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TMI Blog2020 (2) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the claim of bad debt has arisen within the same assessment year and is immature and highly susceptible. 2. The Learned Commissioner of Income tax (Appeals)-3, Ahmedabad has erred in law and on facts of the case by confirming the disallowance of rs.33,42,400/- made by the Assessing Officer being land leveling expenses incurred by the appellant after considering the same as bogus expenditure, which has been claimed just to reduce tax liability. 3. Your Appellant prays to reserve the right to add, alter, amend and/or with draw any of the above grounds of appeal. 2. The first issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowances of bad debt of Rs. 11.5 crores only. 3. The briefly stated fact is that the assessee is an individual engaged in the business of Construction and Real Estate Development. The assessee during the year under consideration i.e. dated 18-04-2013 sold his running project at Gota Town Plot no. 24/1 to Shakun Corporation Pvt. Ltd. (for short SCPL) for Rs. 14 crores only. However, the assessee was able to collect Rs. 2.5 crore only from the purchaser i.e. M/s SCPL. It was submitted that the party namely M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Hari Enterprises. Accordingly, the AO in view of the above disallowed the claim of bad debt and added the same to the total income of the assessee 4. Aggrieved assessee preferred an appeal before the learned CIT (A). The assessee before the ld. CIT-A reiterated the submissions as made before the AO. 5. However, the learned CIT (A) observed that the assessee has not been doing any business of real estate development. As the assessee is showing income from capital gain and income from partnership consistently from A.Y. 2012-13 which is available on record. The assessee has shown impugned property as investment in balance sheet for A.Y 2012-13, 2013-14. The assessee had no closing stock or any other income with respect to business in the Profit & Loss account from 2012-13 to 2016-17. Accordingly the learned CIT-A held that the assessee is not doing any business activity. Accordingly the learned CIT (A) confirmed the disallowances made by the AO. Aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 6. The learned AR for the assessee before us filed a paper book running from page 1 to 394 and submitted that the assessee offered the sale of the projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar under consideration for the land under dispute. c. There was the single transaction in the year under consideration which was treated as business whereas no such transaction was shown as business in the earlier and the subsequent assessment years. 8.2 The above allegations of the learned CIT (A) certainly create a doubt that whether the assessee is carrying on any business activity of the real estate or not. However, the finding of the learned CIT (A) suffers from certain infirmities as described below: i. The Revenue has accepted the sale of the property in dispute as business transaction. As such if the learned CIT (A) was of the view that the transaction for the transfer of the property does not represent the business transaction, then it was his duty to classify such transaction under the appropriate head of income in pursuance to the provisions of the Act. But the learned CIT (A) has not commented on the same which implies that he has accepted the sale proceeds as business receipt. Accordingly, we are of the view that the learned CIT (A) has treated part of the transaction as business transaction and disagreed at the same time to accept the bad debts as part of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was carrying out the business activities in the year under consideration. Accordingly, we are not impressed with the finding of the learned CIT (A) for the reasons as discussed above on the issue that the assessee was not carrying out any business activity of the real estate. 8.4 Now coming to the 2nd question as discussed above, we note that the assessee is entitled for the bad debts once he has written off the same in the books of accounts. As such, the assessee is not required to justify the irrecoverability of the amount from the debtors. In holding so we find support and guidance from the judgment of Hon'ble Supreme Court in the case of T.R.F. Ltd. vs. CIT reported in 190 taxman 391 where it was held as under "This position in law is well-settled. After 1-4-1989, it is not necessary for the assessee to establish that the debt, in fact, has become 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 bad debt occurs, the bad debt account is debited and the custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of contractor, confirmation and mode of payment etc with respect to the impugned expenses claimed. Further, the Ld. CITA also observed that the assessee has claimed the expenses after transfer of the property. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 12. The learned AR before us submitted that the assessee has incurred the impugned expenses in the course of the business as evident from the copies of the bills issued by the parties. These bills were representing the purchase of sand, therefore there was no question of deducting the TDS. 13. The DR on the contrary before us vehemently supported the order of the authorities below. 14. We have heard the rival contentions of both the parties and perused materials available on record. In the present case, the assessee claimed to have incurred certain expenses towards the land leveling /Mati Puran amounting to Rs. 33,42,400/-. However the AO held, in the absence of sufficient documentary evidence, that such expenditure were not incurred by the assessee for its alleged business activities. The view taken by the AO was subsequently confirmed by the learned CIT (A). 14.1 From the prece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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