEE COMPANY HAD FILED THE RETURN OF INCOME FOR THE PRESENT ASSESSMENT YEAR 'UNDER PROTEST ONLY IN ORDER TO COMPLY WITH THE NOTICE SO RECEIVED. 3 THE ASSESSEE HAD RECEIVED THE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 09.03.2007 WHERE IN YOUR GOOD SELVES HAVE CALLED UPON US TO SHOW CAUSE AS TO WHY THE WRITING OFF INTEREST OF RS.19 36 150/- SHOU LD NOT BE ADDED BACK TO THE TOTAL INCOME FOR THE YEAR IN QUESTION AND SAME BE TAXED. 4. THE ASSESSEE VEHEMENTLY OBJECTS TO THE REOP ENING OF THE ASSESSMENT ON THE FOLLOWING GROUNDS.- A) NO COPY OF REASONS RECORDED FOR REOPENING OF THE ASSESSMENT HAS BEEN PROVIDED TO THE ASSESSEE IN VIE W OF THE HON'BLE SUPREME COURT DECISION IN THE CASE O F GKN DRIVESHAFT (INDIA) LTD VS. ITO 259 ITR 19. ACCORDINGLY THE ISSUANCE OF NOTICE AND PROCEEDINGS THEREAFTER ARE BAD IN LAW AND WITHOUT JURISDICTION. B) ON GOING THROUGH THE IMPUGNED NOTICE WE W OULD LIKE TO BRING TO YOUR KIND ATTENTION THAT MATERIAL FACTS AND INFORMATION WAS PROVIDED TO THE ASSESSING OFFIC ER AT THE TIME OF FILING OF RETURN OF INCOME BY WAY OF NOTE AND ACCORDINGLY THERE IS NO ESCAPEMENT OF INCOME. A LL DETAILS OF EXPENSES WERE AVAILABLE WITH THE ERSTWHI LE ASSESSING OFFICER AND THEREFORE THERE IS NO QUEST ION OF CONCEALING OR ANY TYPE OF ESCAPEMENT OF INCOME. 5. WITHOUT PREJUDICE TO WHAT HAS BEEN STATED AB OVE THE ASSESSEE SUBMITS AS UNDER: - 4 - 5.1. VIDE NOTICE U/S 142(1) OF THE ACT YOUR GOOD S ELVES HAVE STATED THAT THE INTEREST WRITTEN OFF OF RS.19 36 719/- SEEMS TO IRREGULAR AND REQUIRES TO B E ADDED TO THE TOTAL INCOME. THE ASSESSEE VEHEMENTLY OBJECTS AND SUBMITS THAT THE ASSESSEE COMPANY HAD ADVANCED RS.1 50 00 000/- TO M/S NACHMO KNITEX LTD. FOR THE BUSINESS PURPOSE WITH A VIEW TO START OF TR ADING AND BUSINESS ACTIVITY. THE INTEREST OF RS.24 35 405 /- ON THE SAID ADVANCE HAS BEEN CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON 31-03-2004 ON WHICH M/S . NACHMO KNITEX LTD. HAS DEDUCTED TDS ON THE SAID INTEREST AMOUNT. HOWEVER THE TERMS AND THE CONDITI ONS ON WHICH THE TRANSACTION WAS ENTERED INTO BETWEEN T HE ASSESSEE COMPANY AND M/S NACHMO KNITEX LTD COULD NOT BE FULFILLED AND AS A RESULT THE BUSINESS TRANS ACTION COULD NOT BE GO THROUGH. THE DOCUMENTS/ CORRESPONDENCE WHICH HAD TAKEN PLACE BETWEEN THE ASSESSEE COMPANY AND M/S. NACHMO KNITEX LTD. ARE ATTACHED AS PER ANNEXURE A. WHICH WOULD JUSTIFY THE INTENT AND BONAFIDES FOR WHICH THE ADVANCES WERE GIVEN. 5.1. THEREAFTER BEFORE THE FINALLISATION OF AUDIT A RESOLUTION WAS PASSED IN THE BOARD MEETING OF THE ASSESSEE COMPANY IN WHICH DECISION WAS TAKEN THAT SINCE THE BUSINESS COULD NOT BE CARRIED ON WITH THE M/S. NACHMO KNIFEX LTD. THE INTEREST CREDITED IN TH E BOOKS OF THE ACCOUNTS OF THE ASSESSEE REQUIRES TO B E WRITTEN OFF AS THE SAME HAS BECOME IRRECOVERABLE. 5.3. THE ASSESSEE FURTHER LIKE TO INFORM YOUR GOOD SELVES THAT THE FINANCIAL POSITION OF M/S NACHMO KNITEX LTD. WAS VERY POOR AND THE SAID COMPANY WAS INCURRING HEAVY LOSSES AND CONSIDERING THE FACT THA T BUSINESS TRANSACTIONS AS ENVISAGED COULD NOT MATERIALISE THE SAID COMPANY WAS NOT IN A POSITION TO PAY THE INTEREST ON THE ADVANCES GIVEN BY THE ASSES SEE COMPANY. FURTHER M/S NACHMO KNITEX LTD. HAS WRITTEN BACK THE INTEREST AMOUNT WHICH HAS BEEN DEBITED IN THE BOOKS OF ACCOUNTS IN SUBSEQUENT YEARS. THE LOSSES INCURRED BY THE M/S NACHMO KNITEX LTD. AS PER PROFI T AND LOSS ACCOUNT IN THE FOLLOWING FINANCIAL YEARS A RE AS UNDER: - 5 - (RS. IN LACS) FINANCIAL YEAR AMOUNT OF LOSS 2002 1464.93 2003 1443.81 2004 1794.91 5.4 FURTHER YOURS GOOD SELVES WILL APPRECIATE THAT THE ASSESSEE HAS DISALLOWED THE INTEREST EXPENSES TO TH E TUNE OF RS.22 01 127/- IN THE RETURN OF INCOME FILE D FOR THE PRESENT ASSESSMENT YEAR. 5.5 IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANC ES THE ASSESSEE HAS REVERSED THE INTEREST INCOME WHICH THEY HAVE EARLIER CREDITED IN THEIR BOOKS OF THE ACCOUNTS. THUS THE INTEREST OF RS.19 36 150/- HAS B EEN WRITTEN OFF IN THE BOOKS OF THE ACCOUNTS OF THE ASS ESSEE AS THE SAME WAS IRRECOVERABLE FOR THE ASSESSMENT YE AR UNDER CONSIDERATION BECAUSE OF THE BUSINESS BETWEEN THE ASSESSEE AND M/S NACHMO KNITEX LTD FAILED TO TA KE PLACE. 6. IT IS ALSO SUBMITTED THAT A SUM OF RS.19 36 150/ - REPRESENTED INTEREST CHARGED BY THE ASSESSEE BUT BECAME IRRECOVERABLE. SINCE THE RECOVERY OF IN FULL COULD NOT BE EFFECTED BECAUSE OF THE ABOVE STATED FACTS THE AMOUNT ACTUALLY BECAME BAD AND IRRECOVERABLE WHICH HAS BEEN WRITTEN OFF. THEREFORE THE DEDUCTION ON ACCOUNT OF SUCH IRRECOVERABLE IS CLAIMED AND ALLOWA BLE U/SEC. 36(I)(VII) READ WITH SECTION 37(1) OF THE AC T. FURTHERMORE AS STATED IN THE FOREGOING PARAGRAPHS THE DEBTS HAVE ALREADY BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE. 7. WITHOUT PREJUDICE EVEN IF A INTEREST IS NOT ALLO WED AS BAD DEBT THEN HAVING REGARD TO ACCEPTED COMMERC IAL PRACTICE AND TRADING PRINCIPLES IT CAN BE SAID THA T A LOSS HAD ARISEN OUT OF THE CARRYING ON OF THE BUSIN ESS AND WAS INCIDENTAL TO IT THE SAME REPRESENTED A TR ADING LOSS OF THE BUSINESS OF THE ASSESSEE A DEDUCTION F OR THE SAME HAD GOT TO BE GRANTED BEFORE ITS PROFITS ASSES SABLE U/S. 28 COULD BE DETERMINED. - 6 - IN VIEW OF AFORESAID THE ASSESSEE