Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ACIT Circle – 4 (1) , New Delhi Versus Living Media India Ltd.

2015 (5) TMI 722 - ITAT DELHI

Disallowance of the claim of bad debts - CIT(A) deleted the disallowance - Held that:- the present case, it is an admitted fact that the assessee had written off debts in its books of accounts and it is not the case of the AO that the debts written off were not related to the business of the assessee. On a similar issue the in the case of TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] wherein held that After 1st April 1989, it is not necessary for the assessee to establish that the debt, in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e investment on which no dividend income was received by the assessee during the year consideration. The Ld. CIT(A) also rejected the explanation of the assessee, without pointing out any defect in the amount of disallowance worked out by the assessee (copy of which is placed at page no. 111 of the paper book). In the present case it seems that neither the AO nor the Ld. CIT(A) considered the facts of the present case in right prospective. We, therefore, deem it appropriate to remand this issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pta For the Respondent : Sh. Gaurav Dudeja , Sr. Dr, Adv. ORDER Per N.K.Saini, A. M. : These cross appeals by the department and the assessee are directed against the order dated 20.10. 2011 of CIT(A)- VII New Delhi. 2. First we will deal with the appeal of the department in ITA No. 5386/Del/2011. Only effective ground has been raised in this appeal read as under :- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the disallowance of the c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

