TMI Blog2017 (9) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year the income of the assessee is not assessable to tax at all. We also find that the assessee has decided to write off when it finds that the further investment in the said securities would be loss making propositions considering the adverse market conditions. Moreover, it is the assessee who can take decision to write off of the amount which became bad in particular year and the revenue cannot dictate the terms of writing off the bad debts or how to run the business in the ordinary course of business. On this count also the deciding of writing off the bad debts deserved to be allowed. We, therefore, set aside the order of the FAA and direct the AO to delete the disallowance. - Decided in favour of assessee. - I.T.A. No.2864/Mum/2015 - - - Dated:- 21-6-2017 - SHRI D.T.GARASIA, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Rajesh P Shah For The Respondent : Shri Purushottam Kumar ORDER PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee against the order of ld.CIT(A)-8, Mumbai dated 27.2.2015 for the assessment year 2011-12. 2. Grounds of appeal taken by the assessee are as under : 1. On the facts and under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Growth Fund-II asked the assessee to contribute 10% of its capital commitment which worked out to be at ₹ 4,00,00,000/-. When the assessee failed to make the payment by the due date by 15.12.2008, the same was extended to 31.3.2009. The assessee decided not to go ahead with the commitment of capital in view of the adverse market conditions and decided to withdraw from such commitment as there were every possibility of losing the money and incurring further losses, had the assessee contributed to this fund further. As per the terms of the agreement if the amount as per second drawdown notice dated 7.11.2008 was not paid within default cure period ending on 27.10.2009 then the assessee s contribution of ₹ 1,20,00,000/- was to be forfeited and which was ultimately forfeited. Accordingly the AO issued show cause notice to the assessee as to why the said claim was allowable in AY 2011-12 which was replied by the assessee vide letter dated 17.2.2014 as reproduced by the AO in para 5.3 of the assessment order. The AO finally concluded that the assessee s contribution of ₹ 1,20,00,000/- was forfeited in the financial year 2009-10 relevant to AY-20010-11 and therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. If the Default Amount is not paid within the Default Cure Period, your contributions to the Fund made thus far (i.e: towards subscription of the partly paid Units of the Fund) shall, together with such Units, stands forfeited. The investment Manager may deal with the same in any manner it deems fit, including through a sale of such Units to non-defaulting Contributors of third parties or credit the same to the Contribution Fund for the, benefit of all the Contributors. In view of the para 7 mentioned here-in-above, if the amount of ₹ 4,00,00,000/- as per the second drawdown notice dated 7th November, 2008 was not paid within the Default Cure Period ending 27th October, 2009,then the assessee's contribution of ₹ 1,20,00,000/- to the fund was to be forfeited. I find that the appellant company has not produced the details of any correspondence made with the Kotak India Growth Fund-Il for getting the Revised due date extended or to enforce its rights, if any, beyond the revised due date . It also did not produce any document or correspondence to support its claim that the rights were intact in Kotak India Growth Fund beyond 27th October, 2009. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions.The ld AR argued that any further investment would have been wiped up and justified the decision of the assessee to withdraw from the commitment. AR further contended that the assessee rightly claimed the write off of ₹ 1.20 Cr in the assessment year 2011-12 as against the findings of the AO which was confirmed by the FAA that the same should have been written off in the assessment year 2010-11. The ld. AR also submitted that the security written off in the assessment year 2011-12 were as per law and the provisions of the Income Tax Act, 1961 and the assessee was fully entitled to claim the said set off as the assessee continued its efforts to recover the money till the current year. Ultimately when failed in its efforts wrote off as provided in the terms of agreement that the amount was to be forfeited if any of the terms and conditions of clause 7 of the MOU were violated. In the alternative, the ld. AR contended that even then the amount was admissible in the assessment year 2010-11 and was claimed by the assessee in the assessment year 2011-12 even then its admissibility could not be disputed and denied to the assessee. In defence of his arguments the ld.AR relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the contention of the ld.AR that the writing off of the said amount in neither of the assessment year i.e. 2010-11 or 2011-12 is tax neutral as is clear from the computation of total income filed at page 1 and 2 of the paper book as the in that both the years the taxable income of the assessee was NIL. In the first year, the assessee sustained loss of ₹ 46,80,427/-. In the next year income after adjustment of the brought forward losses to the tune of ₹ 77,17,152/- is turned out to be NIL. In the case of Vishnu Industrial Gases Pvt Ltd (supra), the Hon ble Delhi High Court has held as under : 4. The situation does not seem to have changed over the last fifty years and the Revenue continues to agitate the question whether tax is leviable in a particular year or in some other year. This is hardly a question that should require us to exercise our minds particularly since there is no doubt that the tax has been paid and the rate of tax remains the same for both the assessment years. The Hon ble High Court has held that where the rate of tax remained same in both the assessment years then the issue of whether the tax is leviable in one year or other year is im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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