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2015 (12) TMI 615 - ITAT AHMEDABAD

2015 (12) TMI 615 - ITAT AHMEDABAD - TMI - Disallowance of claim of bad debt - Held that:- While loss on account of writing off the trade advances is, in principle, admissible as deduction under section 28 of the Act, in the light of the law laid down by Hon’ble jurisdictional High Court in the case of CIT vs. Abdul Razak & Co. (1981 (2) TMI 27 - GUJARAT High Court), the factual elements embedded in stand of the assessee remain unsubstantiated. It is for the assessee to demonstrate at least by w .....

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dit card issued to Shri M.T. Tahakkar and Shri N.J. Thakkar. These are not as such, club expenses. It is also not in dispute that these cards were used for the purposes of business of the assessee. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance. - Decided in favour of assessee.

Disallowance of notional interest on interest free advances - Held that: .....

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be left open, without any observations on the merits. In view of thee discussions, and with the consent of the parties, the matter stands restored to the file of the Assessing Officer for adjudication de novo.

Addition u/s 41(1) - Held that:- As far as this addition is concerned, it was added as income of the assessee on the ground that it represented ceased liability but then, as pointed out to us by the learned Counsel for the assessee, it has been subsequently reopened by the asse .....

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er 2010, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) for the Assessment Year 2005-06. 2. Ground no.1 is not pressed and is, accordingly, dismissed for want of prosecution. 3. In ground no.2, the assessee has raised the following grievance:- 2. Ld CIT(A) erred in law and on facts in confirming disallowance of claim of bad debt of ₹ 8,00,000/- made by AO though the amounts have been written off in the books of accounts by the appellant. .....

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written off being ₹ 3,00,000/- advanced to Mithilesh Sahu and ₹ 5,00,000/- advanced to Amit Surgicals. These amounts were stated to have been advanced, by cheques, for liaison work for orders. As no bill was given as the amounts were no longer recoverable, the same were written off. However, the Assessing Officer disallowed this claim by observing as follows :- In the case of the assessee, the assessee has failed to substantiate that the amount given to the above two persons was for .....

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ast upon it. Under the circumstances, the above amount claimed as bad debts cannot be allowed as a deduction. 5. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A) but without any success. The assessee is not satisfied and is in further appeal before us. 6. Having heard the rival contentions and perused the material on record, we are of the considered view that while loss on account of writing off the trade advances is, in principle, admissible as deduction under section 28 o .....

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ove the conclusions arrived at by the CIT(A) and decline to interfere in the matter. 7. Ground no.2 is thus dismissed. 8. In third ground of appeal, the assessee has raised the following grievance: 3. Ld. CIT(A) has erred in law and on facts in confirming disallowance of ₹ 14,455/- made by AO holding the same to be as personal expense. Bothe the lower authorities failed to appreciate that the amount expended to make payment of club bills were purely business expenditure and ought not to ha .....

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cord, we find that the expenses in question, as detailed on page no.24 of the Paper Book filed before us, are in respect of renewal/annual fee for credit card issued to Shri M.T. Tahakkar and Shri N.J. Thakkar. These are not as such, club expenses. It is also not in dispute that these cards were used for the purposes of business of the assessee. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to .....

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in law and on facts in confirming disallowance of ₹ 79,695/- out of travelling expenses on adhoc basis by AO without giving any cogent reason for such disallowance. Ld. CIT(A) ought to have deleted such adhoc disallowance. 6. Ld. CIT(A) has erred in law and on facts in confirming disallowance of ₹ 1,34,856/- made by AO out of vehicle expenses, depreciation on vehicles and car lease rentals @ 10% of total expenses. Both the lower authorities failed to appreciate the ratio of the juris .....

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c basis. Ld. CIT(A) ought to have deleted the disallowance. 13. So far as above disallowances are concerned, all the above disallowances are made on adhoc basis @ 10% on the ground that these expenses are not properly vouched, that personal expenses in the same cannot be ruled out and that non-business expense therein can also not be ruled out. In appeal, learned CIT(A) has confirmed the disallowances. Aggrieved, assessee is in second appeal before us. 14. We have heard the rival contentions, pe .....

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cept for generalities, for the same. We are unable to see any legally sustainable merits in the same. In view of these discussions, we consider it fit and proper to delete the impugned disallowances. The assessee gets the relief accordingly. 16. Ground nos.4 to 7 are thus allowed. 17. In ground no.8, the assessee has raised the following grievance:- 8. Ld. CIT(A) has erred in law and on fact in confirming disallowance of ₹ 8,05,892/- out of interest expenses made by AO by working out avera .....

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paid interest on the same. It was in this background that the Assessing Officer disallowed ₹ 8,05,892/-, being interest @ 15% - which was the average rate at which borrowings had taken place, on such interest free advances. In appeal, the disallowance was confirmed. The assessee is now in second appeal before us. 19. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 20. Learned counsel fo .....

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