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C.I.T., Kolkata Versus M/s. Xpro India Ltd.

2016 (6) TMI 134 - CALCUTTA HIGH COURT

Claim to write off on account of advance disallowed - year in which bad-debts crystallized - mercantile system of accounting - Held that:- Though the amounts relate to the period April 1998 to March 1999, the dispute of liability was ultimately crystallized during the period under consideration by the report of the Chartered Accountant referring, inter alia that the CBL has insured amount during that period and it was declared as sick industry by BIFR and any amount from such industry is not rec .....

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der consideration though related to the period April 1998 to March 1999 is allowable as the claim is finally crystallized during the period under consideration. In that view of the matter, the view taken by the department in disallowing the claim of the assessee is not sustainable for legal scrutiny and the same is hereby directed to be deleted. - Decided in favour of assessee - ITA 435/2006 - Dated:- 12-5-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Petitioner : Mr. Nizamuddin, Adv. .....

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f advance as irrecoverable from M/s. CIMMCO Birla Ltd. without appreciating that the said amount was never included by the assessee in its income in any earlier year and was never recorded in its books of accounts and the said amount was not offered for taxation and as such it was not allowable for written off? The facts and circumstances of the case, briefly stated, are as follows. Cimmco Birla Ltd. (for short CBL ) had eleven divisions. Four out of the eleven divisions demerged pursuant to an .....

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sed that the money paid after April 1, 1998 was recoverable. CBL contended that it had rendered services in lieu of such payment. Ultimately, the assessee appointed a chartered accountant. The chartered accountant, after going into the facts of the case, reported that the contention of CBL was correct. In that view of the matter, for the assessment year 2002-03, the contention of CBL was accepted and the aforesaid sum was debited to its profit and loss account. The assessing officer and the CIT( .....

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he assessee to examine the reality of the scheme of the CBL and the claim of the CBL as correct. Besides that, it was undisputed that the CBL has been declared as sick industry by the Board for Financial and Industrial Reconstruction and hence any dues from it cannot be recovered as there is prohibition contained under Sick Industries Act. Basing on these factual aspects, the assessee has finally decided not to claim amount from the CBL. Hence it has shown the amount as irrecoverable advance fro .....

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