SUBMITS THAT ENT IRE REASSESSMENT PROCEEDINGS IS WITHOUT JURISDICTION AN D LIABLE TO BE QUASHED. ' ON GOING THROUGH THE ABOVE SUBMISSION IT SEEMS THA T THE ASSESSEE HAS DONE THE ABOVE MENTIONED EXERCISE AS AN AFTER THOUGHT AND WITHOUT PROPER DOCUMENTARY EVIDENCES. HENCE THE SAME IS NOT ACCEPTABLE. THEREFORE A SHOW CAUSE NOTICE OF EVEN NUMBER DTD. 12/07/2007 WAS ISSUED. THE MAIN CONTENTS OF THE SHOW CAUSE NOTICE ARE AS UNDER: 'IN VIEW OF SECTION 36(1)(VII) OF THE I.T. ACT IN COMPUTING THE BUSINESS INCOME DEDUCTION SHALL BE ALLOWED SUBJECT TO FULFILLMENT OF CONDITIONS OF SECTION 36( 2) OF THE I.T.ACT IN RESPECT OF THE AMOUNT OF BAD-DEBT OR PART THEREOF WHICH IS WRITTEN OF AS IRRECOVERABLE IN YOU R ACCOUNTS FOR PREVIOUS YEAR UNDER CONSIDERATION. THE ITAT DELHI IN THE CASE OF CIT VS. INDIA THERMIC CORPORATION (56 ITD 307 'B BENCH DATE 29/09/2005) & 25 SITC 440 (MADRAS) IN THE CASE OF BHAWARLAL C. BA FNA VS. ADDL. CIT (2004) HELD THAT EVEN AS PER AMENDED PROVISION OF SECTION 36(L)(VII) OF THE I.T. ACT W.E .F. 01/04/89 YOU HAVE TO ESTABLISH THAT DEBTS ARE BAD- DEBTS. IT WAS CLARIFIED THAT WRITING OFF IS TO BE O F BAD- DEBTS NOT OF ANY DEBTS WHICH IS NOT BAD. THE ITAT ALSO FOLLOWED THIS DECISION IF ASSESSEE WRITING OFF THE DEBTS OF A PARTY WHICH IS WHOLLY OR PARTLY MANAGED OR CONTRO LLED BY ASSESSEE IT IS NOT ADMISSIBLE. THE HON'BLE SUPR EME COURT ALSO SUPPORTED THE VIEWS OF ITAT DELHI JUDGM ENT IN 48 ITR 67 IN THE CASE OF THOMAS AND COMPANY VS. CIT. RELIANCE IS ALSO PLACED ON THE DECISION OF APE X COURT IN THE CASE OF CIT VS. ABDULLABHAI ABDUL KADA R (1961) 41 ITR 545 (SC) & MADRAS HIGH COURT'S DECISI ON IN THE CASE OF CIT VS. DHANLAKSHMI CORPORATION (19 ) 46 ITR 1031 (MAD). IN VIEW OF THE ABOVE FACTS & JUDICIAL PRONOUNCEMENT S PLEASE SHOW CAUSE WHY YOUR CLAIM OF BAD DEBT OF RS.19 36 150/- SHOULD NOT BE DISALLOWED WITHIN SEV EN DAYS OF RECEIPT OF THIS NOTICE FAILING WHICH IT SH ALL BE PRESUMED THAT YOU HAVE NO OBJECTION TO THE PROPOSED ACTION.' - 7 - IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE THE ASSESSEE HAS SUBMITTED ITS REPLY VIDE LETTER DTD.L7.07.2007 WHICH IS AS UNDER:- 'WITH REFERENCE TO THE CAPTIONED THE ASSESSEE COMPA NY HAS RECEIVED SHOW CAUSE NOTICE FOR THE ABOVE REFERR ED ASSESSMENT YEAR REQUIRING US TO SHOW AS TO WHY THE CLAIM OF BAD DEBT OF RS.19 36 719/- SHOULD NOT BE DISALLOWED. IN THIS CONNECTION THE ASSESSEE VEHEMEN TLY OBJECTS AND SUBMITS AS UNDER: 1. YOUR GOOD SELVES IN THE NOTICE HAS MENTIONED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOTICED THAT THE ASSESSEE COMPANY GRANTED ADVANCE O F RS.150 LACS TO A GROUP CONCERN VIZ. NACHMO KNITEX L TD. ('NKL'). THE ASSESSEE OBJECT TO THE SAME AND STATES THAT NKL IS NEITHER CONNECTED WITH THE ASSESSEE COMPANY NOR THE DIRECTORS OF THE ASSESSEE COMPANY ARE DIRECTOR/HAVING ANY INTEREST IN NKL APART FROM THE FACT THAT IT HAD EXECUTED BUSINESS TRANSACTION WITH THEM . ACCORDINGLY THE CONTENTION MADE BY THE ASSESSING OFFICER IS NOT CORRECT. 2. YOUR SELF IN THE SHOW CAUSE NOTICE HAS HIGHLIGHT ED THE IRREGULARITIES FOR WHICH THE ASSESSEE WOULD LI KE TO STATE AS UNDER: 2.1 YOU HAVE MENTIONED THAT THE ASSESSEE HAS N OT FURNISHED ANY EVIDENCE O AS TO ENSURE THE POOR FINANCIAL POSITION OF NKL. IN THIS REGARDS THE ASS ESSEE COMPANY STATES THAT IT HAS ALREADY FURNISHED THE DE TAILS REGARDING THE LOSSES INCURRED BY THE NKL VIDE OUR EARLIER SUBMISSION DATED 05-07-2007. THE LOSSES OF NKL FOR THE LAST THREE YEARS ARE AS UNDER:- RS IN LACS FINANCIAL YEAR AMOUNT OF LOSS 2002 1464.93 2003 1443.81 2004 1794.91 THE COPIES OF AUDITED PROFIT AND LOSS ACCOUNT IS ENCLOSED HERE WITH VIDE ANNEXURE-1 FOR YOUR KIND PERUSAL. ACCORDINGLY THE OBSERVATION MADE BY THE ASSESSING OFFICER IS NOT CORRECT. - 8 - 2.2 VIDE PARA (B) OF YOUR NOTICE YOU HAVE MENTIONE D THAT IT IS NOT JUSTIFIED THAT DEBT PERTAINS TO INTE REST HAVING THE AGE OF 0 TO 3 MONTH COULD BE TREATED AS BAD DEBT. IN THIS CONNECTION THE ASSESSEE WOULD LIKE TO STATE THAT THE INTEREST OF RS.19 36 150/- ON THE SAID ADV ANCE HAS BEEN CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON 31-03-2004 ON WHICH NKL HAS DEDUCTED TDS ON THE SAID INTEREST AMOUNT. HOWEVER THE TERMS AND THE CONDITIONS ON WHICH THE TRANSACTION WAS ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND NKL FAILED TO GET FULFILLED AND AS A RESULT THE BUSINES S TRANSACTION COULD NOT BE GO THROUGH. THUS IT IS DUE TO THE BUSINESS SITUATION AND THE R ELATED CIRCUMSTANCES THAT THE BAD DEBT HAS ARISEN. ALLOWABILITY OF BAD DEBT CANNOT BE QUESTIONED SIMPL Y ON THE GROUND OF THE RECEIVABLE NOT BEING TOO OLD IN T ERMS OF AGEING BECAUSE THE FACTS AND CIRCUMSTANCES OF T HE CASE ARE OF TREMENDOUS RELEVANCE IN THE MATTER. 2.2.1 AS STATED HEREINABOVE THE BUSINESS ENVISAGED WITH NKL COULD NOT MATERIALIZE AND NKL WAS ALSO NOT IN A POSITION TO PAY INTEREST DUE TO ITS FINANCIAL POS ITION. THEREFORE BEFORE THE FINALISATION OF AUDIT A RESO LUTION WAS PASSED IN THE BOARD MEETING OF THE ASSESSEE COMPANY IN WHICH A DECISION WAS TAKEN THAT SINCE INTEREST IS NOT RECOVERABLE DUE TO INABILITY ON THE PART OF NKL TO PAY THE INTEREST CREDITED IN THE BOOKS OF T HE ACCOUNTS OF THE ASSESSEE REQUIRES TO BE WRITTEN OFF AS THE SAME HAS BECOME IRRECOVERABLE. 