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2017 (11) TMI 851 - ITAT, KOLKATADisallowance on account of bad debts - tds liability on amount received on the amount from Sikkim and Bhutan Government - Held that:- In the assessee's case under consideration, the Sikkim and Bhutan govt. neither paid the said amount to the assessee nor deposited the said amount to the Central Govt. account, therefore, it is a revenue loss in the hands of the assessee company. We observe that Sikkim and Bhutan Govt. suppose to deposit the said amount to the Central Govt. account on behalf of the assessee but in fact the amount was not deposited to the Central govt. account, therefore, it is a revenue loss in the hands of the assessee company The assessee is entitled to write it off as a bad debt. Since the TDS certificate was not issued by the deductor nor any actual payment was made by them, the assessee company could not claim credit thereof against the tax liability. Therefore, when there was no possibility of TDS certificates being received from the clients, the assessee company decided to write off the TDS receivable and debited the same to the Profit &Loss account for the assessment year under consideration. We are of the view that if the loss occurred during the course of carrying on the business, it is incidental to it and hence allowable. Admittedly, in this case, the assessee suffered loss during the course of carrying on its business. Therefore, same is allowable. In the assessee's case under consideration. we note that necessary TDS certificates were not issued by the deductions/clients nor any actual payment was made by them, the assessee company could not claim credit thereof against the tax liability. Therefore, when there was no possibility of TDS certificates being received from the clients, the assessee company decided to write off the TDS receivable ot ₹ 21,72,227/- and debited the same to the profit & Loss account for the assessment year under consideration. We are of the view that in this case the assessee suffered loss during the course of carrying on its business and said loss is allowable. - Decided in favour of assessee.
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