TMI Blog2014 (2) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... lance and has followed the decision of Hon. Apex Court in the case of TRF Ltd. reported at [2010 (2) TMI 211 - SUPREME COURT ] where it was held that after the amendment of Section 36(2) effective from 01.04.1989 by Finance Act, 1987, once the Assessee has written of the debts in the books, it is not necessary to prove that the debt has become bad for the purpose of allowing claim of bad debts. - Decided in favour of assessee - I.T. A. No. 3341/AHD/2010 & C.O. No. 08/AHD/2011 - - - Dated:- 21-2-2014 - SHRI G.C.GUPTA VICE PRESIDENT SHRI ANIL CHATURVEDI, A.M.) For the Appellant by: Shri J.P. Jhangid, Sr. D.R. For the Respondent by: Shri M. K. Patel ORDER PER SHRI ANIL CHATURVEDI,A.M. 1. This appeal is filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case are different from the facts of relied case laws. 4. 1st ground is with respect to restricting the disallowance under 14A to the extent of ₹ 10 lac as against ₹ 39,38,045/- made by A.O. 5. During the course of Assessment proceedings, A.O. noticed that Assessee has earned dividend income to the tune of ₹ 24,92,096/- which was exempt from tax. He also noted that Assessee had made investment of ₹ 23.78 crores and had also taken loan of ₹ 3.89 crore on which interest of ₹ 22,50,000/- was paid by the Assessee. He also noticed that there was intermingling of own funds and borrowed funds and therefore disallowance under section 14A r.w.s. Rule 8D was warranted. He also noted that Assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands deleted, as it is duplication of disallowance. In so far as the disallowance of interest is concerned, the A.O. has made proportionate disallowance without establishing that the dividend earning activity is from the borrowed funds on which interest is paid. No nexus has been established by the A.O. for that purpose. That apart, the appellant has clearly pointed out that as against the cost of investment as per the books amounting to ₹ 23,78,38,000/- the appellant's own fund by way of capital and reserves is of the aggregate amount of ₹ 26,68,41,000/-. Therefore, considering the ratio of various decisions and in particular the decision of the Bombay High Court in the case of Reliance Utilities Power Ltd. 313 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that disallowance made by the A.O. was of ₹ 39 lacs which was more than the dividend earned by the Assessee. He further submitted that disallowance of 10 Rs. lacs that was sustained by CIT(A) is also on a higher side. He thus submitted that the addition be deleted. In the alternate he submitted that a reasonable disallowance may be made 9. We have heard the rival submissions and perused the material on record. We find that CIT(A) while granting relief to the Assessee has noted that A.O had made disallowance out of administrative expenses twice firstly on adhoc basis and secondly by disallowing 0.5% of the investment by following Rule 8D. Since provisions of Rule 8D were not applicable to the year under consideration, he deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of assessment proceedings, A.O. noticed that Assessee has claimed ₹ 4,17,959/- as Sundry balances written off. Before A.O. since the Assessee was not able to furnish the break up and could not prove with documentary evidence that the amount was shown as income in any previous year prior to the year under consideration, he disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under:- 4.2 I have considered the assessment order and the above submissions. On perusal of the details furnished before the undersigned I find that the appellant had in fact claim net amount of sundry debit balances written off amounting to ₹ 4,17,959/-. This amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the recent decision of the Supreme Court in the case of TRF Ltd. reported at 323 ITR 397 after the amendment of section 36(2) effective from 1-4-1989 by the Finance Act 1987 once the assessee has written off the debts in the books it is not necessary to prove that the debt had become bad for the purpose of allowing claim of bad debt. Accordingly, the A.O. is directed to allow the claim for bad debt of ₹ 46,60,519/-. Thus effectively both the additions (4.17 lakh + 42.42 lakh) stands deleted. 12. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. Before us, ld. D.R. relied on the order of A.O. On the other hand ld. A.R. reiterated the submissions made before CIT(A) and supported his order. 13. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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