TMI Blog2010 (8) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 25-8-2010 - SHRI R.S. SYAL, AND SHRI V. DURGA RAO, JJ. Appearances by: Shri G.P. Mehta for the Appellant. Mrs. Kusum Ingle for the Respondent. ORDER Shri R.S. Syal, AM.- This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on February 28, 2006 in relation to the assessment year 2002-03. 2. The first ground is general in nature which does not require any adjudication. 3. The second ground is against the sustenance of addition of Rs.20,68,21,770 by resorting to the provisions of section 41(1) of the Act. Briefly stated the facts of this ground are that the assessee showed outstanding balance of Rs. 20,50,00,000 in the name of M/s. Filtrona India Ltd. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is that the provisions of section 41(1) are attracted as the said party had refused to accept the existing liability. It is seen from page 32 of the paper book, which is the account of Triad Construction P. Ltd. in the books of assessee, in which the said sum of Rs. 21.53 crores was received as loan from Global Trust Bank on June 4, 2001 which has been transferred by the assessee to the account of M/s. Filtrona India Ltd. Thus the entry of Rs. 20.50 crores in the account of Filtrona India Ltd. is by way of transfer from the account of Triad Construction Private Ltd. Both these concerns belonged the same group and the original credit of Rs. 21.53 crores in the account of Triad Construction P. Ltd. was generated due to receipt of loan. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding as payable as opening balance, which position continued till next year and up to the previous year relevant to the assessment year under consideration. The learned authorised representative could not place on record any evidence to show that it was in the nature of a loan. On a specific query, the learned authorised representative admitted that the said amount of Rs. 18.21 lakhs was still unpaid. In view of these facts it becomes apparent that the said outstanding balance of Rs. 18.21 lakhs was payable due to trading transactions which subsequently became non-payable. In such a situation the provisions of section 41(1) get fully attracted. We, therefore, uphold the addition. This ground is partly allowed. 6. The third ground is again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecame non-recoverable and hence written off. In so far as M/s. Manav International is concerned, it is seen that the amount was advanced to this party through some broker with the intention of purchasing goods. However no such purchases could be made as claimed by the assessee. Obviously the condition of section 36(2) is not satisfied as such debt or part thereof was not taken into account in computing the income of the assessee in this year or earlier year. Patently the amount cannot be allowed as bad debt. The next contention raised by the learned authorised representative was that it should be considered as business loss under section 37(1). We are again unable to appreciate the view point of the learned authorised representative for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India but no such permission was filed. As the assessee's accounts were not audited, the learned Assessing Officer held that the claim for bad debt amounting to Rs. 47.94 crores could not be allowed as deduction. He, therefore, made this addition, which came to be upheld in the first appeal. 10. After considering the rival submissions and perusing the relevant material on record it is found that there is no dispute about the said amount of Rs. 47.94 crores arising out of export made by the assessee to M/s. Freeway Supplies Ltd. This unrealised amount got accumulated over some years with the assessee and was hence eventually written off in the year in question as non-recoverable. It has been categorically recorded in the impugned order tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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