Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 653 - ITAT DELHIAllowable deduction u/s 37 - payment of interest charges - Held that:- It is observed that the terms of agreement have been placed by the assessee wherein the terms of settlement of dues and the payment schedule has been specified. It is observed that the payment made by the assessee is part of the contract / settlement entered into between the assessee and IFCI Ltd. and interest paid from 01.01.2007 till 15.02.2007 is a part of agreement and does not assume the nature of penalty. We are, therefore, of the considered opinion that the said expenditure should be allowed as deduction as per provisions of Section 37(1) of the Act. - Decided in favour of assessee Allowance of old stock written off - Held that:- On perusal of the statement of account of the assessee for the year under consideration, it is found that the assessee has incurred expenses for maintaining office premises as well as paid salary and other miscellaneous expense relating to the administration of the business. It cannot be said that the business activities were completely shut down after the lock out that took place at the manufacturing unit in Kerala. It is observed that the reason for not continuing the manufacturing activities was due to power supply being cut by KSEB. Further, there is no material to suggest that the manufacturing operation of the assessee were in a stage of more than that of suspension.Section 36(1)(vii) and 36(2) of the Act require the assessee to write off the bad debts which are irrecoverable and that it has been considered as income in any of the previous year if it relates to such previous year. The Assessing Officer cannot insist the assessee to prove the authenticity of circumstances leading to write off the bad debts.The assessee has furnished the details of financial year in which write off of bad debts were taken into account in computation of income. The assessee has also placed reliance upon the decision of Hon'ble Supreme Court in the case of TRF Ltd. Vs CIT reported [2010 (2) TMI 211 - SUPREME COURT ]. Thus the disallowance made by the Ld. Assessing Officer stands deleted. Addition u/s 41 - secured loan from IFCI Ltd - Held that:- Respectfully followings the decision of Hon'ble Jurisdictional High Court in the case of Tosha International Ltd (2007 (7) TMI 346 - ITAT DELHI-F) we are inclined to hold that the waiver of loan does not amount to cessation of liability and cannot be brought to tax by invoking the provisions of Section 41(1) of the Act.
|