asked the assessee to justify the claim of bad debts. The AO observed that some of the bad debts were related to the sister concerns which by no stretch of imagination could be said to be bad debts. According to the AO, the assessee had not furnished any convincing explanation and had not established that the requisite conditions of Section 36(1) (vii) read with Section 36 (2) of the IT act 1961 (hereinafter referred to the Act) have been satisfied, so as to ponder over the allowability of the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing aggrieved the assessee carried the matter to the Ld. C.I.T.(A) and submitted as under : The statement given by Ld. Assessing Officer that No evidence has been produced so as to explain the contention of the assessee that these debts become bad in this year or in the earlier year is wrong statement. We are enclosing herewith the party wise detail of bad debts written off along with the years in which the bad debts has been accounted as income in the books of accounts [ annexure - B] As per se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d debt or part thereof, the following provisions shall apply i) ….. no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee;] (ii) ………. (iii) . . . .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o establish that the debt, in fact has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. We are also relying on the following judgment to substantiate of our claim in this regard CIT vs. Vistar Construction Pvt. Ltd, [2010 - TMI - 201401 Delhi High Court ] CIT vs. Modi Telecommunication Ltd, [2010] 325 ITR 291 (Delhi High Court) CIT vs. Bonanza Portfolio Ltd, [2010] 320 ITR 178 (Delhi High Court ) Star Drugs & Research Labs lt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Act are concerned. After 1-4-1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee, subject to the provisions of section 36(2) that such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. If the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the disallowance of ₹ 40,16,401/- on account of bad debts written off is directed to be deleted. As a result, the Ground of appeal no. 4 raised by the appellant is accordingly allowed. 7. Now the department is in appeal. The Ld. DR reiterated the observations made by the AO and strongly supported the assessment order dated 23.12.2010. In his rival submissions, the Ld. Counsel for the assessee reiterated the submissions made before the authorities below. 8. We have considered the submissio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the debt, in fact has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. 9. We, therefore, keeping in view the ratio laid down by the Hon ble Supreme Court in the aforesaid referred to case, do not see any valid to interfere with the findings of the Ld. CIT on this issue. Accordingly we do not see merit in this appeal of the department. 10. Now, we will deal with the appeal of the assessee in ITA No. 5501/Del/2011. Following ground .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2,912/- by considering those Investment on which no dividend has been received by the assessee company during the year; 2(c) That the Ld. Commissioner of Income tax (Appeals) has gone wrong in disallowing expenses for earning Dividend Income to the extent of ₹ 4,41,02,912/- by considering bank charges as interest; 2(d) That the Ld. Commissioner of Income tax (Appeals) has gone wrong in disallowing expenses for earning Divident Income to the extent of ₹ 4,41,02,912/- by considering in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nal revenue generation; 2(g) That the Ld. Commissioner of Income tax (appeals) has gone wrong in passing a non-speaking order on the submitted issues; 2. That the appellate reserve the right to add, amend, later, delete, any/all grounds of appeal either before or at the time of the hearing of the appeal. 11. From the above ground it is gathered that the grievance of the assessee relates to the sustenance of the addition to the extent of ₹ 4,41,02,912/- on account of expenses for earning di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not maintained separate bank accounts in respect of investment and other activities and that there was no feature distinguishing the funds used for investing in shares. He did not accept this contention of the assessee that there was common pool of funds and it could not be ascertained whether investments were made out of internal accruals or from borrowed funds. The A.O. was of the view that had the company not made investment, the total borrowings would have been lower leading to reduction to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula- AX B/C Where A= amount of expenditure by way of interest other than the amount of interest included in clause (1) incurred during the previous year B= the average of value of investment, income from which does not or shall not form part of the total income appearing in the balance sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e previous year ½ % of average investment of ₹ 77,73,84314/-= 38,86,921/- Total disallowance Amount disallowed by the assessee Further disallowance to be made /- ₹ 4,51,57,204/- Rs. 10,54,292/,- Rs. 4,41,02,912 13. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under :- During the Assessment Year 2008-09 the assessee has received dividend of ₹ 2,72,25,894/- mainly from its subsidiary Companies. In these Companies investments have been .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he sale proceeds it made fresh investment as under :- iii Investment in M/s ITAS Media Pvt. Ltd. ₹ 1,00,000/- iv. Investment in M/s Today Retail Network Pvt. Ltd. ₹ 1,00,000/- During last 18-20 years the assessee company has not made any investment out of borrowed funds which is quite evident from the year wise investment chart [Copy of the same is attached herewith as Annexure-A]; From the Year wise investment chart it is quite evident that no investment has been made by the assesse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he year. Chennai Tribunal has given its decision after considering the cases of Godrej & Boyce Mfg Co. Ltd. [328 ITR 81 (Bom)] and Walfort Share and Stock Brokers Pvt. Ltd. 233 CTR 42 (SC). 14. The Ld. CIT(A) after considering the submissions of the assessee observed that the issue involved in the appeal was decided by Delhi Special Bench of the ITAT in the case of Cheminvest Ltd. Vs. ITO (2009) 121 ITD 318 (Delhi) (SB). He also referred to the judgment of the Hon ble Supreme Court in the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere is no taxable income of the assessee against which such expenditure can be allowed; (b) the disallowance under section14A could be made in a year in which no exempt income had been earned or received by the assessee; (c) the allowance of expenditure in relation to dividend income would not be admissible in computing the income of an assessee under the Act in both the situations, whether the shares are held as investment or held on trading account as stock-in-trade and (d) the provisions of R .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d case the assessment year involved was 2006-07. The Ld. CIT(A) by relying the decision of the Delhi Special Bench of the ITAT in the case of Cheminvest Ltd. vs. ITO (Supra) held that the disallowance u/s 14A could be made in a year in which no exempt income had been earned or received by the assessee. Accordingly, the disallowance made by the AO was confirmed. 16. Now the assessee is in appeal. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and fur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee had already added back a sum of ₹ 10,54,292/- in respect of expenditure relating / attributable to exempt income, in the computation of taxable income which has also been confirmed by the auditor in clause 17 (k) of tax audit report. It was submitted that only those investment which earned the income could have been considered by the AO while making the disallowance, however, the AO did not appreciate the facts in right prospective. It was pointed out that for the year under consi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wrongly applied the decision of the ITAT. It was submitted that those investment on which no dividend income was received by the assessee in current year should have been excluded from the investment while calculating the disallowance u/s 14A of the Act. The reliance was placed on the judgment of the Hon ble Delhi High Court in the case of CIT vs. HOLCIM INDIA P. LTD. reported at [(2014) 90CCH0081 (Delhi)], copy of the said order is placed at page no. 71 to 77 of the assessee s compilation. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ai) 8. Siva Industries Holdings Ltd. vs. ACIT 145 TTJ 497 (ITAT Chennai) 9. M/s Mercantile Capital & Finance Services P. Ltd. ITA No. 2571 / Del/ 2011 (ITAT Delhi) 10. M/s DCIT vs. REI Agro Ltd. 144 ITD 141 (ITAT Kolkata) 11. CIT vs. Consolidated Photo & Finvest Ltd. 358ITR310 (HC Delhi) 12. CIT vs. REI Agro Ltd. ITA No. 161 of 2013 (HC Calcutta) 13. CIT vs. Holcim India P. Ltd. in ITA No. 486 of 2014 (HC Delhi) 14. Delite Enterprises in ITA No. 110 of 2009. 15. CIT vs. Winsome Textiles .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version