TMI Blog2014 (7) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein, the details of sales of valves during the AY 2007-08 and the amounts outstanding from Mawana group as on 31.3.2008 are clearly depicted - revenue has not disputed the one time settlement entered between the assessee and Mawana group of concern as a sham agreement - the write off of ₹ 10,83,639/- has arisen in the course of assessee’s business transaction and necessarily, it is to be allowed as bad debt or business loss - the CIT(A) order is correct and in accordance with law and there was no infirmity in the order – Decided against Revenue. - ITA No. 4995/Del/2012 - - - Dated:- 20-6-2014 - Shri George George K. And Shri B. C. Meena,JJ. For the Appellant : Shri Satpal Singh, Sr. DR For the Respondent : Shri Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the aforesaid concern on the basis of which, out of the total claim of ₹ 39,75,639/- the assesee received the amount of ₹ 28,92,000/- through bank draft and balance of ₹ 10,83,639/-, was written off as LD discount (bad debts discount) and debited to the P L account. 3.1) The AO however rejected the contention of the assessee and held a sum of ₹ 10,83,639/- cannot be allowed as a deduction and added the same back to the total income of the assessee. 4. Aggrieved by the asstt. order in making an addition of ₹ 10,83,639/- the assessee filed an appeal before the Ld. CIT(A). The detailed submissions made before the Ld. CIT(A) by the assessee is reproduced below for ready reference :- .In the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the earliest. Therefore, a onetime settlement was made by way of a written agreement executed on 15.04.2008, whereupon a lump sum amount of- Rs.' 28,92000/-was agreed to be taken in full and final settlement of all the dues, thus resulting into a , loss of ₹ 10,83,639/-, which had to be finally debited to P L account as LD discount. Relevantly, on page of settlement agreement, the following recital supports the assessee's anxiety to go for such settlement: AND 'WHEREAS due to certain circumstances beyond the control of the Company, the payments by the company to the suppliers/contractor are getting delayed and are likely to take much longer time than expected Detail of bill issued, copy of agreement for supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the appellant of previous years and succeeding years as under A. Y. Income Shown, 2007-2008 18,46,680.00 2008-2009 9,46.094.00 2009-2010 81,01,000.00 2010-2011 3,27, 150.00 The addition of only s.15,05,360.00(10,83,639+4, 16,090+5631) was made for which the appellant has surrender of ₹ 81 Lakh before any detection by department. So any addition upto.Rs. 81 Lac should be deemed to be adjusted from surrendered amount, Kindly Consider: Sanjay Associates Vs ITO 145 TT J In this matter the Hon'ble I. T.A. T. has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,78,800/- As per the appellant the above sale of Rs.l,20,78,800/- formed part of total turnover shown by the appellant in its return of income filed for A.Y.2007- 08. The bills amounting to ₹ 39,75,639/- remained unsettled till 31-03- 2008. Since the blocked funds were causing financial hardship to the appellant, therefore, a onetime settlement was made by way of a written agreement executed on 15-04-2008 on the basis of which a lump amount of ₹ 28,92,000/- was agreed to be taken in full and final settlement of all the dues thus resulting in loss of ₹ 10,83,639/-( Rs..39,75,639 - ₹ 28,92,000) ,which was debited by the appellant to the profit loss account. The appellant has furnished details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the material on record. The assessee had made sale of valves to Mawana Sugar Mill group of concerns amounting to ₹ 1,20,78,800/- by three sales invoices during the financial year relevant to A.Y. 2007-08. Thus sale of ₹ 1,20,78,800/- was part of the total turnover for A.Y. 2007-08. Payments as and when received from Mawana group was credited to the assessee s account. However, as on 31.3.2008, despite lot of persuasion, out of the above bill, an amount of ₹ 39,75,639/- was outstanding. Due to the financial position of the assessee company and to avoid a constrained relationship with Mawana group of concerns, the assessee entered into a one time settlement on 15.4.2008, whereby, the outstanding amount of ₹ 39,75,63 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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