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2016 (10) TMI 159 - ITAT AHMEDABAD

2016 (10) TMI 159 - ITAT AHMEDABAD - TM - Allowability of deduction on account of ‘write off’ of bad debts - Held that:- Section 36(2)(i) of the Act allows deduction on account of satisfaction of any of one of the two conditions; namely (a) bad debts or part thereof taken into account in computing the income of the assessee for an earlier assessment year before such date or part thereof is ‘written off’ or (b) the debts represents money lend in the ordinary course of business of bank or money le .....

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see either before AO or ld.CIT(A) or before us. Assessee has merely made a submission that the amount represents sale. Similarly, as far as the assessee’s claim of having given advance payment for purchase of raw-material of ₹ 11,56,495/- is concerned, no details of the same have been furnished by the assessee. Further, in the present case, assessee has not furnished details in support of its contention of having fulfilled the conditions specified u/s.36 of the Act for claiming deduction. .....

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e, the assessee be granted one more opportunity to place on record about the satisfaction of the required conditions for claiming deduction of “write off”. We therefore restore the issue to the file of AO to decide the issue afresh - Decided in favour of assessee for statistical purposes. - I.T.A. No.915/Ahd/2012 - Dated:- 22-8-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Appellant by : Written submission For The Respondent : Shri James Kurian, Sr .....

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7/08/2009 declaring total income of ₹ 11,20,690/-. The case was selected for scrutiny and thereafter assessment was framed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 27/12/2010 and the total income was determined at ₹ 27,90,270/-. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 15/02/2012 (in Appeal No.CIT(A)/XX/614/10-11) dismissed the appeal of .....

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e off . The claim of the assessee was disallowed by the AO for the following reasons:- (i) Assessee did not file the details and according to AO the balances written off were with respect to the balances recoverable from the sister-concern of the assessee and assessee had not filed any proof of written off in the books of accounts. (ii) Though assessee had claimed that the party to whom the balance was receivable was closed since last 10 years but on perusal of the ledger , AO noticed that as on .....

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allowing the claim of balance written off ₹ 16,69,583/-. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who dismissed the appeal of the assessee by observing as under:- 2.2. I have considered the submissions made by the A.R. of the appellant and the observations of the assessing officer in the assessment order. For the detailed reasons mentioned at para-5 of the assessment order, AO disallowed the balance written off in respect of M/s.Satyanaran Steel Rolli .....

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nd not capital advanced. If these were trade advances, they never formed part of appellant s income in earlier years. Hence the provisions of Sec.36(2) are not satisfied. If the advances were capital in nature, since the appellant is not a money-lender, the loss cannot be revenue loss. Therefore, I do not see any merit in the contentions of the appellant. Impugned disallowance of ₹ 16,69,583/- is confirmed. This ground of appeal is dismissed. 3. Aggrieved by the order of the ld.CIT(A), ass .....

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ubject matter of claim of bad debts is credited to profit & loss account and there is no need to further substantiate that besides copy of invoices and annual accounts of the relevant year. 4. Before us, in the written submissions assessee has submitted that the amount written off includes ₹ 5,13,088/- on account of sale of waste and scrap which could not be recovered by the assessee and the sales of which were credited in the books of accounts in earlier years. As far as the writing o .....

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rnished any details before any of the authorities including the Tribunal about the compliances of the conditions required for claiming deduction u/s.36(1)(vii) r.w.s. 36(2) of the Act. He thus supported the orders of the AO and ld.CIT(A). 5. We have heard the ld.Sr.DR, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to allowability of deduction on account of write off of bad debts. Section 36(2)(i) of th .....

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/s.36(1)(vii) has to be allowed. So far as first part of section 36(2)(i) of the Act is concerned, in the present case it is assessee s submission that the amount of ₹ 5,13,088/- represents the sale of waste and scrap which was credited to the P&L A/c. in the year of sale. We find that no details of the year of sale has been furnished by the assessee either before AO or ld.CIT(A) or before us. Assessee has merely made a submission that the amount represents sale. Similarly, as far as t .....

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