2023 (5) TMI 317 - AT - Income Tax

Disallowance u/s 14A read with Rule 8D - HELD THAT:- Disallowance u/s 14A read with Rule 8D was deleted by the Tribunal in assessee’s own case for the subsequent assessment years [2021 (10) TMI 1105 - ITAT DELHI] holding that the share of profit from the partnership is mere distribution of income and is already been taxed, hence provisions under section 14A are not attracted in such cases.

We observe that the Tribunal also held that if there is no exempt income no disallowance is called for under section 14A and finally the Tribunal directed the AO to re-compute the disallowance keeping in view the guidelines mentioned therein. Following the judgement of the Tribunal we direct the Assessing Officer to re-compute the disallowance, if any, under section 14A read with Rule 8D of the I.T. Rules keeping in view the guide-lines set out by the Tribunal in the order for the assessment years 2011-12 to 2014-15. This ground is partly allowed.

Disallowance of write off of bad debts - AO held that the amount written off by the assessee was not allowable as deduction u/s 36 since the same was not part of profit and loss account and was in the nature of trade advances - HELD THAT:- We hold that since the assessee had advanced the loan to its employee on account of business interest and due to shut down of the operations entity the loan become irrecoverable and was written off by the assessee along with the imprest lying with the employee who was looking after day-to-day business and the same is allowable as business loss u/s 28 of the Act.

As regards the Sundry advances written off, we observe that the same was provided as advances to various parties for entering into a new business of supply of packaged food items and since the business could not be materialized the assessee had written off the sundry advances given to various parties.

Mumbai Tribunal in the case of DCIT Vs. M/s. Edelweiss Capital Ltd. [2011 (2) TMI 284 - ITAT MUMBAI] held that the moneys advanced for development of web site of the assessee which was written off subsequently for the reason that the web site did not materialize and the advances became irrecoverable the write off claim by the assessee is a loss incidental to the business and, therefore, allowable as business loss in terms of the provisions of section 28 - Therefore, sundry advances written off by the assessee are allowable as deduction under section 28 of the Act as business loss. We direct the AO to delete the disallowance made out of bad debts. This ground is allowed.

TP Adjustment in respect of receipt of receivables from AE - HELD THAT:- As following the order of the co-ordinate bench in the case of L.T. Foods Ltd. (2022 (4) TMI 1499 - ITAT DELHI] we direct the Assessing Officer to delete the transfer pricing adjustment made on account of receivables from AE. This ground is allowed.

Deduction u/s 80IB(11A) - Denial of deduction as assessee was engaged in manufacture and sale-purchase of rice and not storage handling & transportation of food grains as provided under that section - HELD THAT:- On perusal of the order of the Tribunal in assessee’s own case for the assessment year 2009-10 [2021 (6) TMI 258 - ITAT DELHI] we observe that the issue in appeal has been decided by the Tribunal in assessee’s favour holding that the deduction u/s 80IB(11A) of the Act is allowable in the case of the assessee as it fulfills the parameters of the exemption clauses specified under this section.