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2015 (10) TMI 1874 - ITAT AHMEDABAD

2015 (10) TMI 1874 - ITAT AHMEDABAD - TMI - Disallowance of advances given to transporters - whether it is provision and not actual written off in books of account though advances given during the normal course of business? - Held that:- It is an undisputed fact that during the year under consideration, the Assessee had debited a sum under the head “provision for bad debts” and had claimed it as deduction. It is also an undisputed fact that the amount were not written off in the books of account .....

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ere with the order of ld. CIT(A). With respect to allowing the deduction in subsequent years, Before us, ld. A.R. has submitted that the amount which were claimed as “provision for bad debts” were in fact have been written off in subsequent years and in subsequent year, when the same have been written off in A.Y. 08-09, Assessee has not claimed the deduction in A.Y. 08-09 and therefore Assessee should not be denied the claim altogether. The aforesaid submission of the Assessee needs a factual ve .....

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d by the Assessee is against the order of CIT(A)-VIII, Ahmedabad dated 01-07-2011 for A.Y. 2006-07. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in the business of transportation, construction and development. Assessee electronically filed its return of income for A.Y. 2006-07 on 28.12.2006 declaring total loss of ₹ 12,30,846/-. The case was selected for scrutiny and thereafter the assessment was framed under se .....

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nd that it is provision and not actual written off in books of account though advances given during the normal course of business. 4. During the course of assessment proceedings and on perusing the details furnished by the Assessee, A.O noticed that Assessee has debited a sum of ₹ 3,74,860/- under the head provisions for bad debts . Assessee was asked to justify its claim to which Assessee submitted that during the course of transport business, Assessee had given advances to the contractor .....

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adjust the advances given to the transporters. He accordingly disallowed the claim of ₹ 3,74,860/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the disallowance by holding as under:- 3.3 I have carefully considered the facts of the case, findings of the A.O as well as submission of the appellant. During the assessment proceedings, the A.O observed that the assessee has debited sum of ₹ 374860/- under the head 'Provisions for bad debts& .....

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ntrary, the Ld. A.R on behalf of appellant submitted that the appellant is in the business of transportation. During the course of business of transportation , the appellant had to give the advances to the contractors at the beginning of the trip for on the way expenses. As per the normal practice of profession of transportation business, every time such type of advances given to the drivers. After completion of the trip or periodically, the concern contractor made the bills and accordingly the .....

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has made a "provision for bad advances" and it has not written off the advances in the books of account. Meaning thereby the advances have really not become bad during the year under consideration. It is settled legal position that any " provision with reference to debt or advances is not allowable unless it is written off in the books of account. Therefore the addition of ₹ 3,74,860/- is confirmed. 5. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appea .....

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tion in the years in which Assessee has debited the sum as bad debts. The ld. A.R. placed on record the copy of the computation of income for A.Y. 2008-09, grouping of bad and doubtful debts and the audited accounts in her support. She further placed reliance on the decision of Ahmedabad Tribunal in the case of Perfect Equipments vs. DCIT 85 ITD 50 (Ahmedabad) for the proposition that the Hon ble Tribunal could give direction in relation to any assessment year which is not before it but is neces .....

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