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2016 (3) TMI 54 - AT - Income TaxIrrevocable bad debt - whether allowable as revenue expenditure - Held that:- The assessee has made efforts to recover the amount but could not recover the same for which necessary evidences are placed on record by the assessee in the paper book filed with the Tribunal. This amount has been considered to be bad debt by the assessee and has been written off in the books of account in the current assessment year under appeal. In the opinion of the assessee, the said amount has become irrecoverable and has been written off in the books of accounts maintained by the assessee. In our considered view , the assessee has fully satisfied the conditions laid down in section 36(1)(vii) of the Act read with Section 36(2) of the Act and the said amount written off by the assessee as irrevocable as bad debt is allowable as revenue expenditure. Hence, The addition made by the A.O. and as sustained by the CIT(A) is hereby ordered to be deleted. - Decided in favour of assessee Advance receipts - Held that:- In the instant case, the amount has been held by the assessee on behalf of Tips Industries Ltd. and is not being held by the assessee in his own right as the assessee can be deemed to hold the said amount in his own right on commencement of the film. No income is being generated or earned even under the cash system of accounting followed by the assessee as in the instant case the film has not commenced as per agreed terms and the amount has become refundable to Tips Industries Limited which is stated to be asking for refund of their advance. In our considered view, the addition made by the A.O. is not sustainable in law because the amount is being still held by the assessee on behalf of the Tips Industries Ltd and not on his own right as per the agreed terms of conditions as agreed vide mutual understanding dated 05-02-2008 as the assessee will be deemed to appropriate the said amount or hold the said amount in his own right only on the commencement of film and till then the assessee is holding the said amount on behalf of Tips Industries Limited which is refundable in case of non-starting of the film as per agreed terms as per mutual understanding dated 05-02-2008. The addition made by the A.O. as confirmed by the CIT(A) is hereby ordered to be deleted - Decided in favour of assessee Disallowance of depreciation on assets not used for the purposes of business - Held that:- We have observed that the A.O. is insisting on the commercial electricity use as evidence for allowing the claim of the business user of the premises of the assessee, which in our view, no-doubt is a vital document/evidence to claim that the premises are used for commercial / business purposes but it is not the only/sole evidence to prove that the afore-stated premises are used by the assessee for the purposes of his business rather the assessee can prove the same by bringing other cogent material / evidences to prove his contentions that these premises were used for business purposes of the assessee. The assessee is also directed to bring on record cogent material/evidences to prove his contentions of business user of the afore-stated premises. The A.O. is directed to admit evidences furnished by the assessee in de-novo proceedings in his defense and the AO should consider the necessary evidences submitted by the assessee before deciding the matter on merit.Needless to say that proper and adequate opportunity of hearing in accordance with law shall be granted to the assessee by the AO before deciding the issue on merits in denovo proceedings. Treating three properties namely ‘Evershine Greens’, ‘Saidwar’ and ‘Tranquil Treat’ as deemed to be let out properties - Held that:- The assessee’s claim is that all the three properties were being used for the personal use of profession hence it should not be treated as deemed let out properties. We find that the assessee also claimed depreciation on furniture and fixture and computers installed at these properties whereby we have set aside the matter of allowability of depreciation on furniture and fixtures and on computers to the file of A.O. and directed the assessee to produce cogent evidence/material to substantiate his claim of business user of the afore-stated properties and the A.O. shall examine the same for deciding the issue of claim of depreciation and we apply the same principle in this issue also, hence, we set aside this issue to the file of A.O. for de-novo determination of issue after considering the cogent material/evidences brought on record by the assessee in his defense in denovo proceedings . The A.O. is directed to admit evidences furnished by the assessee in de-novo proceedings
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