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TMI Blog2017 (11) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was reimbursing expenses besides commission given to the agents for collection/ renewal of FDRs on behalf of the assessee-company. In the absence of regular bills, the Assessing Officer held that the documents furnished do not prove that the expenses have actually been incurred and none of the agents had filed any documentary evidence to show that the expenses were actually incurred. Accordingly, he proceeded to make disallowance of Rs. 13,60,980/- out of the total expenses claimed at Rs. 67,46,413/- paid to the sister concerns/agents of the assessee-company namely, M/s Precision Industrial Moulders and M/s Kraft Foil Printers. 4. The ld. CIT (A) in the quantum proceedings confirmed only 50% of such disallowance, which has been upheld by the Tribunal. 5. So far as disallowance of advertisement and publicity expenses are concerned, the Assessing Officer has disallowed a sum of Rs. 13,970/- on the ground that the same pertains to assessment year 1993-94, as it was incurred in earlier year and the same cannot be allowed in this year and this addition too has confirmed from the stage of the Tribunal. 6. Lastly, with regard to the disallowance of amount written off of Rs. 27,88,31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was a difference of opinion or two views for making the disallowance and looking to the fact that disallowance has been restricted to 50%, it cannot be held that there was any concealment or furnishing of inaccurate particulars of income by the assessee. Secondly, on the issue of disallowance of expenditure of Rs. 13,978/- on advertisement and publicity expenses, he noted that assessee admitted that it was a bona-fide mistake in respect of claiming expenditure in this assessment year but the genuineness of the same cannot be doubted. Thus, it cannot be held that it amounts to furnishing of inaccurate particulars. Lastly, with regard to the amount written off, he held that the Tribunal itself has noted that all the particulars have been furnished by the assessee and the amount was confirmed only on the ground that it cannot be treated as bad debt. 9. None appeared on behalf of the assessee despite service of notice. After hearing the Ld. DR and on a perusal of the impugned order, we find that first of all, so far as the addition of Rs. 6,80,490/- is concerned, addition made by the Assessing Officer has been reduced to half, as the same were based on adhoc disallowance only. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company. In light of such business requirement and commercial expediency; advances were given to the subsidiary company from time to time. Since the subsidiary company got merged with another company and BIFR wrote a letter to this effect and in view of such an event Assessee Company took a business decision that the amount has become irrecoverable in the wake of BIFR order; and therefore, assessee has written off the said advance from its books. Since the advances given by the assessee-company were for the purpose of business and writing off of such advance has been claimed, then it cannot be held that the assessee has furnished inaccurate particulars. Assessee's explanations qua this addition before the Assessing Officer as well as the ld. CIT(A) are reproduced hereunder:- "The learned Assessing Authority has disallowed the claim of assessee for writing off Rs.27,88,311/- being amount due from Southern Synthetics Ltd. a subsidiary company that later on merged with M/s. Kothari Plantation Industries Ltd., in pursuance of BIFR Order. The assessee Company has been advancing some amounts from year to year to the subsidiary company M/s. Southern Synthetics Ltd. on account of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs. KPIL was not interested for merger unless Nuchem Limited agreed to forego the amount of Rs.27.88 lacs. Since, the Company was under obligation having given Corporate Guarantee of Rs.277 lacs. The assessee company had no choice but to forego the amount to save self from invocation of guarantees of Rs.277 lacs. Therefore, it is contented that (1) writing off of the amount was duly considered by the Board of directors and noted in its meeting held on 30.4.94. (2) The amounts were paid out of company's funds. (3) Writing off had become essential to save the assessee from the obligation of invocation of guarantee to the extent of Rs.277 lacs. The assessee's plea for deleting the disallowances of interest in earlier years having been accepted by the CIT(A), Faridabad. The amount which was advanced on account of business needs of the company and has been written off to save the company from invocation of the corporate guarantees, the writing off this amount is allowable to the Company. In case of Manubhai Bikhabhai v/s CIT (1994) 205 ITR 505 (Guj.) the losses suffered on account of sale of shares, where the assessee was guarantor was allowed to the assessee, sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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