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M/s. Sensient India Pvt. Ltd. Versus ITO-8 (3) (1) Mumbai

Addition made towards sundry balances written off - Held that:- As find that assessee has initially not produced any details before the Assessing Officer but it was produced only before the CIT(A) and CIT(A) has not entertained these details in the absence of proper explanation. In our considered view, as these details were not there before the Assessing Officer, it should go back to the Assessing Officer for afresh adjudication and the assessee should produce all these details before the Assess .....

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e off when such expenses were incurred for business of the assessee which is not in dispute. Hence, we direct the Assessing Officer to delete the disallowance - Disallowance of deposits written off - business loss or bad debts -Held that:- Security deposit which was written off by the assessee should be allowed as business loss. Thus, we direct the Assessing Officer to delete the addition. See case of Fab India Overseas P. Ltd. vs. ACIT [2013 (9)301 - ITAT DELHI ]wherein held that the above .....

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30.5.2014 for Assessment Year 2010-11. The first issue in the appeal of assessee is that CIT(A) erred in confirming the disallowance of business expenses amounting to ₹ 34,970/-. 2. Briefly stated, the facts are that the assessee-company, which is engaged in the business of trading in flavours, fragrance, dehydrated vegetable and its allied products, filed a return of income on 12.10.2010 declaring income from business at ₹ 11,45,392/- before set off of brought forward losses and NI .....

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etails were furnished by the assessee. The Assessing Officer also disallowed ₹ 6,51,852/- which was written off by the assessee observing that this is not a bad debt to be allowed as this amount represents only advance deposit given by the assessee to the lessor of the premises taken on lease, therefore, not allowable as bad debt. On appeal, CIT(A) confirmed the additions. Insofar as addition of ₹ 34,750/- is concerned, the CIT(A) rejected the details filed before him by the assessee .....

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they have been already offered as income, therefore, the addition by Assessing Officer has resulted in double taxation of same amounts. In respect of sundry balances written off of ₹ 4,499/-, he submits that this amount pertains to payment made to courier company against which no expenses were booked. Since this amount was not recoverable, same has been written off. He submits that these expenses were incurred in the course of business and hence, it cannot be disallowed. 4. Coming to the .....

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l taxes and later on the assessee has vacated the premises. Therefore, since these amounts are not recoverable and as these amounts could not be adjusted, these were written off in the books of account and claimed as deduction. The learned counsel for the assessee submits that these amounts if not allowed u/s 36 of the Act, it should be allowed u/s 37 of the Act as revenue loss. The learned counsel for the assessee, referring to the submissions made before the CIT(A), submits that it was claimed .....

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e orders of the authorities below. 6. We have heard the rival submissions, perused the orders of the authorities below and the decisions relied on. In respect of the addition made towards sundry balances written off of ₹ 34,750/-, we find that the assessee contended before the CIT(A) that these amounts are, in fact, credit balances written off and they have already been offered as income and by this addition, it will result in double taxation of same amount. Regarding the amount written of .....

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xplanation. In our considered view, as these details were not there before the Assessing Officer, it should go back to the Assessing Officer for afresh adjudication and the assessee should produce all these details before the Assessing Officer, especially when it was contested that these amounts were already offered as income and by this addition it will be a double taxation. Thus, we restore the matter to the file of Assessing Officer who shall examine the claim of assessee afresh in accordance .....

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iven to the lessors towards rental deposit, we find that almost an identical issue has been considered by the Delhi Bench of Tribunal in the case of Fab India Overseas P. Ltd. (supra) wherein the assessee has given security deposit as well as advance rent to the lessor, Ghaziabad Real Estate P. Ltd., and since the contract for lease could not be concluded as the lease deed was not registered, assessee backed out of the lease and by virtue of this backing out of the lease, the advance and securit .....

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above loss is a business loss; for the reason that the assessee has taken on lease many premises spread over many parts of the country, and this act of taking this show room on lease is in the normal course of business. In fact 84 show rooms are taken on lease at various placed. Six months rent was given as security deposit. This was given in the course of business. The transaction is intimately connected with the business of the assessee. The Assessing Officer has not disputed the genuineness o .....

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h Court in the case of CIT vs. Khaitan Chemicals & Fertilizers Ltd. 326 ITR 114 has held as follows. We agree with the Ld. Counsel for the appellant/Revenue that the assessee had wrongly claimed it as a bad debt u/s 36(1)(vii) of the said Act. However, we find that the Tribunal has examined the matter in the correct light and allowed the same as an expenditure u/s 37(1) of the said Act. A plea was raised by the Ld. Counsel for the Revenue that the Tribunal ought not to have done this and oug .....

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of allowability of the said amount of ₹ 14.79 lakhs and as to whether the assessee was entitled to claim it as a bad debt or as an expenditure u/s 37(1). 20. Applying the propositions laid down in this case law to the facts of the case we uphold the contentions of the assessee that the expenditure in question can be allowed as a business loss by the Tribunal though originally it was claimed as a bad debt. The amount in question was given, not for acquiring of any asset giving enduring bene .....

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ining whether the payment is revenue or capital disbursement qua the payer. (ii) There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it i .....

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