Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 933 - AT - Income TaxWrite off of outstanding dues - Bad debts claimed u/s 36(1)(vii) - Fresh claim before ITAT, in alternative, as business expenditure u/s 37(1) - as per AO Advance payment cannot be claimed as bad debts u/s 36(1)(vii) because the said advance was not included as income of the appellant in any of the previous years - HELD THAT:- Here is no doubt that within the provisions of Section 36(1)(vii) of the Act the deduction was not allowable. A perusal of the submissions of assessee before CIT(A) and the grounds raised in the first appeal before CIT(A) show that assessee had not made any specific claim that instead of provisions of Section 36(1)(vii) of the Act, Ld. AO should have invoked Section 37 and allowed the write off as an expenditure. There is no material on record to show as to what was the nature of agreement or transaction entered into and how though services which were sought were related to the purpose of business of assessee. In fact as the advances were paid in the year 2010-11 then in the relevant previous year 2014-15, the recovery of amount for non-provision of service, would also become time barred and which also needed the examination on facts. The assessee at this stage cannot seek relief to allow the claim u/s 37 of the Act merely because some relief has been given by Ld. CIT(A) in regard to other addition. Thus, ground no. 1 is decided against the assessee. Write off of the outstanding due balance of Hughes Communications Ltd - HELD THAT:- Tax Authorities have failed to appreciate that the amount was in fact not an advance but was received mistakenly and which under a Court decree had to be returned with interest. If interest was allowable u/s 37 of the Act, then the principal amount returned by virtue of order of the Court was also allowable, as both formed the composite money decree. Accordingly, the findings of Ld. CIT(A) in regard to ground no.2 are not sustainable, the same is allowed. The Ld. AO shall allow the whole of the amount as allowable deduction u/s 37 of the Act. Consequently, the appeal of assessee is allowed partly.
|