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TMI Blog2011 (3) TMI 1553X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,10,75,610, inter alia, making following disallowances : 1. Sundry balances written off ₹ 60,54,678 (as discussed in para 5 above) 2. Bad debts written off ₹ 96,05,42,627 (as discussed in para 6 above) 3. The learned CIT(A) confirmed the disallowances. 4. Being aggrieved, the assessee is in appeal before us and has taken, inter alia, the following grounds of appeal : "2. The learned lower authorities have grossly erred in making/confirming an addition of ₹ 60,54,678 being the sundry balances written off without appreciating the fact that the said amount was claimed as an expenditure under s. 37(1) of the IT Act, 1961 and the said advances were accepted as business related advances in the precedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addresses of the parties have not been submitted. (b) No concrete action has been taken for recovery. (c) No documents related to the said transactions have been submitted. (d) The genuineness of the transactions itself has not been substantiated. The AO referred to the provisions of s. 36(1)(vii) relating to set off of bad debts and pointed out that the assessee's nature of transaction does not fit into any of the provisions of the Act. Further, the accounts of the assessee company have not been audited. He further pointed out that the assessee has filed an unaudited provisional P&L a/c and balance sheet with the return of income. Therefore, the genuineness of the books of account prepared by the assessee itself is in doubt. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit balances were attributable to excess provision of income receivable/expenses payable and/or advances made/received during the course of business long back. However, due to passage of time and frequent changes in the executive staff, the company could not keep a track on these parties and consequently the balances were being brought forwarded from the preceding years. The assessee filed copies of accounts to show that there was no movement in the accounts. 7. The learned Departmental Representative submitted that the assessee had not been able to substantiate its claim. 8. We have considered the rival submissions and perused the records of the case and the Supreme Court decision in the case of CIT vs. Calcutta Agency Ltd. (1951) 19 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, between the assessee and M/s Freeway Supplies Ltd., London and M/s H.W.J. Wills & Partners Ltd., London, pertaining to the debts whose execution was subject to the permission of the RBI." The AO observed as follows : "(a) That the resolution of the board regarding write off of foreign debtors has been passed only on 23rd Sept., 2002, i.e., during the previous year relevant to the asst. yr. 2003-04 and not during the year under consideration. (b) The MoU dt. 10th Nov., 1998 and 3rd Aug., 1999 executed between the assessee and M/s Freeway Supplies Ltd., London and H.W.J. Wills & Partners Ltd., London pertaining to the debts is subject to the permission of the RBI. However, the RBI permission for the aforesaid execution has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to s. 36(1)(vii) of the Act, No set off of loss was claimed by the assessee. He further referred to the board's resolution dt. 23rd Sept., 2002, authorising the company to write off the debt during financial year 2001-02. Learned Departmental Representative submitted that since the resolution was passed on 23rd Sept., 2002, therefore, the debt had become bad on the said date and not prior to that. He relied on the decision of Hon'ble Bombay High Court in the case of Director of IT (International Taxation) vs. Oman International Bank SAOG (2009) 223 CTR (Bom) 382: (2009) 21 DTR (Bom)193, to submit that the write off of the debt should be bona fide and the subsequent decision of the Hon'ble Supreme Court in T.R.F. Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the debt pertained to a foreign party, it could not be written off. As held by the Hon'ble Madras High Court in T.N. Power Finance & Infrastructure Development Corporation Ltd. (supra), RBI directives cannot override statutory provisions of Explanation to s. 36(1)(vii). Further, in the paper book, assessee has filed all the relevant sales invoices, the veracity of which has not been doubted. The assessee was denied deduction under s. 80HHC, as it had not received the sales proceeds. Resultantly, the impugned amount was taxed in earlier year, Therefore,, we are inclined to accept the submissions of learned counsel in view of the decision of this Tribunal in the case of Sashak Noble Metals Ltd. (supra). 12. In view of the aforesaid di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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