2.2.2 MOREOVER WHETHER A DEBT HAS BECOME BAD OR NO T IS A MATTER OF JUDGMENT OF THE BUSINESSMAN. HIS DECISION AS LONG AS IT IS BONA FIDE CANNOT BE DISPU TED BY DEMANDING FROM HIM A DEMONSTRATIVE PROOF TO ESTABLI SH THAT THE DEBT HAS ACTUALLY BECOME BAD. THE WRITE-OF F OF A BAD DEBT IS A PRIMA FACIE EVIDENCE ON THE PART OF THE ASSESSEE WITH WHOM THE INFORMATION RESTS AND IS A SUFFICIENT REQUIREMENT OF THE AMENDED PROVISION. 2.2.3 THE ACT OF WRITING OFF A DEBT AS IRRECOVERABL E IN THE ACCOUNTS OF THE ASSESSEE DISCHARGES THE ONUS OF THE ASSESSEE IN HOLDING A DEBT AS BAD. WHEN THE STATUTE - 9 - HAS PROVIDED THE MODE OF DISCHARGING THE ONUS OF PR OOF BY WRITING OFF THE DEBT AS BAD DEBT IT IS NOT FAIR TO CALL FOR FURTHER EVIDENCE. THE RULE REGARDING THE DEDUCTIBILITY OF BAD DEBT PROVIDED IN S.36(L)(VII) AFTER THE AMENDMENT IS A STATUTORY RULE BY ITSELF AND THEREF ORE THERE IS NO NEED FOR INSISTING ON ANY OTHER PROOF. THE STATUTORY RULE ITSELF DECLARES THE RULE OF DEDUCTIO N OF BAD DEBT. IF IT WERE AGAIN NECESSARY TO PROVE BY DEMONSTRATIVE PROOF THAT THE DEBT HAS BECOME BAD THEN THERE WOULD HAVE BEEN NO NECESSITY FOR INSERTI NG A STATUTORY RULE. 2.2.4 ACCORDINGLY THE WRITING OF THE DEBT AS BAD W AS CORRECT AND PRUDENT DECISION TAKEN BY THE MANAGEMEN T OF THE ASSESSEE COMPANY HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.3 VIDE PARA NO (C) OF YOUR SHOW CAUSE NOTICE YOUR GOOD SELVES HAS REVEALED THAT THE ASSESSEE COMPANY HAD OBTAINED SECURED LOAN DURING THE PREVIOUS YEAR 2002-03 AND GIVEN TO A GROUP CONCERN I.E. NKL AMOUNTING TO RS.5.50 CRORES AND INTEREST DUE THERE ON. AT THE OUTSET THE ASSESSEE COMPANY STATES THAT AS MENTIONED IN EARLIER PARA NKL IS NOT A GROUP CONCER N OF THE ASSESSEE COMPANY AND ACCORDINGLY THE OBSERVATIO N MADE BY THE ASSESSING OFFICER IS WITHOUT ANY BASE A ND APPLICATION OF MIND. FURTHER WE WOULD LIKE TO REITERATE THAT THE .SAID ADVANCES OF RS.5.50 CRORES TO NKL WERE GIVEN FOR TH E BUSINESS PURPOSE WITH A VIEW TO START OF TRADING AN D BUSINESS ACTIVITY. JUST BECAUSE THE BUSINESS ENVISA GED COULD NOT MATERIALIZE THE ADVANCE PAYMENT CANNOT B E TERMED INAPPROPRIATE. ACCORDINGLY TO HOLD THAT THE SAID TRANSACTION IS CONTRARY TO BASIC CONCEPT OF SECTION IS FAR FETCHED AND BASELESS. 2.4 YOUR GOOD SELVES VIDE PARA NO (D) HAS MENTIONED THAT THE ASSESSEE COMPANY HAS NOT TAKEN ANY PROMPT AND CONCRETE ACTION FOR RECOVERY BEFORE WRITING OF THE INTEREST IN THE BOOKS OF ACCOUNTS. IN THIS CONNECTI ON THE ASSESSEE WOULD LIKE TO STATE THE THAT SUBSEQUENT TO THE AMENDMENT TO SECTION 36(1) (VII) W.E.F. 1-4-89 MER E WRITING OFF OF AMOUNT OF BAD DEBTS IS SUFFICIENT TO CLAIM - 10 - IT AS DEDUCTION U/S 36(1)(VII) OF THE INCOME TAX AC T. ACCORDINGLY IT IS NOT OBLIGATORY FOR ASSESSEE TO P LACE DEMONSTRATIVE PROOF FOR ESTABLISHING A DEBT AS BAD AND IF HE HAS TAKEN STEPS TO WRITE IT OFF IN PREVIOUS Y EAR IT IS SUFFICIENT COMPLIANCE FOR CLAIMING A DEBT AS A BAD DEBT UNDER SECTION 36(L)(VII). 2.4.1 WITHOUT PREJUDICE TO ABOVE THE ASSESSEE COMPA NY VIDE SUBMISSION DATED 05.07.2007 HAS SUBMITTED THE FOLLOWING DOCUMENTS SO AS TO SUFFICE THE ABOVE THA T THE AMOUNT WAS WRITTEN OFF AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. NO. PARTICULARS 1 LETTER DATED 10.03.2003 FROM THE ASSESSEE COMPANY TO NACHMO TEXTILES (DIVISION OF NKL) ABOUT THE INQUIRY FOR PURCHASE OF PROCESSED KNITTED FABRICS. 2 LETTER DATED 26.03.2003 FROM THE ASSESSEE COMPANY TO NACHMO TEXTILES (DIVISION OF NKL) ORDER FOR PURCHASE OF 580 TONS OF PROCESSED KNITTED FABRICS. 3 LETTER DATED 06.4.2004 REQUESTING THE NACHMO TEXTILES (DIVISION OF NKL) TO MAKE PAYMENT OF INTEREST) 4 LETTER DATED 07.04.2004 OF NKL INFORMING FOR NON PAYMENT OF INTEREST TO THE ASSESSEE COMPANY TO OFFSET THE INCREASED PRICES OF GREY KNITTED YARN. 5 LETTER DOTED 16.4.2004 OF THE ASSESSEE COMPANY AGREEING FOR NON PAYMENT OF INTEREST HOWEVER REQUESTING TO EXPEDITE THE ORDER FOR SUPPLY SO PLACED. 6 LETTER DATED 06.05.2004 FROM NKL TO THE ASSESSEE COMPANY STATING THAT THEY ARE NOT IN A POSITION TO BEAR THE INTEREST COST ON ADVANCE AND THEREFORE SHALL NOT BE ABLE TO PAY ANY INTEREST ON THE SAID ADVANCES EFFECTIVE FROM 1.4.2004. 7 LETTER DATED 28 5.2004 FROM NKL THAT THEY SHALL NOT BE PAYING INTEREST CHARGED NET OFF TDS AND HENCE THE ASSESSEE COMPANY IS REQUESTED TO FORGO FOR INTEREST CHARGED NET OFF IDS IN THE YEAR 2003- 04. 8 LETTER DATED 28.05.2004 FROM THE ASSESSEE COMPANY TO NKL THAT THEY SHALL NOT BE CHARGING ANY INTEREST ON THE AMOUNT ADVANCED EFFECTIVE - 11 - FROM 1.4.2004. 9 COPY OF BOARD RESOLUTION PASSED IN THE MEETING HELD ON 11. 