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PRINCIPAL COMMISSIONER OF INCOME TAX Versus RJD IMPEX PVT LTD

2016 (4) TMI 652 - GUJARAT HIGH COURT

Claim of bad debts - ITAT confirming CIT (A)’s order by allowing the claim as bad debts, the advances for other than regular business of the assessee whose corresponding income or sales were not offered in the previous year - Held that:- Tribunal has recorded concurrent findings of fact to the effect that advances given by the assessee had become actually bad and such findings had remained uncontroverted. It is not the case of the appellant that the Tribunal has placed reliance upon any irreleva .....

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erence. - Decided against revenue - TAX APPEAL NO. 324 of 2016 - Dated:- 4-4-2016 - MS. HARSHA DEVANI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MRS MAUNA M BHATT, SENIOR STANDING COUNSEL ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. The appellant - revenue in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has challenged the order dated 29.09.2015 passed by the Income Tax Appellate Tribunal, C Bench, Ahmedabad (hereinafter referred .....

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007-08. The assessee was engaged in the trading of gold jewellery, land and shares for the year under consideration and claimed bad debts amounting to ₹ 5,24,59,472/-. The Assessing Officer allowed the bad debts in respect of A. P. Sayona Trade Association amounting to ₹ 9,06,980/- and the balance amount of ₹ 5,15,52,492/- was added to the total income observing that they were not incidental to the regular business activity of the company as the assessee s regular business was .....

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ous edible items, like, dehydrated onion flakes, onion powder, potato powder and sesame seeds, which is not the regular business of the assessee for the year under consideration. That the main business of the assessee is sale and purchase of land, gold and shares. It was submitted that trading of goods for which the debts are stated to be incurred is not even covered in the main objects of the company to be pursued by it on its incorporation. It was further submitted that bad debts are admissibl .....

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the assessee failed to prove the same as trading loss. It was, accordingly, urged that the Tribunal was not justified in confirming the order passed by the Commissioner (Appeals) and that the appeal requires consideration on the question as proposed or as may be formulated by the court. 4. The facts as emerging from the record reveal that the respondent assessee had claimed that certain debts had become bad in respect of seven parties. The Assessing Officer declined the claim in respect of six p .....

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the goods were not received and that the payments were made in advance and that therefore, these amounts could not be treated as bad debts. As regards the dues from Quality Foods and S.Y.P. Exporter, the Assessing Officer was of the view that the trade advances for purchases could not be treated as bad debts. As regards S.N. Das Freight Forwarders Pvt. Ltd., the Assessing Officer noted that the same represented excess payment made for forwarding expenses. According to the Assessing Officer, ther .....

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, the same is to be allowed as deduction as business loss. It was also noted that the assessee had exported substantial quantities of agricultural processed goods, including dehydrated garlic flakes and white onion powder, and it was in this connection that the assessee bona fide and in the course of normal business, gave advances to S.Y.P. Exporter, Sakar Overseas Pvt. Ltd. and Shri Ram Trading Co. It was also noted that criminal cases were also instituted against the persons who were given the .....

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