TaxTMI 
TaxTMI 
2011 (7) TMI 1250
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....olidated order for the sake of convenience. 2. Brief facts of the case are that, the assessee, an individual, is in the business of export of garments. It filed its return of income on 31st October 2005, declaring total income of ` 12,06,940, for assessment year 2005-06 and on 31st October 2006, declaring total income of ` 30,20,600 for assessment year 2006-07. The Assessing Officer, in both the cases, disallowed business loss claimed on account of write-off of bad debt. Certain other disallowances were also made. Aggrieved, the assessee carried the matter in first appeal, wherein the Commissioner (Appeals) granted part relief. Being aggrieved, the Revenue is in appeal before the Tribunal on the issue of addition made on account of disallo....
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....he same was for the procurement of raw material, development of website, advance to employees, business requirements, etc. as discussed in Para-4.2.1 of the assessment order for the A.Y. 2005-06 and Para-4.1 of the A.Y. 2006-07. However, the A.O. did not accept this contention of the appellant due to the following reasons:- i) The accountant stated the advances to be for the purpose of purchase of land whereas the written submission made by the assessee speaks about the advances for the purchase of material for export of garment business of the assessee. Thus, the assessee has changed its stand while giving the submission in writing. ii) The assessee has not filed any supporting evidences in support of the contentions made above i.e., ....
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....ts that the assessee's submissions before the Assessing Officer were that the advances become irrecoverable and no other details were filed. He pointed out that the assessee has not filed any supporting evidence like details of bank cheques number, address of the parties, etc. He submits that the advances were given in the years 1991, 1992, 1993 and 1994 and it is not demonstrated as to how the advances have become bad in this particular year. He referred to Page-3 of the assessment order and submits that no evidence has been adduced to demonstrate that the advances have become irrecoverable. 6. Learned Counsel for the assessee, Mr. S.C. Tiwari, on the other hand, submits that the order of the Assessing Officer is self-contradictory, as at....
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....ances were given for supply of material and, hence, a loss which is incurred for the same would be a revenue loss and not a capital loss. In support of his contentions, he relied on the judgment of Hon'ble Jurisdictional High Court in I.B.M. World Trade Corporation v/s CIT, (1990) 186 ITR 412 (Bom.). He further submits that the assessee is not enduring any benefit due to write-off of this loss and it is not the case of the Assessing Officer that by incurring this expenditure, the assessee is carrying on the business in a more efficient manner. He filed a paper book running into 92 pages and drew the attention of the Bench to the various documents filed before the Revenue authorities to demonstrate his case that adequate evidence has bee....
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.... factual finding that the loss in question directly relates to the business operations. He observed that reimbursement of expenditure incurred at Bangalore in connection with purchase of technology from Sunsoft Technologies P. Ltd. is directly connected to purchase of material or for processing of material required for export business and is in revenue field as no capital asset was acquired. At Para-4.3.4, the Commissioner (Appeals) held as follows:- "4.3.4 Therefore, due to the aforesaid discussion and particularly in view of the fact that loss incurred is directly related to his business operation, I find that except in case of loss incurred due to loan given to his employee of ` 5,000, and reimbursement of expenses claimed for ` 42,894....
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.... do not find any infirmity in the aforesaid findings of the Commissioner (Appeals). Hon'ble Jurisdictional High Court in I.B.M. World Trade Corporation (supra) held that where the assessee advanced money to a landlord for construction of factory shed as well as the residential plant, for leasing them to the assessee and the landlord became insolvent making the amounts irrecoverable, it was held that the assessee was entitled to a deduction by way of business loss. On the assumption of the Assessing Officer that legal proceedings should be launched for recovery of advance so as to claim business loss, we hold that there is no such requirement. Hon'ble Calcutta High Court in A.W. Figgis & Co. (supra) held that if the assessee knew that fi....