Ajitsinh Takhatsinh Baraiya vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, Ajitsinh Takhatsinh Baraiya, is engaged in the business of manpower supply exclusively to M/s Harsha Engineers Limited. The assessee filed his return of income declaring business income of ₹7,17,682/-. During assessment proceedings, the Assessing Officer observed that the assessee claimed a sum of ₹27,92,370/- as expenditure under the head 'Contribution to PF,' supposedly on account of deductions made by the service recipient (M/s. Harsha Engineers Ltd.) towards Provident Fund, ESIC, Professional Tax, canteen expenses, bus fare, and deficiency in services. The assessee submitted that the total amount invoiced for services rendered was ₹1,31,80,617/-, and therefore, the closing balance receivable as of 31.03.2018 should have been ₹41,33,823/-. However, according to the confirmation from M/s Harsha Engineers Ltd., the closing balance was only ₹13,41,452/-. The difference of ₹27,92,370/-, according to the assessee, had been deducted by the client and was hence irrecoverable. The assessee submitted before the Assessing Officer that since Harsha Engineers Ltd. had written off the same amount in their books and issued a ledger confirmation, the amount was irrecoverable and qualified as bad debt.…

Legal Issues

• 1. Whether the NFAC (Appeals), New Delhi erred in dismissing the appeal of the Appellant by confirming the Addition made by the Learned Assessing Officer.
• 2. Whether the NFAC (Appeals), New Delhi erred in law and in facts in confirming the addition to the tune of Rs 27,92,370/- with respect to amounts written back by the client i.e M/s Harsha Engineers Limited as not payable to the appellant on account of Statutory Contribution and deficiency in service.
• 3. Whether the NFAC (Appeals), New Delhi erred in law and in facts in rejecting the alternate claim the appellant to the tune of 27,92, 370/- with respect to amounts written back by the client i.e M/s Harsha Engineers Limited as not payable to the appellant on account of Statutory Contribution and deficiency in service as bad debts under section 36 or business loss under section 28.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

Similar Judgements

• M/s. J.V. Industries Pvt. Ltd. vs. DCIT, Circle-13(1), Delhi

  Delhi Bench benchAY 2008-09Allowed

• M/s Bengal Omnitech Nirman Ltd. vs. ACIT/ ITO, Ward 8(1), Kolkata

  Kolkata Bench benchAY 2018-19Allowed

• M/s Blue Bird Technicks Pvt Ltd Vs DCIT, Circle-7(1), Kolkata

  Kolkata Bench benchAY 2015-2016Allowed

• M/s Kanak Projects Ltd. Vs ACIT, Circle-8(1), Kolkata

  Kolkata Bench benchAY 2017-18Allowed

• E Factor Adventure Tourism P. Ltd. Vs. Deputy Commissioner of Income Tax

  Delhi Bench benchAY 2017-18Partly Allowed

• M/s Khemka Stuart Leisure Ltd. vs ACIT

  Delhi Bench ‘F’, New Delhi benchAY 2005-06Dismissed