6.2004 TO WRITE OFF THE AMOUNT OF RS.19 36 150/- AS INTEREST RECEIVABLE ON TRADE ADVANCE TO NKL TO THE PROFIT AND LOSS ACCOUNT OF THE COMPANY ON 31.3.2004 AS BAD DEBTS. AFTER GOING THOUGH THE ABOVE FACT THE ASSESSEE WOU LD TIKE TO HIGHLIGHT THE FOLLOWING JUDICIAL PRONOUNCEM ENTS IN SUPPORT OF THE CLAIM MADE BY THE ASSESSEE: 1. THE DECISION OF THE GUJARAT HIGH COURT IN THE CA SE OF CIT VS. GIRISH BHAGWATPRASAD REPORTED AT 256 ITR PAGE 772. THE RELEVANT HEAD NOTES FROM THE SAID DECISION ARE AS UNDER: 'THE ASSESSEE HAD WRITTEN OFF AN AMOUNT OF RS.4 36 307/- ON ACCOUNT OF ITS HAVING BECOME A BAD DEBT. THE ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT PROVE THAT THE DEBT HAD BECOME BAD AND THAT THE ASSESSEE DID NOT TRY TO RECOVER THE AMOUNT AND FURT HER THAT MERE DELAY IN RECOVERY DID NOT CONVERT THE DEB T INTO A BAD DEBT. ON APPEAL THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THE AMENDED PROVISIONS OF SECTION 36(L)(VII) OF THE. INCOME-TAX ACT 1961 WERE APPLICABLE UNDER WHICH THE ASSESSEE WAS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAD BECOME BAD IN THE PREVIOUS YEAR AND MERE WRITING OFF OF THE AM OUNT AS BAD DEBT WAS SUFFICIENT. EVEN ON THE MERITS THE FIRST APPELLATE AUTHORITY FOUND THAT THERE WAS NO CHANCE FOR THE ASSESSEE TO RECOVER THE AMOUNT AND HENCE THE D EBT REALLY BECAME BAD. THE TRIBUNAL ALSO UPHELD THE CONTENTION OF THE ASSESSEE ON THE BASIS OF THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT WHICH C AME INTO FORCE FROM APRIL. 1989 AND UPHELD THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. ON AN APPLICATION FI LED UNDER SECTION 256(2) OF THE ACT FOR DIRECTING THE TRIBUNAL TO REFER A QUESTION OF LAW: HELD THAT UNDER THE PROVISIONS OF SECTION 36(1)(V II) OF THE ACT DEDUCTION HAD TO BE ALLOWED IN COMPUTING T HE INCOME REFERRED TO IN SECTION 28 OF THE ACT OF THE AMOUNT OF ANY BAD DEBT OR PART THEREOF WHICH IS WRI TTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSE E FOR THE PREVIOUS YEAR SUBJECT TO THE PROVISIONS OF SUB- SECTION (2). PRIOR TO THE AMENDMENT FROM APRIL 1 1 989 - 12 - THE ALLOWANCE UNDER THIS CLAUSE WAS CONFINED TO THE DEBTS AND LOANS WHICH HAD BECOME IRRECOVERABLE IN T HE ACCOUNTING YEAR. THUS UNDER THE PROVISIONS OF SECT ION 36(1)(VII) AS IN FORCE FROM APRIL 1. 1989. ALL THAT THE ASSESSEE HAD TO SHOW WAS THAT THE BAD DEBT WAS WRITTEN OFF AS IRRECOVERABLE. 2 DECISION IN THE CASE REFERRED BY THE ASSESSING OFFICER IN THE CASE OF INDIA THEN NIT CORPORATION 'HAVING REGARD TO THE DECISION OF THE JURISDICTIONA L HIGH COURT IT WILL BE APPRECIATED THAT THE ARGUMENT OF T HE ASSESSING OFFICER IN THIS REGARD ARE TOTALLY UNJUST IFIED AND UNWARRANTED. THE DECISION OF THE ITAT DELHI IN THE CASE OF CIT VS. INDIA THERMIT CORPORATION LTD. 56 I TO 307 IS REFERRED TO BY THE ASSESSING OFFICER. WHEN A DECISION OF GUJARAT HIGH COURT IS ALREADY AVAILABLE THERE WAS NO JUSTIFICATION FOR REJECTING CLAIM ON T HE BASIS OF DECISION OF DELHI ITAT. FURTHER THE SAID DECISION OF DELHI ITAT WAS UNDER CONSIDERATION BY T HE BOMBAY ITAT IN THE CASE OF ITO VS. ANIL H. RASTOGI REPORTED AT 86 ITO 193. IT MAY BE STATED THAT IN TH E SAID CASE OF ANII H. RASTOGI THE TWO MEMBERS DEFERR ED AND THE MATTER WAS REFERRED TO THIRD MEMBER AND BY MAJORITY VIEW OF IT HAS BEEN NOW DECIDED THAT FOR T HE PURPOSE OF CLAIMING BAD DEBT IT IS NOT NECESSARY TH AT DEBT TO BE ESTABLISHED TO BE BAD. THE ITAT CHENNAI DECISION IN THE CASE OF NEW DEAL FIN. INVEST. LTD 7 4 ITO 469 ALSO SUPPORTS APPELLANT'S CLAIM.' 3. THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT V. MORGAN SECURITIES & CREDITS (P) LTD. 2007-TI OL- 15 HAS OBSERVED THAT A DEBT BECOMING BAD OR IRRECOVERABLE WERE BUT TWO SIDES OF THE SAME COIN. IT EXPRESSED THE VIEW THAT THE FACTORS CONSIDERED BY T HE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) IN DISALLOWING THE AMOUNT WOULD BE RELEVANT IF THE TRANSACTION OF LENDING ITSELF WAS SHAM OR FALSE. ON CE IT WAS ACCEPTED THAT THE TRANSACTION ACTUALLY TOOK PLA CE THESE FACTORS WOULD IN FACT QUELL ANY DOUBT THAT TH E DECISION TO WRITE OFF THE LOAN AS A BAD DEBT WAS A CONSEQUENCE OF AN HONEST JUDGEMENT. THE HIGH COURT OBSERVED THAT ANY PRUDENT PERSON ON LEARNING THAT AN UNSECURED LOAN HAD BECOME PERILOUSLY IRRECOVERABL E - 13 - WOULD EXPEDITIOUSLY INITIATE EACH AND EVERY LEGAL REMEDY AVAILABLE TO HIM TO RECOVER THE AMOUNT AS H AD BEEN DONE IN THE CASE BEFORE THE HIGH COURT. THE DELHI HIGH COURT EXTENSIVELY REFERRED TO THE CB DT CIRCULAR NO.551 DATED 23RD JANUARY 1990 IN WHICH THE RATIONALE FOR AMENDING S.36(L)(VII) WAS CLARIFI ED. IT IS STATED IN THIS CIRCULAR THAT THERE WAS ENORMOUS LITIGATION AS TO THE YEAR IN WHICH A DEBT HAD BECOM E BAD AS IT WAS ALLOWABLE ONLY IN SUCH AN YEAR AND T O ELIMINATE DISPUTES IN DETERMINING THE YEAR OF ALLOWABILITY THE SECTION WAS BEING AMENDED SO THA T THE CLAIM FOR BAD DEBT WOULD BE ALLOWED IN THE YEAR IN WHICH SUCH A BAD DEBT WAS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSES. THE DELHI HIGH COU RT WAS OF THE VIEW THAT THIS CIRCULAR CLEARLY LEFT NO SCOPE FOR DEBATE AND THAT A BAD DEBT WAS ALLOWABLE IN TH E YEAR OF WRITE-OFF IN THE ACCOUNTS. THE DELHI HIGH COURT ALSO NOTED THE OBSERVATIONS OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. GIRISH BHAGWATPRASAD 256 ITR 772 WHERE THE GUJARAT HIGH COURT HAD OBSERVED THAT WITH EFFECT FROM 1ST APRIL 1989 ALL THAT THE ASSESSEE HAD TO SHOW WAS THAT TH E BAD DEBT WAS WRITTEN OFF AS IRRECOVERABLE. THE DELH I HIGH COURT ALSO NOTED THE DISMISSAL OF THE REVENUE' S APPEAL BY THE GUJARAT HIGH COURT IN THE CASE OF DY. CIT V. PATIDAR GINNING AND PRESSING CO. 157 CTR 177 WHERE THE QUESTION BEFORE THE GUJARAT HIGH COURT WA S WHETHER IT WAS ENOUGH IF THE ASSESSEE WROTE OFF THE DEBT AS BAD IN ITS BOOKS OF ACCOUNT AND WHETHER THE ASSESSEE COMPANY NEED NOT ESTABLISH THE DEBT TO HAV E BECOME BAD IN THE SAME YEAR. THE DELHI HIGH COURT THEREFORE HELD THAT THE BAD DE BT WRITTEN OFF BY THE ASSESSEE WAS ALLOWABLE IN THE YE AR OF WRITE-OFF. 4. A SIMILAR VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF DY.CIT V. OMAN INTERNATIONAL BANK SAOG 100 ITO 285 THAT IT WAS NOT OBLIGATORY ON THE PART OF THE ASSESSEE TO P ROVE THAT THE DEBT WRITTEN OFF BY HIM IN A RELEVANT YEAR HAD - 14 - INDEED TURNED BAD IN THE RELEVANT YEAR FOR THE PURP OSE OF ALLOWANCE U/S.36(L)(VII). 