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TMI Blog2017 (11) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of tea and coffee auctioneering, financing and rubber handling. It f i led its return of income for the assessment year 2009-10 through e-filing on 29.11.2010 showing total income of Rs. 3,31,90,721/-. The Assessing Officer passed an order under section 143(3) of the Act on 30.12.2011 determining the total income at Rs. 4,77,63,850/-, inter alia making addition on account of building repairs and bad debts. On appeal , the first appellate authority al lowed these additions made by the Assessing Officer for the various reasons given in his order. Aggrieved, the Revenue has f i led an appeal before the Tribunal on the following grounds: - "That on the fact s and circumstances of the case, the ld. CIT(A) has erred in law in del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used by the assessee for the purposes of its business. The Assessing Officer's record shows that the depreciation charged to the building account is Rs. 12,34,957/- and whereas repairing expenses of the bui lding including repairs and maintenance comes to Rs. 52,72,402/-. Hence, he was of the view that the amount of expenditure incurred for repairs should have been capitalized and added to the value of the assets. After considering the expenditure incurred on maintenance of garden, security arrangement, water supply, plumbing and sanitary, miscellaneous expenses, etc. as allowable, he disallowed the balance amount of expenditure claimed. The first appellate authority considered the submissions of the assessee that the details of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that these were trade advances made to various tea companies, which were written off in the year under consideration. I t was submitted that the advances were made to M/s. Al l India Tea & Trading Co. , Tonganagaon tea Co. Limited, Amritapur Tea Co. Limited during the normal course of business of the assessee at the interest rate of 21% per annum. On the condition mentioned in section 36(1)(vi i) read with section 36(2) of the Act, he submitted that, when a loss arises out of non-recovery of such advances, the same should be allowed as a business loss while computing the prof it and gains of business and as the monies were advanced for the purpose of its business. These three companies had financial and certain other di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and gains of business. 6. The Hon'ble Delhi High Court in the case of CIT -vs. - Sumangal Overseas Limited (ITA No. 174 of 2011)(Del .) held as follows:- "A trading loss has a wider connotation than a bad debt. A bad debt may also be a trading loss. But a trading loss need not necessarily be a bad debt . There may be a bad debt which may not fall within the purview of section 36(1)(vii) of the Act, but may well be regarded as one eligible for deduction incurred in the course of carrying on business will come under that category and will naturally enter into computing the net total income as the real prof it chargeable to tax cannot be arrived at without setting off legitimate trading loss" . 7. Applying the proposition laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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