TMI Blog2013 (5) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ts it is now no longer necessary for the assessee to establish that the debt had become irrecoverable and it is sufficient if the assessee forms such an opinion and writes off the debt as irrecoverable in its accounts. as decided in T.R.F Ltd. (2010 (2) TMI 211 - SUPREME COURT ) - In favour of assessee. - ITA 45/2013 - - - Dated:- 10-5-2013 - Badar Durrez Ahmed And Vibhu Bakhru,JJ. For the Appellant : Mr Sanjeev Rajpal, Advocate. For the Respondent : Mr S. Krishnan, Advocate. JUDGMENT Vibhu Bakhru, J 1. This is an appeal preferred by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') challenging the order dated 09.07.2012 passed by the Income Tax Appellate Tribunal, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt being suit titled as Samara India Pvt. Ltd v. Union of India Ors.: CS(OS) No.2467/2001. The said suit is still pending before this Court for recovery of the sums advanced by the assesse to the lessors and the amount expended by the assesse on development and interiors of the property. 3. The assessee has written off a sum of Rs 64,60,707/- as irrecoverable in the previous year relevant to the assessment year 2004-2005. This amount is an aggregate of two components, namely, advance rent of Rs 33,82,289/- paid by the assessee to the lessors and Rs 30,78,418/- spent by the assessee on the property. 4. The assessing officer disallowed the entire amount of Rs 64,60,707/-, written off by the assessee in his profit and loss account, by ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spent by the assessee on carrying out the renovation and betterment of the workshop and the amount paid by the assessee as advance rent. The CIT (Appeals) upheld the decision of the Assessing Officer to disallow the write off of a sum of Rs 30,78,418/- spent by the assessee on the workshop. In respect of the sums advanced by the Assessee to the lessors, the CIT (Appeals) deleted the addition to the extent of Rs 34,800/- and upheld the addition of Rs 33,47,489/- to the income of the assessee. The CIT (Appeals) held that as the property was demolished on 01.06.2000 i.e. after a period of only two months from the commencement of the previous year 2000- 2001, an amount of Rs 34,800/- ( i.e. Rs. 17,400/- for each month) was liable to be adjuste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount is outstanding to the assessee company which is being pursued by them by way of filing a Civil Suit, it cannot be called a bad debt at this stage and allowed as a revenue expenditure. The case laws referred to by the assessee are not applicable to the facts and circumstances of the case. In Lucent Technologies Hindustan Ltd. v. JCIT, 106 TTJ (Bang) 205 the case was of repair/renovation of a cinema hall taken on lease; in the instant case, a plot of land was converted into a warehouse cum workshop which is a capital expenditure. Similarly, Agra Color Lab (P) Ltd v. ITO 86 TTJ (Agra) 836 and Escorts Ltd v. ACIT 102 TTJ (Del) 522 are not applicable as it was expenditure on furnishing, painting etc and not on conversion of plot of land to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n carrying on business even prior to the lease agreement with respect to which advance had been made. The assessee had come to a conclusion that chances of recovery, of the amounts claimed from the lessors, in the near future were remote and had therefore written off the amount of Rs 64,60,707/- as irrecoverable in the previous year relevant to the assessment year 2004-2005. For an assessee to claim deduction in relation to the bad debts it is now no longer necessary for the assessee to establish that the debt had become irrecoverable and it is sufficient if the assessee forms such an opinion and writes off the debt as irrecoverable in its accounts. The decision of the Supreme Court in the case of the T.R.F Ltd. (supra) squarely covers the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
