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2019 (11) TMI 865 - AT - Income TaxAddition u/s 36 for writing off irrecoverable expenses - disallowing the "advances and deposit written off" - whether the advances and deposit written off by the assessee can be allowed u/s 37(1) as business loss? - HELD THAT:- In the instant case, the claim of advances and deposit have not been considered for income in the year under consideration or in the earlier year(s), such advances or deposit written off are not eligible for deduction under section 36(1)(vii). An assessee is entitled for claim under Section 36(1)(vii) , where by reason of the inability or insolvency of the debtor to pay, the money is unable to be recovered. In all other cases, the claim for allowance should have to be sustained under Section 37(1) which requires that the expenditure (not being of a capital nature) should have been wholly and exclusively incurred for the purpose of the business. In the instant case, we find that advances for salary and deposits for lease premises have been written off. Clearly, the advances which had been made by the assessee in the present case are certainly of a type which are within the contemplation of the words "laid out or expended wholly and exclusively for the purposes of the business and allowable under Section 37(1). The ratio of the decision of the Hon’ble Supreme Court in the case of Southern Technologies Ltd. (supra) cannot be applied in the facts of the instant case. Accordingly, we set aside the finding of the Learned CIT(A) on the issue in dispute and allow the ground of the appeal of the assessee. Addition being legal and professional charges - HELD THAT:- Disallowance on the ground that the assessee failed to provide any evidence of rendering services by Sh. Amreek Singh. The onus was on the assessee to establish that Sh. Amreek Singh, rendered legal and professional services in addition to employment with the assessee. As assessee has failed to produce any evidences before the Ld. CIT(A) as well as before us, we do not find any error in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the appeal of the assessee is dismissed. Short-term capital loss - HELD THAT:- Documents are in relation to lawsuit filed by the vendor against assessee, however, in these letters of attorney of the assessee there is no mention of any fact that asset of the assessee were lying at those customer sites, with the assessee has claimed as not recoverable. No other evidence from the client/customer of the assessee to substantiate that assets were lying at their sites, has been furnished by the assessee either before the lower authorities or before us. In the facts and circumstances of the case, we do not find any error in the order of the learned CIT(A) and accordingly, we uphold the same. Ground of the appeal of the assessee is accordingly dismissed. As far as appeal of the Revenue is concerned, we find that the tax effect involved in the issue agitated before the Tribunal, is less than ₹ 50 lakh, as prescribed by the Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019, dated 08/08/2019, wherein the Revenue has been directed not to pursue those appeals. In view of the tax involved in the present appeal of the Revenue, being less than the prescribed limit of ₹ 50 lakh, the appeal of the Revenue is dismissed.
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