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2018 (1) TMI 1239 - AT - Income TaxDisallowance of provision/write off of advances - assessee made the advance for purchase of machinery and lease advance, which became irrecoverable - Held that:- As the advance paid for the purpose of expansion, will fall within the ambit of section 37 of the Act. With regard to the argument of the ld. DR that expenditure must be expended in the same year to get the deduction as observed by the AO, in our considered view, it is for the expansion of the business and incurred during the earlier years, as and when the assessee realises that this cannot be recovered, this can be written off in the year in which it is determined that it cannot be recovered. This right can be exercised by the assessee with the proper documentation on record. Therefore, the contention of ld. DR/AO on this aspect is not acceptable. Therefore, we are inclined to allow the ground raised by the assessee. Disallowance made towards amount paid to APGENCO for upgradation, operation and maintenance of fly ash extraction - AR has submitted that assessee has made the investment in order to get the benefit of procuring the fly Ash at a concessional rate - Held that:- When the Bench asked to substantiate the submission, ld. AR brought on record the various purchase statements, which are part of record. In order to verify the claim of the assessee and for proper justice, we are inclined to refer this matter back to file of AO with limited purpose to verify the submission of the assessee, whether assessee has procured the fly ash on concession, which supports the investment decision. In case, it is found that assessee has purchased the fly ash at concessional rate ( less by ₹ 40/- per tonne) then the AO may allow the claim of the assessee, otherwise, addition may be sustained. Therefore, ground raised by revenue is allowed for statistical purposes.
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