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2016 (5) TMI 1016 - AT - Income TaxAddition of bad debts/advances written off - Held that:- We find that the advances were given to the farmers before start of the farming season for buying back trial seeds produced by them in their farm lands. On perusal of the records and submissions of the assessee, the same seeds were not suitable for sale in the market and hence, were not procured from the farmers. Therefore, the assessee has written off to the advance in the ordinary course of business, relating to such non-saleable seeds at the end of the year. Therefore, it fit to be allowed as business expenditure of ₹ 6,59,193/-. However, as far as the remaining amounts of ₹ 6,01,457/-, ₹ 3,80,303/- and ₹ 3,09,503/- are concerned, it is evident from record that the AO has given sufficient opportunities to the assessee to furnish basic details as to in which year, the entries were passed to substantiate the claim. The books of account of the assessee are audited by the Chartered Accountant. Therefore, the assessee could substantiate its claim before the AO, but he failed to do so. Therefore, in our considered opinion, the AO has rightly disallowed these amounts out of the claim of assessee and the findings of the ld. CIT(A) in this regard are liable to be reversed. Depreciation on UPS - Held that:- Computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, UPS are the part of the computer system, they are entitled to depreciation at the higher rate of 60%. [2010 (8) TMI 58 - DELHI HIGH COURT] Provision for sale return - Held that:- Accountancy principle of conservatism, which has been duly recognized by the Courts, mandates that anticipated losses are to be provided for in the computation of income but it does not permit anticipated profits to be taken into account till the profits actually arise. Even an anticipated loss, even if it may not have crystallized in the relevant previous year, is to be allowed as a deduction in the computation of business profits. There is no dispute that sales have been returned in the subsequent year and this fact is known before the date of finalization of accounts. Therefore, there is no point in first taking into account income on sales, which never reached finality, and then accounting for loss on sales return in the subsequent year i.e. in which sales return did take place. In our considered view, the approach of the assessee is in consonance with the well settled accountancy principles and the Assessing Officer was not justified in rejecting the same. The disallowance for provision for sales return is, accordingly, deleted. Allowable business expenditure - advances given - Held that:- We find that the advance was given to A+E Consultants for setting up a construction of green house. This project was not materialized and the advance given to the architects for setting up of the project, could not be recovered. In view of this, the assessee has written off the same in the books of account as bad debts/advances written off in the ordinary course of business. In presence of these facts this expenditure was allowable as business expenditure and cannot be treated as capital expenditure as observed by the ld. CIT(A) Expenditure towards payment as license fees - Held that:- Once the addition made by AO of ₹ 25 lacs under reference, stands deleted by the ld. CIT(A) in appeal for A.Y. 2005-06, as submitted by assessee itself, the ground of assessee praying for accepting the same claim in the present appeal becomes infructuous.
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