5. LASTLY IN THE CASE OF CIT VS AUTOMETERS LTD. 210 CTR 339 THE DELHI HIGH COURT HAS HELD THAT THE BAD DEBT CLAIMED BY THE ASSESSEE WOULD BE ALLOWABLE IN THE YEAR IN WHICH THE DEBT WAS WRITTEN OFF AS IRRECOVER ABLE IN THE BOOKS OF ACCOUNTS. THE BAD DEBTS SHOWN AS GO OD DEBTS AS ON 31 MARCH 1993 WERE WRITTEN OFF IN THE BOOKS DURING THE PREVIOUS YEAR. THEREFORE THE TRIB UNAL WAS JUSTIFIED IN ALLOWING DEDUCTION IN THE AY 1994- 95 EVEN IF NO EFFORTS WERE MADE TO RECOVER THE DEBT. IN VIEW OF AFORESAID THE ASSESSEE SUBMITS THAT ENT IRE REASSESSMENT PROCEEDINGS IS WITHOUT JURISDICTION AN D LIABLE TO BE QUASHED.' AFTER CAREFULLY GONE THROUGH THE ABOVE SUBMISSION A S WELL AS JUDICIAL PRONOUNCEMENT GIVEN BY THE ASSESSE E IT IS FOUND THAT THE ASSESSEE HAS MADE A STORY TO SUBSTANTIATE THE CLAIM OF WRITING OFF THE BAD DEBTS . AS PER SEC.36(L)(VII) OF THE I.T. ACT THE DEDUCTIO N SHALL BE ALLOWED OF THE BAD AND DOUBTFUL DEBTS SUBJECT T O FULFILLMENT OF THE CONDITION OF THE SEC.36(2) OF TH E I.T. ACT WHICH THE ASSESSEE HAS NOT FULFILLED. AS FAR AS THE DECISIONS OF VARIOUS COURTS ARE QUOTED BY THE ASSES SEE IT IS SUBMITTED THAT IN THE DECISION OF THE CIT VS. GIRISH BHAGWAT PRASAD 256 ITR 772 (GUJARAT HIGH COURT). IT WAS HELD THAT THE DEDUCTION HAS TO BE ALLOWED IN COMPUTING THE INCOME OF BAD DEBTS WHICH IS WRITTEN OFF AS RECOVERABLE IN THE ACCOUNT OF THE ASSESSEE FOR PREVIOUS YEAR SUBJECT TO THE PROVISION OF SECTION 3 6(2). WITH DUE REGARDS TO THE HON'BLE HIGH COURT IT IS S TATED THAT THE DECISION IS NOT ACCEPTABLE PRINCIPALLY IN THIS CASE AS THE FACTS ARE TOTALLY DEFER FROM THE ABOVE CITED CASE. MOREOVER IT WOULD BE PERTINENT TO MENTIONED HERE T HAT THE FACTS MENTIONED IN THE OTHER CASE LOWS AS CITED BY THE ASSESSEE IN HIS REPLY ARE NOT MATCHED WITH THE FACTS OF THE ASSESSEE. - 15 - THE DECISION OF THE APEX COURT IN THE CASE OF CIT V S. ABDULLABHAI ABDULKADAR (1961) 41 ITR 545 (SC) CLEAR LY SAYS THAT A DEBT IS ONLY ALLOWABLE WHEN IT IS A DEB T AND ARISES OUT OF AND AS AN INCIDENT TO THE TRADE. EXCE PT IN MONEY-LENDING TRADE DEBTS CAN ONLY BE SO DESCRIBED IF THEY ARE DUE FROM CUSTOMERS FOR GOODS SUPPLIED OR LOANS TO CONSTITUENTS OR TRANSACTIONS OF A SIMILAR KIND. IN EVERY CASE THE TEST IS WAS THE DEBT DUE AS AN INCIDENT TO THE BUSINESS; IF IT IS NOT OF THAT CHAR ACTER IT WILL BE A CAPITAL LOSS. IN SUPPORT OF THE ABOVE ISSUE THE VARIOUS COURTS H AVE GIVEN THE DECISIONS IN FAVOUR OF THE REVENUE WHICH ARE QUOTED AS UNDER:- 1. CIT VS. ANNAPURANI VEERAPPAN 193 ITR 426 (MAD) 2. CIT VS. COATES OF INDIA LTD. 232 ITR 324 (CAL) I 3. CHETTINAD COMPANY PVT. LTD. VS. CIT 147 ITR 724 (MAD) THE GUJARAT HIGH COURT IN THE CASE OF SMALL ENTERPRISES AND ENGINEERS (P) LTD. VS. CIT REPORTED AT 207 CTR (GUJ) 72 DTD.L4/11/2006 IT WAS HELD THAT TH E DEBT SHOULD BE WRITTEN OFF AS IRRECOVERABLE AND THE ASSESSEE SHOULD PROVE THAT THE DEBT HAS BECOME BAD IN THAT YEAR - MERE DEBITING THE AMOUNT IS NOT SUFFICI ENT - AMOUNT DUE TO ASSESSEE WAS NOT PAID BY THE DEBTORS IN THE RELEVANT YEAR DUE TO SOME MUTUAL DIFFERENCES - CORRESPONDENCE BETWEEN THE PARTIES SHOWS THAT THE ASSESSEE WAS INSISTING ON PAYMENT OF THE DEBTS - IT CANNOT BE SAID THAT THE DEBTS HAD BECOME BAD IN THE RELEVANT YEAR - CLAIM FOR BAD DEBTS WAS NOT ALLOWAB LE. IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRONOUNCEME NT THE CLAIM OF WRITTEN OFF RS.19 36 719/- AS BAD DEBT S ARE NOT ACCEPTABLE WHICH WAS NOTHING BUT PLANNING TO HE LP THE GROUP CONCERN ONLY. FURTHERMORE THE ASSESSEE H AS NOT FULFILLED THE CONDITIONS LAID DOWN IN 36(2) OF THE I. T. ACT. MERE SUBMITTING THE CORRESPONDENCE IN SUPPORT OF THE CLAIM BETWEEN THE PARTIES SHOWS THAT THE ASSESS EE WAS INSISTING ON PAYMENT OF THE DEBTS WHICH CAN NOT BE SAID THAT THE DEBTS HAD BECOME BAD IN THE RELEVANT YEAR. THEREFORE THE CLAIM FOR DEDUCTION OF BAD DEB TS OF RS.19 36 719/- IS NOT ALLOWABLE AND ADDED TO THE TO TAL INCOME. - 16 - PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I. T. ACT SEPARATELY INITIATED BY FURNISHING INACCURATE PARTICULARS. 