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2017 (4) TMI 1010 - AT - Income TaxDisallowing the claim of depreciation on Plant and machinery and other assets due to closure of factory - Held that:- We find that the ld. Sr.DR was not able to controvert the finding given by the ld. CIT(A). The assessee’s factory was closed on the account of liquidity problem and the matter was pending before the BIFR for revival of the business. The Hon’ble Delhi High court in the case of CIT Vs. Laxmi Sugar Mills Ltd. [2013 (7) TMI 385 - DELHI HIGH COURT] held that in intervening period, plant was ready for use throughout and same could not be used for reasons beyond control of assessee and hence, there was passive user of plant and therefore, in view of facts that above claim of assessee regarding depreciation should be allowed - Decided in favour of assessee Disallowance of writing of Sundry debtors - Held that:- Writing off bad debt in the name of Nam Nam Dhaka is allowed and this ground of assessee’s appeal stands allowed. See Adea International Pvt. Ltd. Vs. ACIT [2011 (2) TMI 724 - ITAT, Bangalore] held that is a settled law that when the assessee arrives at a decision that certain debts have become bad and accordingly writes off the same in the books of accounts, section 36(1)(vii)of the Act provides for a deduction. Further, section 41(1) of the Act provides that if such bad debts written off is recovered during the subsequent assessment years, it shall be treated as income of that year. From the facts and circumstances of the case, we are of the considered view that the assessee is justified to claim deduction u/s. 36(1)(vii) of the Act with respect to the unrealized bills from export turnover - Decided in favour of assessee Disallowance of writing off loans and advances - This amount was written off by the BIFR - Held that:- BIFR, a scheme was sanctioned for rehabilitation of the scheme. As per scheme, assets and liabilities would be limited to what was shown in the sanctioned scheme. In view of this scheme, the balance sheet for financial year 1999- 2000 was recasted. Only those items were shown in recasted balance sheet, which were taken by the new management. Only those assets and liabilities were shown, which were recoverable and payable respectively by the new management and loans and advances which are not recoverable were written off in the line of the sanctioned scheme. Considering these facts, we find merit in the pleadings of the ld AR and therefore, we allow this ground of appeal. This issue is also covered by the decision of the Hon’ble Apex Court in the case of T.R.F. Limited Vs. CIT, Ranchi (2010 (2) TMI 211 - SUPREME COURT ). Disallowance of write off of fixed assets - these assets were found missing during the course of taking over of the operation of the company by the new management and the company has written off these assets - Held that:- We find that these were the assets missing and the same were written off in the books of account. In our considered view, this was not the proper way to deal with these missing assets as these assets were already forming part of the block assets. There was no need to writing off the same in the books of account as these were merged in block of assets and depreciation was allowed. Since no details are filed, hence, we find no merit in the ground. Therefore, we confirm the order of the ld. CIT(A) on this issue and dismiss this ground of appeal of the assessee. Disallowance of interest amount - Held that:- The loan as on 31/3/2000 from the bank was ₹ 2.00 crores as cash credit, export bills and packing credit ₹ 79.52 lacs and working capital term loan ₹ 2.38 crores. The part of the working capital loans were converted during the year as working capital term loan as per the scheme of the BIFR. Thus the total loan outstanding of bank towards the working capital was ₹ 5,17,52,067, which is verifiable from the balance sheet as on 31/3/2000. Further the assessee company has charged interest of ₹ 6.50 lacs only in the P&L account, which is a net effect of 90% of the interest payable. As per the scheme of the BIFR, the balance amount has been credited to extra ordinary income. Keeping in view of these facts and circumstances, we find no merit in this addition and direct to delete the same
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