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2013 (1) TMI 600 - AT - Income TaxDisallowance of Interest income Interest free advance to group companies Commercial expediency - Held that:- Assessee also taken a plea before us that though the advances made by the assessee to its sister concerns at free of interest in earlier year, however, the interest on these advances has been accounted in subsequent years. The assessee is following mercantile system as such interest has to be accounted on accrual basis. If there is a mutual transaction between the assessee and the sister concerns to whom the assessee made interest free advances then it has to be considered as advances made by the assessee on account of commercial expediency. Issue back to the file of the A.O. to consider the issue afresh. Remand back Disallowance of advances written off - creditor advances written off Held that:- The assessee only furnished list of debts and the details called for by the authorities have not been furnished. The claim of the bad debts has been disallowed by considering the material on record by finding as a fact that the debt has not been proved as bad debt. Following the decision in case of Sirpur Paper Mills (1971 (12) TMI 37 - ANDHRA PRADESH HIGH COURT) that only the debt which constitutes trade debt could be claimed as bad debt if it is irrecoverable. In the present case it is observed by the lower authorities that the debts which were written off were not trade debts as seen. In favour of revenue Disallowance of advances given to employees written off - tour advance Held that:- If it is an expenditure incurred in respect of its business, it should have been claimed during the relevant assessment year and if it is a debt it should have been advanced in respect of trade or business of the assessee and it should have gone to computation of income of the assessee in the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year or represents money lent in ordinary course of business The assessee is not able to lead any evidence how it has gone into computation of income of the assessee in the assessment year under consideration or in any other assessment year. Being so, we are of the opinion that findings of the lower authorities in disallowing the claim of the assessee are justified Addition u/s 68 - The A.O. called for information at the time of assessment - The assessee failed to produce the same Held that:- The A.O has no occasion to examine the evidence produced before the CIT(A) by the assessee. The CIT(A) ought to have called for a remand report before deleting the addition. In the interest of justice, we remit the entire issue back to the A.O. for fresh consideration. Remand back
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