4. WITH THE ABOVE REMARKS AND THE DATA MADE AVAILABLE THE TOTAL INCOME OF THE ASSESSEE IS RE- COMPUTED AS UNDER: TOTAL INCOME AS PER REVISED RETURN RS. 7 78 660/- ADD;: DISALLOWANCE AS DISCUSSED: BAD DEBTS RS.19 36 719/- TOTAL ASSESSED INCOME RS. 27 15 379/- ASSESSED U/S.143(3) R.W.S.147 OF THE I.T. ACT. ISSU ED REVISED DN & CHALLAN. GIVE CREDIT FOR PREPAID TAXES AFTER VERIFICATION. CHARGE INTEREST U/S.234A/ 234B/ 234C/ 234D AS APPLICABLE IF ANY. ISSUED PENALTY NO TICE U/S.274 R.W.S.271(L)(C) OF THE I.T.ACT FOR CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME.' KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMSTANC ES AS WELL A VARIOUS JUDICIAL PRONOUNCEMENTS ADDUCED B Y BOTH SIDES; FIRST OF ALL IT IS VERY ESSENTIAL TO HA VE A LOOK AT BAD DEBTS U/S. 36(1 )(VII) WHICH IS AS UNDER: AMOUNT OF ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF IRRECOVERABLE IN THE ACCOUNTS OF THE AS SESSEE FOR THE PREVIOUS YEAR AS DEDUCTION SUBJECT TO THE FOLLOWING CONDITIONS LAID DOWN SECTION 36(2); (A) THE DEBT HAS BEEN TAKEN INTO ACCOUNT IN COMPUTI NG THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT IS WRITTEN OFF OR OF AN EARLIER PR EVIOUS YEAR; OR (B) IT REPRESENTS MONEY LENT IN THE ORDINARY COURSE OF BUSINESS ON MONEY LENDING WHICH IS CARRIED ON BY TH E ASSESSEE. IN ORDER TO CLAIM DEDUCTION U/S. 36(L)(VII) THE FO LLOWING CONDITIONS MUST BE KEPT IN MIND : (1) THERE MUST BE A DEBT - BEFORE CLAIMING AN AMOUNT AS A BAD DEBT; IT MUST BE SHOWN THAT IT IS A PROPER DEBT. IN OTHER WORDS A BAD DEBT PRESUPPOSES THE EXISTENCE OF A DEBT AND RELATIONSHIP OF DEBTOR AND CREDITOR. UNLESS THEREFORE THERE IS AN ADMITTED D EBT IT - 17 - CANNOT BE ALLOWED AS BAD DEBT WHEN IT IS WRITTEN OF F. A DEBT IS THAT WHICH IS OWNED OR DUE; ANYTHING WHICH ONE PERSON IS UNDER OBLIGATION TO PAY OR RENDER TO ANOT HER; A LIABILITY TO PAY OR RENDER SOMETHING. A DEBT IS THEREFORE A PRESENT OBLIGATION TO PAY AN ASCERTAIN ABLE SUM OF MONEY IRRESPECTIVE OF THE FACT THAT WHETHER AMOUNT IS PAYABLE IN PRAESENTI OR IN FUTURO. (2) DEBT MUST BE INCIDENTAL TO THE BUSINESS OR PROFESSION OF THE ASSESSEE -THE DEBT WHICH IS CLAIM ED AS BAD DEBTS U/S. 36(L)(VII) MUST BE INCIDENTAL TO THE BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE. IN OTHER WORDS THE DEBTS NOT CONNECTED WITH BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE OR NOT ARISIN G OUT OF OPERATION OF THE BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE ARE NOT ADMISSIBLE AS BAD DEBTS EVEN IF OTHER CONDITIONS ARE SATISFIED. IN THE CASE OF BAD DEBTS ARISING OUT OF ADVANCES MADE IN BUSINESS OR PROFESS ION A DECIDING POINT IS WHETHER ADVANCES ARE MADE FOR T HE PURPOSE OF BUSINESS OR PROFESSION OR WHETHER THEY A RE RELATED TO THE BUSINESS OR PROFESSION (CIT V. ABDULLABHAI ABDULKADAR (41 ITR545) (SC)]. WHEN THE AFORESAID FACTS AND CIRCUMSTANCES OF THE APPELLANT ARE VIEWED VIS--VIS THE DEFINITION OF BAD DEBTS U/S. 36(L)(VII) AND THE PREREQUISITE CONDITI ONS LAID DOWN IN SECTION 36(2) FOR ITS ALLOWABILITY ; AS ENUMERATED IN DETAIL ABOVE; THE FACT EMERGES THAT IT CAN BE SAID WITHOUT THE LEAST SHADOW OF DOUBT THAT EVEN AS PER THE AMENDED PROVISIONS OF SECTION 36(L)(VII) OF THE INCOME-TAX ACT 1961 W.E.F. 1.4.1989 THE APPELLANT HAS TO ESTABLISH THAT DEBTS ARE REALLY BAD DEBTS. THERE IS NO SCOPE OF ANY AMBIGUITY ABOUT IT THAT WRITING OFF IS TO BE OF BAD DEBTS NOT OF ANY DEBTS WHICH IS NOT BAD. HOWEVER FROM THE AFORESAID FACTS AND CIRCUMSTANCES OF THE APPELLANT; IT IS CRYSTAL CLEAR THAT THE APPELLA NT HAS FAILED TO ESTABLISH THE SAME. THE APPELLANT IS A PVT. LTD. CO. IT IS DEALING IN T RADING OF COTTON FABRICS & TEXTURISED YARN. DURING THE YEAR U NDER CONSIDERATION IT IS NOTICED THAT THE APPELLANT HAS GRANTED ADVANCES OF RS.1.50 CRORES TO ITS GROUP CON CERN COMPANY VIZ. NACHMO KNITEX LIMITED IN MARCH 2003. THE APPELLANT ACCOUNTS FOR RECEIPT OF INTEREST ON A BOVE ADVANCE OF RS.17 88 704/- ON 31.12.2003 AND - 18 - RS.6 46 704/- ON 31.3.2004 AGGREGATING TOTAL OF RS.24 35 405/-. THE INTEREST IS RECEIVED BY THE APPELLANT BY BOOK ADJUSTMENT ENTRIES ONLY AND OUT O F THIS RS.19 36 719/- IS WRITTEN OFF AS BAD DEBTS ST ATING THAT DUE TO POOR FINANCIAL POSITION OF NACHMO KNITE X LIMITED ON 31.3.2004. NO SUPPORTING CORROBORATIVE EVIDENCES ARE AVAILABLE ON RECORD AS TO SUGGEST THE POOR FINANCIAL POSITION OF NACHMO KNITEX LIMITED. IT IS REVEALED FROM THE RECORDS THAT THE APPELLANT OBTAINS A SECURED LOAN OF RS.1.50 CRORES DURING THE FINANCIAL YEAR 2002-03 IN WHICH THE APPELLANT GRAN TS AN ADVANCE TO NACHMO KNITEX LIMITED AND INTEREST DU E THERE ON IS ALSO WRITTEN OFF. THE AFORESAID IS NOTHING BUT THE PLANNING TO HELP T HE GROUP CONCERN OF THE APPELLANT WHICH IS CONTRARY TO THE BASIC CONCEPT OF THE SECTION. THE ITAT DELHI IN THE CASE OF CIT V. INDIA THERMIC CORPORATION (56 ITD 307) 'B BENCH DATED 29.9.200 5 AND 25 SITC 440 (MADRAS) IN THE CASE OF 'BHAWARLAL C. BAFNA V. ADDL. CIT(2004) HELD THAT EVEN AS PER AMEN DED PROVISIONS OF SECTION 36(1)(VII) OF THE INCOME TAX ACT 1961 W.E.F. 1.4.1989 THE ASSESSEE HAS TO ESTABLISH THAT DEBTS ARE REALLY BAD DEBTS. IT WAS FURTHER CLARIF IED THAT WRITING OFF IS TO BE OF BAD DEBTS; NOT OF ANY DEB T WHICH IS NOT BAD. THE ITAT ALSO FOLLOWED THIS DECISION WHILE THE ASSESSEE WRITING OFF DEBTS OF A PARTY WHICH IS WHOLLY OR PARTLY MANAGED OR CONTROLLED BY THE ASSESSEE IT IS NOT ADMISSIBLE. THE HON'BLE SUPREME COURT ALSO SUPPORTED THIS VIEW OF ITAT DELHI IN THE JUDGMENT IN 48 ITR 67 IN THE CASE OF THOMAS & CO. V. CIT. THE GUJARAT HIGH COURT IN THE CASE OF SMALL ENTERPRISES AND ENGINEERS PVT. LTD. V. CIT REPORTED AT 207 CTR (GUJ.) 729 DATED 14.11.2006 IT WAS HELD TH AT DEBT SHOULD BE WRITTEN OFF AS IRRECOVERABLE AND THE ASSESSEE SHOULD PROVE THAT THE DEBT HAS BECOME BAD IN THAT YEAR AND MERE DEBITING THE AMOUNT IS NOT - 19 - SUFFICIENT - AMOUNT DUE TO THE ASSESSEE WAS NOT PAI D BY