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Wilhelmsen Ship Management (India) Private Ltd. Versus The Dy. CIT 8 (3) , Mumbai

2017 (1) TMI 764 - ITAT MUMBAI

Disallowance of advances and bad debts written off - Held that:- We find that the assessee had written off certain amounts in its P&L account,that the AO had called for details in that regard, in its reply the assessee had filed details about the bad debts/advances written off and nature of the expenditure in dispute,that the AO did not make any enquiry and did not consider the reply while finalising the assessment,that general comments were made by AO in the assessment order,that the FAA had si .....

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d that:- Considering the fact that payments in question were reimbursements, we reverse the order of the FAA and decide the issue in favour of the assessee. - I.T.A./6159/Mum/2014 - Dated:- 11-1-2017 - Sh.Rajendra,Accountant Member and Amarjit Singh,Judicial Member For The Revenue : Shri S.Senthil Kumaran- DR For The Assessee : Shri Nishant Thakkar PER Rajendra A.M.- Challenging the order dated 3.9.14 of CIT(A)- 18, Mumbai the assessee had filed the present appeal.Assessee-company,engaged in the .....

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claimed a sum of ₹ 3.04 lakhs as bad debts written off and a further sum of ₹ 1.87 lakhs as advances written off in its P&L account. She called for the breakup of the amounts in question, On verification it was observed by the AO that amounts written off by the assessee were not offered as income in the earlier years. She held that disputed amounts would not fall under the category of debts.The assessee was directed to justify the claim made by it in accordance with the condition .....

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nstrued as capital in nature, that there was no evidence to show the loss, if any, had crystallized in the year under consideration,that the write off was a unilateral Act on-the part of the assessee. Finally.the AO added a sum of ₹ 4.91 lakhs to the income of the assessee. 2. 1. During the course of hearing before the First Appellate Authority (FAA),the assessee argued that it had filed the complete details of write offs vide is letter dt.3.10.13, that the AO had not considered judgment o .....

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ad not established as to how the same were applicable to the facts of the case under consideration, that it had failed to produce any documentary evidence to prove that loss had crystallized during the year under appeal.Finally, he upheld the order of the AO. 2.2. Before us,the Authorised Representative (AR) argued that expenditure was incurred for renovation of building, that it could not recover the amounts from the tenants,that the amounts became time barred,that assessee could not recover tr .....

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nd that the assessee had written off certain amounts in its P&L account,that the AO had called for details in that regard, in its reply the assessee had filed details about the bad debts/advances written off and nature of the expenditure in dispute,that the AO did not make any enquiry and did not consider the reply while finalising the assessment,that general comments were made by AO in the assessment order,that the FAA had simply endorsed the view of AU without consider - ing the judgments .....

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on of TDS u/s. 195 of the Act.During the course of assessment proceedings,the AO found that certain sums were paid to the non-resident companies/firms on account of various expenses debited to P&L account.She directed the assessee to clarify as to whether it had deducted tax at source while making payments as per provisions of section 195 of the Act. The assessee submitted that expenses in question were in the nature of reimbursement and therefore, no TDS u/s. 195 of the Act was liable to be .....

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and commercial experien - ces,that it had not produced any non deduction certificate to establish that tax was not to be deducted at source while making payments to non residents.Referring to the case of Van Oord Acz India (P.) Ltd.(1 121TD79) the AO held that while making the payments to non residents the payer could not escape liability of deducting tax unless a certificate for AO is obtained for non deduction of tax at source, that the assessee was not expected to step into the shoes of the .....

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e FAA and made elaborate submissions.Before him, it was argued that out of the six items five items were not falling under TDS provisions,that pure reimbursements were not attracting the TDS provisions,that it referred to the case of Siemens AG (31 01TR320)before the AO,that the AO had wrongly made the disallowance.The FAA after hearing the rival submissions held that the assessee had made payment of ₹ 60,90,206/- to non-resident companies,that the expendi -ture was in the nature of subscr .....

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aining the certificate.He referred to the case of Transmission Corporation of A.P. Ltd. and held that the assessee had violated the provisions of Section 195 of the Act and that the AO had rightly made the disallowance u/s. 40(a)(i) of the Act. 3.2.The Authorised Representative (AR),before us,argued that reimbursement of expenses could not be regarded as a revenue receipt,that except for the first item of reimbursement all other payments were not falling under category of revenue receipt. He ref .....

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ective amendment made to the section 40(a)(i)of the Act for making the disallowance.But,they did not take notice of the fact the amendment was curative in nature. Considering the fact that payments in question were reimbursements, we reverse the order of the FAA and decide the issue in favour of the assessee.Here,we would like to refer to the matter of Siemens Aktiongesellschaft of the Hon'ble'ble Bombay High Court.In that case the Hon'ble Court has held as under: "57. That leav .....

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