TMI Blog2018 (12) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... the business. In our opinion, the assessee has failed to discharge his onus in substantiating that the advances written off were made wholly and exclusively for the purpose of the business. The finding of the Ld. CIT(A) on the issue in dispute that write off cannot be considered as allowable expenditure under section 37 of the Act, are well reasoned and we do not find any error in the same. We accordingly uphold the same and dismiss the appeal of the assessee. - ITA No.5188/Del/2012 - - - Dated:- 10-12-2018 - Sh. O.P. Kant, Accountant Member And Sh. K.N. Chary, Judicial Member For the Appellant : Sh. Anil Bhalla, CA For the Respondent : Ms. Ashima Neb, Sr.DR ORDER PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 25/07/2012 passed by the Ld. Commissioner of Income-tax (Appeals)-XIII, New Delhi for assessment year 2007-08, raising following grounds: 1. The learned Commissioner of Income Tax(Appeals) has erred both on facts and in law in upholding the learned Assessing Officer s action of disallowing amounts written off as business loss during the relevant previous year amounting to ₹ 3,20,34,757/- allegedly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Tribunal raising the ground involving the issue of disallowance of business loss of ₹ 3,20,34,757/-. 4. Before us, the Ld. counsel of the assessee referred to an application filed on 14/08/2017 under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 (in short ITAT Rules ) for admitting additional evidences, which included a copy of arbitration award in respect of the advances recoverable from M/s Sutlej power Private Limited. The Ld. Counsel submitted that the arbitration proceedings happened subsequent to the write off of the advances and thus same could not be produced before the lower authorities. The Ld. counsel also submitted that the additional evidence has been filed in view of the direction of the bench during hearing on 01/03/2017 to produce any other document in connection with the business loss and therefore the additional evidence is in compliance to the Rule 29 of the ITAT Rules. Though the Ld. DR opposed admission of the additional evidence, however he submitted that the arbitration proceedings were not in respect of the amount of advances written off and, therefore, the same cannot justify allowance of the expenses. 5. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture produced and was approved by the audit committee and board of directors of the assessee company. 10. The Ld. Assessing Officer rejected the claim of the assessee mainly on following grounds: 1. As per the sourcing agreement between the assessee and the producer(s) (i.e. companies), it was the liability of the producer to ensure growing and supply of agricultural produce of acceptable quality and if the producer fails to deliver the goods as per the agreements then the assessee has the right for compensation. 2. Writing off of the advances by the assessee was a unilateral action without exploring any legal recourse. 3. No documentary evidence placed on record regarding the correspondence etc, which the assessee had with the producer(s) in respect of the write off. 11. Before the Ld. CIT(A), the assessee contended that the Assessing Officer has not appreciated various clauses of the agreement. He submitted that the clause (6) of the agreement relied upon by the Assessing Officer also specifies that in the event of agriculture produce being destroyed or not of the acceptable quality or on account of failure of the crops due to factors beyond the control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained hereinabove, the Affected Party shall use its best efforts to resume full performance thereof without avoidable delay, provided that if any delay in the Affected Party 's performance caused by act of God or governmental action exceeds ninety (90) days, the Non - Affected Party may at its option terminate this agreement effective immediately. 13. The Ld. counsel submitted that the nature of the business of the trading in agriculture produce is highly fragile and risky in view of the fact that the agriculture produces are highly perishable nature, subject to vagaries of nature and is prone to a very high degree of losses and heavily prone to act of God. 14. However, we note that the assessee has neither provided the details of quality damage of the agriculture produce nor any correspondence with the producers companies for claiming write off of the advances of ₹ 3,20,34,757/-. The assessee is merely contended that after the write-off of unrecoverable amount of advances, there was a still balance of ₹ 7,44,18,762/- and for which the assessee has gone into arbitration proceedings and an amount of ₹ 2 crore has been awarded in the arbitration pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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