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2015 (9) TMI 946 - AT - Income TaxDisallowance invoking the provision of Section 40(a)(ia) - CIT(A) treating the expenditure incurred towards debit notes raised by with M/s. S & V Industries Inc., USA as unexplained and not genuine - Bad debts u/s 36(1)(vii) - Held that:- On perusal of the facts it is crystal clear that M/s. S & V Industries Inc., USA had raised the debit notes against the assessee for whatever reasons it may be and it has become extremely difficult for the assessee to recover its entire sales proceeds. In order to keep good business relationships, the assessee had conceded to the debits notes raised by M/s. S & V Industries Inc., USA and preferred to accept a lesser amount than what was invoiced. In these circumstances, the debit notes raised by the assessee will either relate to the expenses reimbursable by the assessee to its client or the debt that has become bad which the assessee has written off in its books of accounts. From these facts, it is crystal clear that the assessee is forced to incur the expenditure or accept the same as bad debt. Apparently the assessee has also debited the expenditure account and credited M/s. S & V Industries Inc.,USA account, thereby satisfying the conditions laid by the Hon’ble Apex Court in the case TRF LTd. Vs. Ld. CIT (2010 (2) TMI 211 - SUPREME COURT) as pointed out by the Ld. A.R. Therefore, we do not have any hesitation to accept the contention of the Ld. A.R and accordingly we hereby delete the addition of ₹ 44,83,941/- made by the Ld. Assessing Officer which was further sustained by the Ld. CIT (A). - Decided in favour of assessee.
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