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PR. Commissioner of Income Tax-4 Versus Good Times Marketing Pvt. Ltd.

2015 (8) TMI 985 - DELHI HIGH COURT

Addition under the head of 'fraud payment'- Held that:- The Court notices that Clause 3.5 of the agreement between the Assessee and IHCL, titled 'Handling of Financials', stipulates that the membership fee collected by way of cash will be deposited on the same day with the cashier of IHCL. Cheques could be collected in the name of IHCL. In the light of the above clauses, the explanation offered by the Assessee that some of its employees had effected sales of Diners Club cards of and failed to de .....

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wed as business loss by the AO and the CIT(A). In the circumstances, the ITAT was justified in directing the AO to allow the deduction claimed by the Assessee. - Decided in favour of assessee. - ITA No. 562/2015 - Dated:- 12-8-2015 - Dr S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr Raghvendra Singh, Junior Standing Counsel For the Respondent : Mr Saubhagya Agarwal, Adv. ORDER CM No.14171/2015 1. For the reasons stated in the application, the delay of 35 days in re-filing the appea .....

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otels. During the course of the assessment proceedings, the Assessing Officer ('AO') observed that the Assessee had debited a sum of ₹ 36,28,233/- under the head of 'fraud payment'. 5. In its reply, the Assessee stated its main activity was to sell membership cards for Taj Hotels for which telephone calls were made to prospective members who used to pay cash/cheque/credit card/pay order or demand draft etc. The collection of the membership fees was made by the Assessee' .....

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recover only ₹ 1,25,766. The balance amount was claimed as business loss under the head 'fraud payment'. 6. The AO rejected the Assessee's contention that the aforementioned amount should be written off as bad debts. Accordingly, ₹ 36,28,233/- was added back to the total income. 7. The CIT(A), on an analysis of the copies of the original and amended agreement entered into between Assessee and IHCL, came to the conclusion that the only financial transaction between the As .....

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greed with the Assessee that there was no hope of the Assessee recovering from its former employees who had embezzled the funds the amount paid to IHCL. Consequently, the disallowance of the loss or the presumption that the amount could be recovered from the employees was held to be unjustified on the facts of the case. Accordingly, the AO was directed to allow the loss as claimed by the Assessee. 9. Mr. Raghvendra Singh, the learned Junior Standing counsel for the Appellant, placed reliance on .....

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