TMI Blog2016 (9) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... off as irrecoverable in the year under appeal. The assessee had duly complied with the provisions of section 36(1)(vii) read with section 36(2) of the Act and accordingly we hold that the ld CITA had rightly deleted the disallowance made on that count. With regard to amounts due from Pennzol Investment & Trading Co Pvt ltd, we find that the trade advances against supplies given by the assessee to such party could not be recovered and remaining outstanding for quite a long period of time and hence the assessee decided to write off the same as irrecoverable. We find that the advance was given in the nature of trade and in the normal course of business of the assessee for supply of industrial gases and loss arising on account of irrecoverabilty of the same is a trading loss allowable u/s 28 of the Act. With regard to write off the earnest money deposits, the same was paid in the normal course of business and write off of the same is an allowable trading loss u/s 28 of the Act. - I.T.A No. 64/Kol/2014 - - - Dated:- 3-8-2016 - Shri M. Balaganesh, AM Shri S. S. Viswanethra Ravi, JM For The Appellant: Shri A. K. Sinha, Addl. CIT. DR For The Respondent: Shri S. M. Sura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m from the Government of India. In fact, in the Profit Loss Account for the year ended March, 1996, the assessee had offered the amount of ₹ 1,54,09,751.55 as income billed on Ameri Gas Pvt. Ltd for manufacturing Supply of Voters Cards Job. The assessee could not recover the aforesaid amount of ₹ 10,14,051.51 from Ameri Gas Private Limited, as assessee company could not finish the job in time and the result was that the Government penalized Ameri Gas Private Limited and did not pay the amount for this portion of the job because the contract was incomplete. Further, since the debt was time barred, assessee had no option but to write off the same. But out of ₹ 1,54,09,751.55 only ₹ 10,14,051.51 was not recoverable. Pennzol Investment Trading Co. Pvt. Ltd. : ₹ 16,90,920.44 The assessee company bought Industrial Gases from Pennzol Investment Trading Company Private Limited and marketed the same in Hyderabad. Such sale was shown as income in the relevant year s profit Loss Account. During the course of business, assessee had to give to the said Company an advance in the current account/running account for buying industrial gases. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case the Ld. CIT(A) has erred in not considering the fact that in order for a debt to be considered bad or irrecoverable, the conditions a) The amount being written off should have been offered to tax as an income in earlier year. b) The first condition being fulfilled, the debt must have gone bad. Which are mutually exclusive, must be fulfilled separately. 2. that the business of the assessee co. not being money lending, allowing bad debt as trading liability is bad in law. 3. that the debt totaling 73,37,547/- out of a total claim of 83,57,119/- by the assessee co., have never been offered to tax. 4. The ld DR vehemently relied on the order of the ld AO . In response to this, the Ld AR claimed that the advances given to M/s Deepak Jhunjhunwala and M/s C.K.Tibrewala Co were in the normal course of business of the assessee and interest income derived from M/s Deepak Jhunjhunwala and M/s C.K.Tibrewala Co were offered to tax by the assessee as income from business which has been accepted by the ld AO in scrutiny assessment proceedings completed u/s 143(3) of the Act dated 18.3.2004 for the Asst Year 2001-02. The amounts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee as a trade advance and loss arising on account of write off of the same is allowable as a trading loss u/s 28 of the Act. 5. We have heard the rival submissions and perused the materials available on record including the copy of assessment order u/s 143(3) for Asst Year 2001-02 , copies of various board minutes submitted by the assessee for advancing monies to M/s Deepak Jhunjhunwala and M/s C.K.Tibrewala Co. and the ledger copies of all the parties whose accounts are written off . The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the assessee had taken sufficient steps for recovery of the advances given to M/s Deepak Jhunjhunwala and M/s C.K.Tibrewala Co and all the efforts to recover the dues from the said parties got jeopardized and even the shares that were held as securities were sold and appropriated towards the loan account (in the case of Deepak Jhunjhunwala) by the assessee and the balance remaining in their loan accounts were written off as irrecoverable as there is no other assets / property left with them or with the assessee to recover the dues. It is not in dispute that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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