TMI Blog2018 (5) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... - I.T.A./9164/Mum/2010, I.T.A./6381/Mum/2011, I.T.A./7098/Mum/2011, I.T.A./751/Mum/2011, I.T.A./6697/Mum/2011 And I.T.A./8127/Mum/2011 - - - Dated:- 2-5-2018 - Shri Rajendra, Accountant Member And Ram Lal Negi, Judicial Member For The Revenue : Shri Samuel Darse-CIT-DR For The Assessee : Shri J.D. Mistry and Shri Nitesh Joshi Order u/s.254(1)of the Income- tax Act,1961(Act) - PER RAJENDRA, AM Challenging the orders, of the CIT(A)-16, Mumbai the assessee and the Assessing Officer (AO) have filed cross-appeals for the above mentioned assessment years(AY.s)..Assessee-company is engaged in the business of civil constructions viz. roads, foundations and marine works, bridges etc. As most of the issues in all the appeals are common,so,we are adjudicating the above appeals together.Details of filing of returns of income returned incomes, assessed incomes, etc., can be summmarised as under :- A.Y. ROI filed on Returned Income Assessment dt. Assessed Income CIT(A)order dt. 2006-07 27/11/2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance ( GOA 4 for the AY. 2007-08) ITA.s AY.2001-02 ITA.s AY.2005-06 15-19/ 28-29 Para14-20/ 8-39 Against AO 2.2. Considering the above,we decide both the issues( i.e.Interest on incremental loans given to subsidiaries/sister concerns after 31.05.1996 and Disallowance made u/s.14A of the Act),raised by the assessee,in its favour,for the all the three AY.s. 2.3. Similarly,all the four issues raised by the AO(Interest on loans given to subsidiaries/sister concerns,Depreciation on plant and machinery,Professional fees paid for arbitration awards) and 14A disallowance are decided against the AO. 3. Now,we would take up the independent issue that are not covered by the order of the Tribunal for the earlier years.First such ground ( Gs.OA 7-9 for AY.2006-07 and GOA 6 for remaining both the AY.s) is about advances written off during the AY. s. 2006-07,2007-08 and 2008-09. 3.1. During the assessment proceedings for the AY.2006-07,the AO found that the assessee had written off ₹ 165.053 lakhs on account of bad debts.He called for the details in that regard. After considering the same,he held the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment, that the expenditure was to be allowed u/s. 37 or section 28 of the Act that the nature of advances clearly showed that they were directly related to the business of the assessee, that during the year under consideration assessee had made advances. He referred to the page number 173, 180 and 181 of the paper book. He relied upon the cases of Sterling Agro Products Processing Private Ltd (13 taxmann.com.174),Radhakrishna Consumer Services Private Ltd (ITA/6862/Mum/2012,AY. 2009-10,dated 21/10/2015), The DR supported the order of the FAA and stated that assessee has not proved that there was any link between the writing off of the amounts and the business carried out by the assessee. 3.4. We have heard the rival submissions.We find that the AO and FAA had disallowed the advances written off by the assessee,as they were of the opinion that provisions of section 36 did not allow such write off.The FAA held that same could be allowed as per provisions of section 28 of the Act i.e. as a business loss and that the assessee had not produced sufficient evidence to support the claim.We have gone through the details available on pages 173,180-181 of the Paper book.The natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material for the production of pickle was Gherkins grown by the agriculturists. According to assessee, it was necessary for it to ensure regular supply of Gherkins from the farmers. For this purpose, advance money was given to agriculturists which were adjusted against supplies made by them. However, when there was failure of crop, some farmers failed to honour their commitment for supply of Gherkins. According to assessee, the advances in such circumstances became irrecoverable. As per the assessee, the loss write-off was nothing but a Revenue loss. Ld. CIT(Appeals) was appreciative of this contention. According to him, decision of Hon'ble Apex Court in the case of Mysore Sugar Co. Ltd. (supra) supported the claim of the assessee. 15. Now before us, learned D.R., strongly assailing the order of ld. CIT(Appeals), submitted that there was no finding whether such a claim of loss, was out of earlier advances given by the assessee or advances given during the impugned assessment years. According to learned D.R., if it were advances given during the relevant previous year itself, then a write-off could not be allowed since irrecoverability thereof could not be established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT [2010] 323 ITR 397 (SC) wherein it was held as under (page 398) : This position in law is well-settled. After April 1, 1989, it is not necessary for the assessee to establish that the debt, in fact, has became irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the Assessing Officer has not examined whether the debt has, in fact, been written off in accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customer's account is credited, thus closing the account of the customer. In the case of com panies, the provision is deducted from sundry debtors. As stated above, the Assessing Officer has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the abovementioned aspect only and that too only to the extern of write off. 16. This legal position settled by the hon'ble Supreme Court and in view of the amendment in law with effect from Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining two AY.s ,dealing with the same issue,also stand allowed. ITA/8127/Mum/2011-AY.2008-09: 4 . In the above AY. the AO has raised one more ground and it deals with un-reconciled ITS transaction of ₹ 3.59 lakhs. During the assessment proceedings, the AO found that the assessee was unable to reconcile receipt of ₹ 3, 59, 952/-. Therefore, he added the said amount to the total income of the assessee under the head unexplained cash credit, invoking the provisions of section 68 of the Act. 4.1. After considering the submission of the assessee, made during the appellate proceedings, the F AA held that the assessee had a contract receipt of ₹ 59, 850.84 lakhs, is that it had reconcile the entire receipt barring minor receipt because of non-availability of information, that the difference constituted a miniscule of the entire contract receipt, that no adverse inference should be drawn in that regard, that it was not the case of the AO that the assessee had received such a petty amount in cash from any of the parties for home it was carrying out the contract. Referring to the order of the tribunal in the case of S Ganesh, the F AA deleted the addi ..... 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