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TMI Blog2014 (1) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings, the assessee furnished the details of sundry debtors and sundry debts and advances written off. Ongoing through the details, the Assessing Officer found that the assessee had written off an amount of Rs. 13,93,31,610 of M/s. Modi Entertainment Network Ltd (MEN). Hence, the assessee was asked to furnish the documents relating to the transaction with MEN. The assessee- company, through its representative's letter dated December 5, 2011, made written submissions and also filed a revised computation of total income stating that the assessee-company had decided to withdraw its claim of bad debts of advances given to M/s. Modi Entertainment Ltd. As the assessee had withdrawn expenses under section 36(1)(vii) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was interested in acquiring the sub-distributorship of the satellite channels from MEN. Therefore, in the course of its business, the assessee advanced a sum of Rs. 13,93,31,610 to MEN in order to obtain the said sub- distributorship rights. Unfortunately, due to financial crunches, the creditors of MEN filed application for winding up of MEN and the hon'ble Delhi High Court passed order for liquidation of MEN. In view of these circumstances, the assessee, following the principle of prudence wrote off the advance given. Further, the advances given to MEN which were written off during the year were fully and truly disclosed by way of Note No. 11 of annual accounts which read as in view of the winding up order issued on March 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer during the penalty proceedings which is available from pages 24 to 30 of the paper book and reiterated his contentions on the basis of the arguments preferred before the lower authorities. It has been stated that the advances to MEN written off during the year has been separately shown in the profit and loss account under the head "Debts/ advances written off", which is however in the nature of trading loss. The mistake has been committed by the accountant without taking any assistance from the professional which resulted in claiming the same as bad debts. Also, reliance has been placed on the decision of the Delhi High Court in the case of CIT v. Sumangal Overseas, decision of the Tribunal in the case of Deputy CIT v. Sofotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has advanced a sum of Rs. 13,93,31,610 to MEN in order to obtain the sub-distributorship rights, the same cannot be a trading advance as the nature of advance is for the purpose of acquiring new business asset considering the fact that the assessee is engaged in the business of management consultancy. Therefore, the decision of the Delhi High Court in the case of CIT v. Sumangal Overseas relied on by the learned authorised representative is not applicable in the case of the assessee. Secondly, it is the contention of the learned authorised representative that the assessee has withdrawn its claim of bad debt during the assessment proceedings due to inaccessibility of documents pertaining to MEN as the records are kept under the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Lastly, we agree with the contention of the Revenue that the consequence would be that the persons who make claims of this nature would otherwise get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. In view of the aforementioned discussion, we are of the view that the assessee's case attracts the provision of section 271(1)(c) of the Act and we do not find any justifiable reason to interfere with the decision of the learned Commissioner of Income-tax (Appeals) confirming the penalty levied by the Assessing Officer. Thus, the order of the learned Commissioner of Income-tax (Appeals) is upheld. 6. In the result, the appeal filed by the assessee is dismissed. The order prono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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