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Amar Enterprise Versus The Income Tax Officer Ward-5 (2) , Baroda

2015 (12) TMI 757 - ITAT AHMEDABAD

Disallowance of expenditure in respect of bad debts written off during the year - Held that:- Assessee has placed reliance on the judgement of the Hon’ble Apex Court in the case of TRF Limited vs. CIT reported at (2010 (2) TMI 211 - SUPREME COURT) in support of his contention that the claim of the assessee with regard to bad debt is allowable. We do not see any force in the contention of the ld.counsel for the assessee as in the present case the AO has demonstrated that the assessee has continue .....

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.A. No. 2520/Ahd/2011 - Dated:- 5-6-2015 - SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) And SHRI KUL BHARAT, JUDICIAL MEMBER For The Appellant : Shri Surendra Modiani, A.R. For The Respondent : Shri Dinesh Singh, Sr.DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-V, Baroda ( CIT(A) in short) dated 09/08/2011 pertaining to Assessment Year (AY) 2007-08. The Assessee has raised the following .....

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add to, alter, amend or delete any of the ground of appeal. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 04/12/2009, thereby the Assessing Officer (AO in short) made disallowance of bad debt of ₹ 1,14,366/- and also made addition of ₹ 91,282/- on account of difference in account of Arihant Enterprises. Further, t .....

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ified in disallowing the bad debts and addition thereon. He submitted that the ld.CIT(A) ought to have deleted the disallowance. The ld.counsel for the assessee relied on the judgement of Hon ble Apex Court rendered in the case of TRF Limited vs. CIT reported at (2010) 323 ITR 397 (SC). 3.1. On the contrary, ld.Sr.DR supported the order of the AO and submitted that the AO has given a clear finding that the assessee in written submission stated that the firm has claimed bad debt as Bil Metal Indu .....

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006. During the year goods worth ₹ 1,02,592/- was sold by the assessee and further payment of ₹ 40,000/- was received by the assessee on 24/03/2007. He submitted that the AO observed that the assessee continued its business transactions with Bil Metal Industries Ltd. He further submitted that the AR on behalf of the assessee agreed to the proposed addition of bad debt of ₹ 1,14,336/-. The ld.Sr.DR submitted that under the facts of the present case, the judgement of Hon ble Apex .....

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e was claim of bad debt of ₹ 1,32,797/- which includes amount written off of ₹ 1,14,366/- in the case of Bil Metal Industries Ltd. Vide notice u/s 142(1) dated 20.11.2009, assessee was requested to justify how the claim of bad debt is allowable in the case of Bil Metal Industries specially when the business of Bil Metal is running & during the year the business of the assessee was continued with the said company. In reply, the assessee filed written submission stating that the fi .....

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ng the year goods worth ₹ 1,02,592/- was sold by the assessee and further payment of ₹ 40,000/- was received by the assessee on 24.03.2007. 4.1. From the above stated facts, it is very clear that the business transactions of the assessee were continued during the F.Y.2006-07 with Bil Metal Industries Ltd. Bil Metal ind. Ltd. was found purchaser from the assessee and towards purchases payments were also made. Thus lit was running account. Considering these facts, assessee's claim .....

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d the particulars of income and therefore penalty proceedings u/s.271(1)(c) of the I T Act is initiated. 4.1. The ld.CIT(A) has confirmed the finding of the AO by observing as under:- 5.2 I have considered the facts of the case as well as the observation of the AO aid the arguments advanced by the AR. From the facts mentioned by the AO and documents submitted by the appellant during the course of proceedings before the undersigned it is very clear that the appellant was continuing business with .....

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ant and Bil Metal Ind. Ltd and not because the financial position of Bil Metal Ind. Ltd has become so bad that the recovery of the amount is doubtful. It has been held in the case of Devi Film Pvt Ltd V CIT (Mad) 75 ITR 301 that action of the assessee waving a portion of amount due from the debtor does not amount to bad debt rather it is a trading loss. A similar inference can be drawn from the finding of honorable Calcutta High Court in case of CIT V Coates of India Ltd (1998) 232 ITR 324 (Cal) .....

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