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2018 (12) TMI 1507 - AT - Income TaxAddition on account of premium received against transfer of tenancy rights - considering the receipts as “Capital receipts” - Held that:- CIT(A) has decided the issue in favour of the assessee after considering the documentary evidences furnished by the assessee and the decision reached by the ITAT in the case of assessee for A.Y. 2005-06 which was followed in assessment year 2006-07, 2007-08 and 2008-09. CIT(A) has also followed the decision of Tribunal in A.Y. 2009-10. There being no contrary material on record from the side of Revenue to take a contrary view, we find no justification to disturb the findings reached by the CIT(A). We, think it appropriate to add that the asset, the tenancy right of which were transferred by the assessee was undoubtedly an income earning source and therefore, the amount received against transfer of tenancy rights should have been treated as compensation for sterilization of profit earning source and not in ordinary course of its business. For this, we find support from the decision of CIT vs. Saurashtra Cement Ltd. [2010 (7) TMI 11 - SUPREME COURT] relied by the ld. AR. - Decided in favour of assessee. Disallowance u/s. 14A - Held that:- Jurisdictional High Court after considering the decision of Special Bench of Tribunal in Cheminvest Ltd. [2009 (8) TMI 126 - ITAT DELHI-B] and Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME COURT] has held that merely because tax auditor had suggested in tax audit report that there ought to be such disallowance, it could not be a ground to make disallowance in terms of section 14A read with rule 8D. In the instant case also, the Assessing Officer has only speculated that the income from investment in share shall be exempt from tax, but there is no finding that any such income has been earned by the assessee or not. There are plethora of decisions to support the aforesaid finding. We accordingly, do not find any infirmity in the impugned order on this count. Accordingly, the appeal of the Revenue deserves to be dismissed. Disallowance of bad debt written off in the name of Punjab Fibers Ltd. - Held that:- Non-recoverability of advance in the year under consideration either in terms of money or in terms of supply of goods. The assessee has filed copy of agreement between the parties which has been doubted without any verification and the impugned amount has been written off in the books of assessee as irrecoverable advance. Even if such write off is not held to be in the nature of bad debt, then also it certainly would be in the nature of business loss. CIT(A) appears to have further treated the impugned debt as loan given by the assessee on the premise that the purchases made in earlier years and in the year under consideration were not shown either in the sales or in the closing stock. This, however, at the most be a ground from making trading addition in the hands of the assessee or for rejection of books of account, but cannot be a valid ground to hold the money advanced as loan by the assessee to Punjab Fibers Ltd., which was advanced during the ordinary course of its business. No material is placed on record on behalf of the Revenue to substantiate that the amount advanced by assessee to M/s. Punjab Fibers Ltd. was a loan transaction and not an advance against supply of goods as per agreement produced. We accordingly, are not inclined to justify the sustenance of addition, being a business loss allowable u/s. 28 of the IT Act. Accordingly, the impugned addition deserves to be deleted and the cross-objection of the assessee has to be allowed.
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