TMI Blog2018 (7) TMI 2312X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on account of sundry debtors written off. This fact is acknowledged by the AO in his assessment order. Once, this is a fact the debts claimed by assessee are allowable. The CIT(A) has rightly allow the claim of the assessee and we confirm the same. This issue of Revenue s appeal is dismissed. - ITA No. 3476/Mum/2016 - - - Dated:- 4-7-2018 - SRI MAHAVIR SINGH, JM AND SRI G MANJUNATHA, AM For the Appellant : Shri Rajesh Kumar Yadav, DR For the Respondent : Shri Niraj D.Sheth, AR ORDER PER MAHAVIR SINGH, JM: This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A)], in appeal No. CAS-4/TFR/115/2014-15 dated 10.02.2016. The Assessment was framed by the DCIT, Circle-1 Surat (in short DCIT / AO) for the A.Y. 2011-12 vide order dated 19.03.2014 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of Revenue is against the order of CIT(A) allowing Attimari Coolie Expenses of ₹ 21,35,504/- out of the total expenses claimed by assessee at ₹ 28,47,339/-. For this Revenue has raised the following ground No. 1: - 1. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t observed that in order to be entitled to deduction of payments made to persons whose names are not disclosed, the assessee has to: a) Establish the practice prevailing in That line of business for making such payments: b) To adduce satisfactory evidence to establish The payments: and C) To satisfy the authorities that the payments were made for the purpose of business. The appellant may have sufficiently established the practice prevailing but the payments have not been established nor the extent of the requirement or purpose for business. Looking to the entirety of the facts, I restrict the disallowance to 25% of the expenses. Therefore, the disallowance of Rs.28,47,339/- is upheld to the extent of Rs. 7,11,835/- and the remaining disallowance is directed to be deleted. 5. The learned Sr. Departmental Representative, relied on the assessment order. On the other hand, the learned Counsel for the assessee filed copy of CIT(A) order for AY 2009-10 and 2010-11, wherein similar disallowance deleted by CIT(A). In AY 2009-10, the CIT(A) in appeal No CAS-I/231/11-12 vide order dated 08.03.2013 deleted the addition by observing in Para 7.4 and 7.5 as under: - 7.4 From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in allowing the claim of bad debts of Rs. 1,25,68,662/- made by the assessee in the return of income which was disallowed by the AO in the assessment order. The same is required to be disallowed in full. 9. Briefly stated facts are that the AO noticed from the verification of profit and loss account schedule K of general and administrative expenses that it has debited an amount of Rs. 1,25,68,662/- on account of Sundry Debtors written off. The following are bad debts claimed and the reasons for write off: - 10. The AO require the assessee to explain and furnish the details in whose name the sundry balances have been written off with reason thereof. The assessee filed details of debt not recoverable. It was also claimed by the assessee that these debts have already been declared as income in earlier years. The assessee also explained that the invoices were offered as incomes when the same were raised. However, subsequent when the Directors formed the opinion that the amounts had become irrecoverable the same was written off as bad debts in assessee company's books of accounts. Further, Ld counsel explained that it is the normal practice in this line of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these amounts in their books of account or they have rejected the claims of appellant or TDS is not made on these amounts or these amounts have been claimed excessively or otherwise, is of any relevance as discussed earlier. Since these debts have been written off in the books of appellant in the year under consideration and have already been credited as income in the preceding year/s, same are allowable as expenditure under section 36(l) (vii) of the Act. The ground of appeal is therefore, allowed. Aggrieved, now Revenue is in appeal before Tribunal. 12. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that in construction business a specified percentage of the running bill is hold as retention by the client and released after the guarantee period. In few of the cases the same is not released due to some technical and/or other reasons. The assessee in the present case has explained the same and written off the same in the books of account as are not recoverable from the clients. In such circumstances, we have gone through the decision of Hon ble Supreme Court in the case of TRF Ltd. Vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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