DEBTORS IN THE RELEVANT YEAR DUE TO SOME MUTUAL DIFFERENCES -CORRESPONDENCE BETWEEN THE PARTIES SHO WS THAT THE ASSESSEE WAS INSISTING ON THE PAYMENT OF D EBTS - IT CANNOT BE SAID THAT DEBTS HAD BECOME BAD IN TH E CURRENT YEAR - CLAIM FOR BAD DEBTS WAS NOT ALLOWABL E. IN VIEW OF THE AFORESAID FACTS; CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS IT IS CRYSTAL CLEAR THAT M ERELY SUBMITTING THE NAME OF THE DEBTOR AMOUNT AND SIMPL Y STATING THE REASON FOR NOT RECOVERING THE DEBT DO N OT SUBSTANTIATE THE CLAIM OF WRITING OFF THE DEBT. FURTHER ANY BAD DEBT ALLOWABLE AS DEDUCTION U/S. 36(1)(VII) MUST BE INCIDENTAL TO THE BUSINESS OR PROFESSION OF THE APPELLANT. THE FACTS AND CIRCUMSTANCES OF THE APPEAL UNDER CONSIDERATION; AS ENUMERATED IN DETAIL ABOVE DO NOT SUGGEST SO. THE APPELLANT OBTAINS A SECURE LOAN OF RS.1.50 CRORES DURING THE FINANCIAL YEAR 2002-03; GRANTS ADVANCE S OF RS.1.50 CRORES TO ITS GROUP CONCERN COMPANY NACHM O KNITEX LTD. IN MARCH 2003 AND ACCOUNTS FOR RECEIPT OF INTEREST ON ABOVE ADVANCES OF RS.17 88 704/- ON 31.12.2003 AND RS.6 46 704/- ON 31.3.2004 AGGREGATING TOTAL OF RS.24 35 405/-. THE APPELLANT RECEIVES INTEREST BY BOOK ADJUSTMENT ENTRIES ONLY A ND OUT OF THIS RS.19 36 719/- ARE WRITTEN OFF AS BAD D EBTS. NO BUSINESS OR PROFESSIONAL ACTIVITY WORTH THE NAM E TAKES PLACE. THE BOOKS OF ACCOUNT AND VOUCHERS MAINTAINED BY THE APPELLANT ON MERCANTILE BASIS HAV E BEEN DULY EXAMINED BY THE ASSESSING OFFICER. AS IS EVIDENTLY CLEAR FROM THE AFORESAID FACTS; CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS THE APPELLANT HAS FAILED TO FULFILL THE CONDITIONS LAID DOWN IN SECTION 36(2) OF THE INCOME-TAX ACT 1961 THEREBY IS NOT ENTITLED TO DEDUCTION U/S. 36(L)(VII). HENCE T HE ASSESSING OFFICER HAS RIGHTLY REJECTED THE CLAIM OF THE APPELLANT AND DISALLOWED THE SUM OF RS.19 36 719/- ON ACCOUNT OF BAD DEBTS AND ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. WITH THE RESULT THE ACTIO N OF THE ASSESSING OFFICER IS UPHELD ON THESE GROUNDS (I .E. GROUND NO. 3 AND 4). HENCE THE APPEAL IS DISMISSED ON GROUND NO. 3 AND 4. - 20 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS ADVANCED RS.1.50 CRORES TO ITS GROUP C ONCERN COMPANY NAMELY NACHMO KNITEX LTD. OUT OF SECURED LO AN OBTAINED BY IT ON WHICH INTEREST WAS PAID BY THE AS SESSEE. DURING THE PREVIOUS RELEVANT TO THE ASSESSMENT YEAR 2004- 05 THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.24 35 405/- ON THE ONE HAND AND CLAIMED RS.19 36 719/- AS BAD DEBT IN RESPECT OF THE SAID INTEREST INCOME ON THE OTHER HAND. THE LEARNED ASSESSING OFFICER DISALLOW ED THE CLAIM OF BAD DEBT OF RS.19 36 719/- AS IN HIS VIEW THE ADVANCES WERE GIVEN TO HELP ITS GROUP COMPANY AND W AS NOT GENUINE BUSINESS ADVANCE AND CONDITION OF SECTION 3 6(2) WAS NOT FULFILLED AND MERE WRITING OFF WAS NOT SUFFICIE NT. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPE ALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT AFTER AMENDMENT TO SECTION 36(1)(VII ) WITH EFFECT FROM 1.04.1989 THE WRITING OFF OF DEBT WAS SUFFICIENT AND THE ASSESSEE NEED NOT TO PROVE THAT DEBT HAVE B ECOME ACTUALLY BAD DURING THE RELEVANT PERIOD. IN SUPPORT OF THE ABOVE SUBMISSION HE RELIED UPON THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT [2 010] 323 ITR 397 (SC). HE ALSO SUBMITTED A COPY OF ORDER DAT ED 12.02.2009 OF THE HON'BLE GUJARAT HIGH COURT TO SHO W THAT M/S.NACHMO KNITEX LTD. WENT INTO LIQUIDATION TO PRO VE THAT THE DEBT HAS ACTUALLY BECOME BAD OR IRRECOVERABLE. HE ALSO SUBMITTED THAT AS THE ASSESSEE HAS SHOWN INTEREST I NCOME ON THE ADVANCE GIVEN THEREFORE THE CONDITION OF SECTI ON 36(2) - 21 - WAS FULFILLED IN THE INSTANT CASE. HE FILED COPIES OF FOLLOWING CORRESPONDENCES WHICH WERE ALSO FILED BEFORE THE LO WER AUTHORITIES AND SUBMITTED THAT THESE CORRESPONDENCE S ESTABLISHED THAT THE ADVANCES GIVEN BY THE ASSESSEE WERE FOR BUSINESS PURPOSES. NO. PARTICULARS 1 LETTER DATED 10.03.2003 FROM THE ASSESSEE COMPANY TO NACHMO TEXTILES (DIVISION OF NKL) ABOUT THE INQUIRY FOR PURCHASE OF PROCESSED KNITTED FABRICS. 2 LETTER DATED 26.03.2003 FROM THE ASSESSEE COMPANY TO NACHMO TEXTILES (DIVISION OF NKL) ORDER FOR PURCHASE OF 580 TONS OF PROCESSED KNITTED FABRICS. 3 LETTER DATED 06.4.2004 REQUESTING THE NACHMO TEXTILES (DIVISION OF NKL) TO MAKE PAYMENT OF INTEREST) 4 LETTER DATED 07.04.2004 OF NKL INFORMING FOR NON PAYMENT OF INTEREST TO THE ASSESSEE COMPANY TO OFFSET THE INCREASED PRICES OF GREY KNITTED YARN. 5 LETTER DOTED 16.4.2004 OF THE ASSESSEE COMPANY AGREEING FOR NON PAYMENT OF INTEREST HOWEVER REQUESTING TO EXPEDITE THE ORDER FOR SUPPLY SO PLACED. 6 LETTER DATED 06.05.2004 FROM NKL TO THE ASSESSEE COMPANY STATING THAT THEY ARE NOT IN A POSITION TO BEAR THE INTEREST COST ON ADVANCE AND THEREFORE SHALL NOT BE ABLE TO PAY ANY INTEREST ON THE SAID ADVANCES EFFECTIVE FROM 1.4.2004. 7 LETTER DATED 28 5.2004 FROM NKL THAT THEY SHALL NOT BE PAYING INTEREST CHARGED NET OFF TDS AND HENCE THE ASSESSEE COMPANY IS REQUESTED TO FORGO FOR INTEREST CHARGED NET OFF IDS IN THE YEAR 2003- 04. 8 LETTER DATED 28.05.2004 FROM THE ASSESSEE COMPANY TO NKL THAT THEY SHALL NOT BE CHARGING ANY INTEREST ON THE AMOUNT ADVANCED EFFECTIVE FROM 1.4.2004. 