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2022 (3) TMI 719 - AT - Income TaxDisallowance in respect of the advances written off - HELD THAT:- Assessee has placed on record the purchase orders on four vendors referred to in para 6.2 of order of Ld. FAA advances shown non recoverable to whom were disallowed. They mentions that under the head “project Shadara Kempinki Hotel” the orders were placed. The project being abandoned led to non-return of the money nor supplying of the articles as they were actually no more required. That is how justification to treat the advances as non-returnable is claimed. The Bench is of considered view that when advance is paid to prospective vendors and the same is forfeited due to discharge of the contract, on account of failure of the assessee himself to honour the contract, there can be no reason to expect the assessee to pursue any remedy or recourse under law to either get the article delivered or the amounts refunded. There was no other recourse to the assessee then to consider the advances as non-recoverable and treat them as expenses while writing them off. In the light of aforesaid discussion of facts and circumstances and relying on the judgment in T.R.F. Ltd. Case [2010 (2) TMI 211 - SUPREME COURT] as there is no necessity to establish that the debt has in fact become irrecoverable, the findings of ld. First Appellate Authority cannot be sustained. Appeal of assessee allowed.
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