COMMISSIONER OF INCOME TAX Vs. WACKHARDT INTERNATIONAL LTD.

JUDGEMENT

(1.) The present appeal can be considered on the following questions:

(2.) A few facts may be set out. The assessee is exporter. He had exported certain goods which were returned and thereafter re-exported the goods. However, it was not in a position to furnish necessary documents as in the meantime the records of the assessee were lost on account of collapse of the building where the assessee maintained his records. It is the case of the assessee that they made attempts to reconstruct the records. However, as they were not in a position to reconstruct the records, they treated the said amount as bad debt for the assessment year 1996-97. The Assessing Officer disallowed the same against which an appeal was filed to the Commissioner of Income-tax (Appeals). The learned Commissioner (Appeals) considering the facts on record allowed the claim of the assessee. The Revenue preferred an appeal. That appeal came to be dismissed. Consequently, the present appeal and the questions as framed.

(3.) The contention as urged on behalf of the Revenue is that the loss have been shown as bad debt for the financial year 1993-94 and not for the assessment year 1999-2000. In our opinion, the issue is squarely covered by the judgment of this Court in Lord s Dairy Farm Ltd. v. CIT, 1955 27 ITR 700. In that case also there was defalcation between May, 1946, and April, 1947. The amount actually embezzled in the relevant accounting year 1st April, 1947, to 31st Mach, 1948. The assessee therein claimed deduction in the assessment year 1947-48. The learned Bench of this Court was pleased to hold that as the assessee wrote of this amount in the year of account, the court was entitled to presume that the amount became irrecoverable when the assessee wrote it off in its books of account and that, therefore, the assessee was entitled to claim the amount. In our opinion, therefore, even if duty drawback was available for the previous assessment year, what will be relevant was when the same is treated as bad debt by the assessee in his books of account. Considering the ratio of that judgment, in our opinion, there is no infirmity in the view taken by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. That question, therefore, would not arise. In so far as the second question is concerned, merely because there was no income in the course of assessment year 1999-2000 would not disentitle the assessee from claiming the business expenditure in the said assessment year. We find no infirmity with the view taken by the Commissioner of Income-tax (Appeals) and/or the Income-tax Appellate Tribunal. In the light of that, we find no merit in the appeal. Consequently, the appeal dismissed.