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TMI Blog2025 (5) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the disallowance of deduction of bad debts written off being in the nature of irrecoverable advance as business loss u/s 37(1) read with section 28 of the Act. The addition made on this account amounting to Rs. 27,00,000/- may please be deleted. 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 3,87,740/- on account of interest income whereas the assessee has taxed the same on receipt basis in the next assessment year. The addition made on this account amounting to Rs. 3,87,740/- may please be deleted. 3. Ground No. 2 was not pressed during the course of hearing, therefore appeal on this ground is dismissed as not pressed. 4. Now we shall deal ground no 1 of the appeal. 5. Briefly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails such as the PAN, address, and a formal agreement with Ms. Joginder Paul Kaur, raising doubts about the genuineness of the transaction. It was also pointed out that no TDS was deducted on the advance payment. Further, the AO held that since the amount was shown as "Loans and Advances" in the balance sheet and the assessee was not engaged in money lending business, the amount was in the nature of capital expenditure and hence not allowable under Section 37(1). The AO distinguished the judicial precedents cited by the assessee as factually different and emphasized that mere assertions without corroborative evidence could not establish the genuineness of the business loss. Additionally, as the expenditure did not pertain to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the appellant has even failed to prove the genuineness of this advance, so as to even claim it as advance written off and also the basic conditions for allowing deduction under the Act. The AO has clearly distinguished the cases relied upon by the appellant on facts of the case. In view of the detailed reasoning given by the AO in the assessment order and discussion above, the addition made by the AO is confirmed. 8. During the course of hearing the Ld. AR submitted that the Assessee engaged in the real estate business, had advanced Rs. 27,00,000/- to Ms. Joginder Paul Kaur for the purchase of land as part of its regular business operations. The transaction did not materialize, and despite repeated efforts, the amount remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement, PAN details, and Tax Deducted at Source (TDS) records. However, we find that the advance is a genuine business expense, properly recorded in the accounts, and it is not considered a capital expense. Here it is important to note that this amount of Rs. 27,00,000/- has continuously being shown in the balance sheet of the assessee as loan / advances and the Revenue has never questioned its correctness. Rather, it has been taken on record year after year without being questioned. The AO has raised this issue only when this amount was written off by the assessee as non recoverable. During the course of hearing the Ld. Counsel of the Assessee drew our attention to the finding of the Hon'ble Supreme Court in the case of TRF Ltd. v. CIT (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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