TMI Blog2021 (2) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... er words sales effected but consideration not received up to the end of financial year are shown as sundry debtors. From going through the finding of Ld. CIT(A) we find that no efforts have been made by Ld. CIT(A) to examine the fact that whether the alleged amount claimed to be bad debts by the assessee are in the nature of sales made in the preceding years, or loans and advances . If the alleged amount are part of sales effected during the year or in the preceding year and they have become bad and doubtful, such claim may be allowed if the assessee has written off in its books of accounts crediting the customer account but in case it is a loans and advances which have become bad then the assessee will have to claim it under the head of business loss by showing that the same were given in the course of business. Since Ld. CIT(A) has not examined this aspect we restore the issue for reconsideration. Allowability of brought forward losses and unabsorbed depreciation - HELD THAT:- The return of income of preceding years from which the business losses and unabsorbed depreciation loss are being brought forward are also not placed on record. No specific finding is given in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y DCIT-1(1) and ACIT- 1(1), Ujjain respectively. 2. Revenue has raised following grounds of appeal :- ITA No.561/Ind/2018 Assessment Year 2012-13 (i) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in directing to allow the brought forward losses and unabsorbed depreciation of ₹ 26,63,698/- as the same is not claimed in the return of income. (ii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of ₹ 58,24,000/- made on account of belated bad debts. (iii) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the disallowance of ₹ 1,08,95,467/- made on account of commission expenses. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. ITA No.562/Ind/2018 Assessment Year 2014-15 (i) Whether in the facts and in the circumstances of the case, Ld. CIT(A) was justified in directing the disallowance of ₹ 1,03,81,727/- made on account of commission expenses. (ii) Whether in the facts and in the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Year 2012-13 and Ground No.1 for Assessment Year 2014-15, we find that the genuineness of claim of similar type of commission expenses was in challenge before this Tribunal in assessee s own case for Assessment Year 2011-12 wherein the Tribunal vide its order dated 11.8.2017 in ITA No.372/Ind/2016 after considering the relevant facts which are identical to the facts of the instant appeal before us deleted the disallowance of commission holding them to be wholly and exclusively for business purposes observing as follows:- 7. We have considered the facts and circumstances of the case and find that the assessee company is doing manufacturing of various kinds of industrial products such as FRP Axial Flow Fans, FRP Seal Disc, FRP Fan Stacks, FRE Fill Hangers which are being used in various power plants, steel plant, coal mines and other heavy industries. The company has started in the year 1991 however it has been incurring heavy loss during the earlier years. It is seen that the company entered into sale agreement on February, 9, 2008 with M/s B-3 Projects Consultants, Nagpur with the condition that if the sales/turnover of the assessee company is achieved the minimum t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of ITO V/s Laxmi Engineering Industries 298 ITC 203 (Raj.). The Ld. Counsel also placed reliance in the case of DCIT V/s Microtex Seperators Ltd. 293 ITR 451 (Kar.) wherein the tribunal found that the sister company was the sole distributor agent for several years and had sole selling agent of the assessee company provided for payment of commission at 10% not on the net entire amount after giving deductions. Taking into consideration of these aspects of the matter allowed entire 10 of bill the appeal before Hon'ble High Court while dismissing the appeal that taking into consideration the long standing relationship and also taking into consideration the reputation of the assessee and the agent also in consideration there was no intention to evade the tax rightly allowed to taken of entire commission. Seeing to the facts of the present case, we are of the view that even though it was not a sister concern at the. time of entering in to the agreement, has paid commission for rendering services which has resulted in increase of turnover by 2.12 crores. Similarly in the case of Pure Pharma Pvt. Ltd V/s CIT (supra) Wherein the commission was paid to government and its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4- 15. 13. During the assessment proceedings Ld. A.O disallowed this claim observing that the alleged amount was a write off of outstanding balance of loans and advances and since the assessee is not engaged in the business of providing loans and advances such claim cannot be allowed as Bad Debts. When the matter travelled before Ld. CIT(A), he deleted the disallowance for both the years placing reliance on the judgment of Hon ble Supreme Court in the case of T.R.F. Ltd v. CIT 190 Taxman 391(SC) and was of the view that since the assessee has written off the amount in the books of accounts should be allowed. 14. We however on perusal of the judgment of Hon ble Supreme Court in the case of T.R.F. Ltd v. CIT 190 Taxman 391(SC)(supra) find that the Hon ble court has also made following observation:- When bad debts occurs, the bad debt amount is debited and the customer s account is credited. In the case of companies, the provision is deducted from sundry debtors 15. In the above observation of the Hon ble Apex Court two important words are customers and sundry debtors. The bad debt which the assessee company wants to claim as an expenditure needs to be reduced from su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and carry forward if any. 18. We on perusal of record find that computation of income for Assessment Year 2012-13 is not placed on record. The return of income of preceding years from which the business losses and unabsorbed depreciation loss are being brought forward are also not placed on record. No specific finding is given in this regard by Ld. A.O. Under these given facts and circumstances of the case we are of the considered view that the issue needs to be set aside to the file of Ld. A.O for afresh examination. In case the assessee has legally and rightfully claimed the set off of unabsorbed business loss and unabsorbed depreciation loss and the return of income of the years in which such loss was shown have been filed on the due dates u/s 139(1) of the Act then the assessee deserves to get the benefit of set off. Ground No.1 of the revenue is thus allowed for statistical purposes. 19. Now we take up Ground No.2 of revenue s appeal for Assessment Year 2014-15 through which the revenue has challenged the finding of Ld. CIT(A) deleting the disallowance of ₹ 4,17,302/- made on account of belated payment of ESIC and EPF contribution. 20. We find that there occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ₹ 4,83,609/- was added on account of interest. Since no tax was deducted at source by the assessee total amount of ₹ 25,95,609/- is disallowed u/s 40a(ia) of the Act. The matter was taken up by the assessee before Ld. CIT(A) which resulted in success against which the revenue is in appeal before the Tribunal. 23. Ld. Counsel for the assessee supported the finding of Ld. CIT(A). 24. As mentioned above this disallowance was made for the alleged non deduction of tax at source on the alleged amount of interest of ₹ 25,95,609/-. We find that Ld. CIT(A) deleted this addition observing as follows:- 1. Ground No,6: Through this ground of appeal the appellant has challenged the addition of ₹ 25,95,609/~ on account of disallowance of interest payment without TDS. The AO observed that during the year, the Company settled a loan received from TIF AC (Technology Information, Forecasting and Assessment council) along with interest of ₹ 25,95,609/~. The AO observed that TIFAC is a society registered under the Societies Registration Act of 1860. Therefore, any payment towards interest is subject to deduction of tax at source under section 194A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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