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2011 (8) TMI 303 - ITAT MUMBAIDisallowance of loans and advances written-off, disallowance of incentives written-off, disallowance of bandwidth charges under section 40(a)(i) - cable subscription - cable network service providers - The cable operators are sharing the cable subscription collected from the public as per the agreement on the declared subscribers - Held that:- the management companies are in the nature of distributing companies for the assessee. We are of the opinion that to determine the exact nature of the transaction, it is necessary to examine the agreement between the assessee company and its distributing companies which are managing companies. The assessee should also demonstrate with evidence the purpose for which these advances were given. The claim of the assessee cannot be considered under section 36(1)(vii), as it does not fulfil criteria laid down under section 36(C). If a claim is to be considered under the provisions of section 37 or 28 itself, it is for the assessee to lead evidence that these advances were given in the normal course of trade and have, in fact, become bad. The onus lies on the assessee to prove that the loss have crystallised in this year only. - Matter restored before AO for examination of facts. TDS u/s 194J - payment made for bandwidth- appellant submits that that the payment was made to non-resident and it is covered under the provisions of section 9(1) read with Explanation (2)(iva) - Held that:- the agreement in question has to be examined before coming to a conclusion that the fee in question has not been paid only for purchase of Band width. If so, no disallowance can be made. Written-off of inventories - the assessee is valuing its closing stock at cost on net realisable value, whichever is less at the end of the accounting year - the loss arising on such re-valuation of stock for the purpose of reduction of share capital is not allowable - When the assessee values its stock at cost and net realisable value, re-valuation loss in the middle of the year cannot be considered - Notice that all these losses written-off have been adjusted against equity share capital or share premium account and are not routed through Profit & Loss account - Therefore such deduction, on re-valuing the stock that too on ad hoc basis, as seen from the report of the valuer, cannot be allowed as expenditure in the hands of the assessee.
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