2023 (3) TMI 664 - AT - Income Tax

Disallowance of bad debt u/s 36(1)(vi) - assessee did not produce any documentary evidences in support of the claim - HELD THAT:- We also notice that the claim of the assessee that the amount to Mr. Ranjan is paid towards property advance is not supported by any documents which the AO called for during the assessment proceedings and the assessee also failed to provide details with respect to the identity of the person, his address, etc.

As further noticed that the amount written off against the salary advance was also not substantiated and that the assessee could not even submit the basic details to support whether Mr. Girish was actually in employment with the assessee. Given the facts of the case, in our considered view, the claim of bad debts is rightly denied by the lower authorities on the ground that the assessee has not substantiated the claim with proper documentary evidence to prove that it is incurred in the regular course of business and that the amount could not be recovered. Accordingly, we see no reason to interfere with the decision of the CIT(Appeals).

Professional and consultancy charges - disallowance is that whether the expenditure was incurred wholly and exclusively for the purpose of business? - HELD THAT:- On perusal of return of income filed by Mr.Sheetal, we notice that the said income of Rs.2 crore has been offered as “Compensation received” under the head “Income from Other Sources” and not as professional fees. As already stated the main ground on which the expenditure is disallowed by the AO and CIT(A) is that the assessee could not substantiate the claim in terms of commercial expediency to incur the expenditure and the nexus between the expenditure and the business. We therefore in the interest of justice remit the issue back to the CIT(A) to examine the issue afresh based on evidences that the assessee may submit in this regard. The assessee is directed to furnish the necessary documents to substantiate the claim and cooperate with the proceedings.

Capital gains - AO during the course of assessment noticed that the assessee had entered into a joint development agreement (JDA) - Based on the various terms of the joint development agreement, the AO held that capital gain arises in the hands of the assessee and computed the short term capital gain by considering the sale consideration - HELD THAT:- Relevant clause of JDA agreement it becomes clear that the assessee has given only the permissible possession of the land to the developer at the time of executing the JDA and the ownership is not transferred. We also see merit in the submission of the ld. AR that the assessee has offered the capital gains to tax as and when the developer handed over the flat as per cl. 6.1 of the JDA. In our view, no taxable event happened during the year under consideration and the basis on which the capital gain is computed by the AO is not tenable. We therefore hold that the capital gain computed by the AO is to be deleted. This ground is allowed in favour of assessee.