TMI Blog2022 (10) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of loss cannot be changed which is supported by basic evidence, books of accounts. The catena of judgments which are mentioned above are in favour of the assessee. It is clear that this particular loss is a business loss and assessee is allowable to claim the loss in profit and loss account. Accordingly, the addition amount is to be deleted.- Decided in favour of assessee. - I.T.A. No. 192/Asr/2018 - - - Dated:- 11-8-2022 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Sudhir Sehgal Sh. P. N. Arora, Adv. For the Respondent : Sh. S. M. Surendranath, Sr. DR ORDER PER ANIKESH BANERJEE, JM: The instant appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), Bathinda [in brevity the CIT(A)], bearing Appeal No. 247-IT/16-17, order dated 08.02.2018, passed u/s 250(6) of the Income Tax Act, 1961 [in brevit the Act], in respect of Assessment Year 2014-15. The impugned order was generated from the order of the ld. Deputy Commissioner of Income Tax, Circle-1, Bathinda [in brevity the DCIT] passed u/s 143(3) of the Act, dated 26.12.2016. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjab Haryana High Court dated 12.11.2009 inter- alia containing decision in respect of Civil Writ Petition No. 3673 of 1983, APB page 73-122 . The matter was taken-up by the seller of the land before the Hon ble Punjab Haryana High Court, where in, the case was again decided against the seller on 24.08.2017. Since the appeal filed before the Hon ble Punjab Haryana High Court was dismissed, the assessee has debited the amount of Rs.1,10,00,000/- in the assessment 2014-15 under the head Amount written off paid against advance of land . The tax audit report with financial statement are with the paper book from page no. 1 to 59 of the assessee s paper book (in brevity APB). The said claim of loss was made in ITR, APB page-12, coloumn no-39 . The ld. Revenue authorities treated this account as per provisions of section 36(2)(i) no deduction of bad doubtful debts. The assessee s contention is that the assessee wanted to purchase the land in anticipation for financial gain in Panchkula and paid the amount accordingly. The assessee denied that he never claimed this amount u/s 36(2) of the Act as a bad and doubtful debt. This payment is related to loss from business which was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b). At the time of entering into the agreement, the said land was under litigation between the farmers and Haryana Govt, and the case was pending before the Hon ble Punjab Haryana High Court. c). That the Hon ble Punjab Haryana High Court decided the case against the seller of the land vide order, dated 12.11.2009 as per copy placed in the Paper Book at pages 73 to 122 and the matter was taken up by the Seller of the land before the Hon ble Apex Court, wherein, the case was again decided against the Seller on 24.08.2017. d). The took a calculated risk of entering into agreement to purchase the land and had the case would have been won by the Land Owner, it would have resulted into huge benefit to the assessee. e). However, since the land owner lost the case before the Hon ble Punjab Haryana High Court, in the year 2009, the assessee could not purchase the land from the parties and, therefore, the amount was written off as bad debt. f). The following evidences in the paper book may, please, be considered: - i). At page 12 of the Paper Book on Form No.39, were the said claimof Rs. 1,10,00,000/- has been mentioned. ii). At page 35, in the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted to CIT(A) as per evidence placed at page 127 of the Paper Book that the assessee came to know that he has not been made a party before the Hon ble Apex Court in the appeal filed by the land owner and the land owner had revolted on the ground that the payment had not been made as per conditions mentioned in the agreement and, therefore, the amount was written off as bad debt. Thus, either assessee could have claimed such loss in the Asstt. Year 2010-11 but since there was a hope and the assessee is into the Real Estate business, the said loss was an allowable loss and, thus, the amount was not written off. 5.2. Mr. Sehgal also relied on the judgment of Hon ble ITAT Kolkata Bench in the case of IMC Ltd vs DCIT, Cir-11, ITA Nos. 813 781/Kol/2009 dated 18.01.2017, the extract of the order is as follows: 13. We have heard the rival submissions made by both the sides and order of the lower authorities as well as materials available on record. In the present case the AO has disallowed the claim of the assessee for the advance written off for Rs. 10,13,245.00 in the profit and loss account on the ground that the assessee failed to furnish necessary details at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, I do agree ' with the Assessing Officer that the aforesaid advance is not a debt in the terms of claim of bad debt as an expenditure as enshrined u/s 36(l)(vi) of Income Tax Act . The concept of bad debt allowable as business expenditure under these provisions has been further explained in 36(2)(i) by explaining that such debt must have been taken into account in computing of the income of the assessee at one point of time. This limitation would render advance in the nature of business as above not being the eligible debt. The contention of the appellant that these advances have been made out of the tax paid income, therefore it has passed through the profit and loss account is fallacious because even the capital advances could have been made out of the tax paid income. The source of payment of advance does not change the nature of advance because it has to be seen on its own merits. The bad debt eligible for deduction as an expenditure are only those debts which have already passed through income generating apparatus of the assessee but now some of it has become bad debt for non - realisation. This can be exemplified in the form that when an assessee makes sales to pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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