9 COPY OF BOARD RESOLUTION PASSED IN THE MEETING HELD ON 11. 6.2004 TO WRITE OFF THE AMOUNT OF RS.19 36 150/- AS INTEREST RECEIVABLE ON TRADE - 22 - ADVANCE TO NKL TO THE PROFIT AND LOSS ACCOUNT OF THE COMPANY ON 31.3.2004 AS BAD DEBTS. 6. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AU THORITIES AND SUBMITTED THAT THE CORRESPONDENCES BETWEEN THE GROUP COMPANIES WERE SELF SERVING DOCUMENTS AND IT DOES N OT ESTABLISH THAT THE ADVANCES WERE FOR GENUINE BUSINE SS PURPOSES. 7. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ADVAN CE WAS GIVEN TO THE GROUP CONCERN BY THE ASSESSEE OUT OF B ORROWED FUNDS ON WHICH INTEREST EXPENDITURE WAS CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE. FURTHER IN VIEW O F THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F T.R.F. LTD. VS. CIT [2010] 323 ITR 397 (SC) IT IS NO MORE IN DISPUTE THAT THE WRITING OFF OF DEBT AS IRRECOVERABLE IS SU FFICIENT IN THAT REGARD THE ASSESSEE IS NOT REQUIRED TO FURTHER PROVE THAT THE DEBT HAS ACTUALLY BECOME BAD DURING THE RELEVAN T YEAR. THUS THE ONLY ISSUE WHICH IS REQUIRED TO BE ADJUDI CATED IN THE INSTANT CASE IS THAT WHETHER THE ADVANCE WAS A GENUINE BUSINESS ADVANCE ON NOT. IT IS NOT IN DISPUTE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRAD ING IN COTTON FABRICS & TEXTURISED YARN AND IS NOT ENGAGED IN THE BUSINESS OF MONEY LENDING OR GIVING OF ADVANCE. THE CASE OF THE ASSESSEE IS ALSO NOT THAT IT HAS GIVEN ADVANCE OF RS.1.50 CRORES AS A PART OF MONEY LENDING BUSINESS. ON THE OTHER HAND THE CASE OF THE ASSESSEE IS THAT THE ADVANCE WAS GIVEN ENTIRELY FOR THE PURCHASE OF KNITTED FABRICS FROM M /S. NACHMO KNITEX LTD. IN SUPPORT OF THE ABOVE CLAIM T HE ASSESSEE COMPANY FILED CERTAIN CORRESPONDENCES WHIC H ARE - 23 - STATED HEREINBEFORE. THE SAID CORRESPONDENCES WERE REJECTED BY THE REVENUE ON THE GROUND THAT THEY WERE NOT SUF FICIENT FOR ESTABLISHING THE ADVANCE AS GENUINE BUSINESS ADVANC E OF THE ASSESSEE. WE FIND THAT NO MATERIAL WAS BROUGHT ON R ECORD BEFORE US BY ANY OF THE PARTIES TO SHOW THAT WHETHE R THE ASSESSEE COMPANY WAS ALSO DEALING IN KNITTED FABRIC S OR NOT. FURTHER NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT WHAT WAS THE ACTUAL BUSINESS ACTIVITY OF THE SAID G ROUP CONCERN TO WHOM ADVANCE OF RS.1.50 CRORES WAS GIVEN BY THE ASSESSEE COMPANY ALLEGEDLY FOR PURCHASE OF KNITTED FABRICS. ON A QUERY FROM THE BENCH THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE P URCHASE OF KNITTED FABRICS FROM THE SAID GROUP CONCERN WAS NOT MADE BY THE ASSESSEE ON ANY EARLIER OCCASION. FURTHER F ROM THE RECORDS IT IS NOT CLEAR THAT WHETHER THE ASSESSEE HAS GIVEN ADVANCE TO SOME OTHER PARTIES AGAINST PURCHASES SO AS TO ESTABLISH THAT GRANTING OF ADVANCE IN RESPECT OF PU RCHASES WAS CUSTOMARY IN THE LINE OF THE BUSINESS IN WHICH ASSESSEE WAS ENGAGED. IN OUR CONSIDERED VIEW EXAMINATION OF THE ABOVE ISSUES WERE IMPERATIVE TO CONCLUDE ONE WAY OR OTHER THAT WHETHER THE ADVANCE IN QUESTION WAS FOR GENUIN E BUSINESS PURPOSE OF THE ASSESSEE COMPANY OR NOT. IN THE ABOVE CIRCUMSTANCES IN OUR CONSIDERED VIEW IT SHA LL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE ISSUE BA CK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR PROPER VERIFIC ATION KEEPING IN VIEW THE DISCUSSION MADE HEREINABOVE AND THEREAFTER TO DECIDE THE ISSUE AFRESH BY PASSING A SPEAKING ORDER AS PER LAW. WE ORDER ACCORDINGLY. NEEDLESS T O MENTION THAT THE REASONABLE OPPORTUNITY OF HEARING IS TO BE GRANTED TO THE ASSESSEE BY THE LEARNED ASSESSING OFFICER BEFOR E PASSING - 24 - THE ORDER OF ASSESSMENT. THUS THESE GROUNDS OF APP EAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3 AND 4 OF THE APPEAL READS AS UNDER:- 3. WITHOUT PREJUDICE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN REJECTING THE ASSESSEE'S OBJECTION WITH REGARD TO THE PROCEEDINGS U/S.148 AS THE ASSESSEE HAD CLAIMED THAT THE PROCEDURE PRESCRIBED BY THE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS INDIA LTD. VS. ITO 259 ITR 19 SUPREME COURT HAD NOT BEEN FOLLOWED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN NOT ACCEPTING THE ASSESSEES CONTENTION THAT IT WAS NOT AT ALL A FIT CASE FOR LEVY OF INTEREST U/S.234B . 9. AT THE TIME OF HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE ABOVE GROUNDS OF APPEAL AND THEREFORE THEY ARE DISMISSED FOR WANT OF PROSECUTION. 10. THUS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 26 TH DAY OF MAY 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD; ON THIS 26 TH DAY OF MAY 2010 PARAS - 25 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-6 AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 20.05.2010 ---------------- -- 2. DRAFT PLACED BEFORE AUTHORITY 21.05.2010 ---- -------------- 3. DRAFT PROPOSED & PLACED 21.05.2010 ----------- ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 21.05.2010 ---------- -------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 24.05.2010 -------- ---------- 6. KEPT FOR PRONOUNCEMENT ON 26.05.2010 --------- --------- 7. FILE SENT TO THE BENCH CLERK 26.05.2010 ------ ------------ 8. DATE ON WHICH FILE GOES TO THE ---------------- ------------------ 9. DATE OF DISPATCH OF ORDER ---------------- --- ---------------