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2013 (10) TMI 1399 - ITAT MUMBAIClaim for bad debts written-off u/s. 36(1)(vii) denied - Held that:- The amounts that have been written-off, as detailed in the Paper Book, are specific bills or part of specific bills raised by the assessee, which have not been collected from such parties. Therefore, merely because assessee had dealing with that particular concern or that the concerns are otherwise financially viable does not distract from the fact that the amounts in question, which are individually of small values, were specific bills of the assessee or part thereof, which were outstanding for a long period of time and therefore considering the aforesaid aspect, on facts, the judgment of the assessee of treating them as ‘irrecoverable’ cannot be faulted. Thus, in our considered opinion, the claim of the assessee for writing-off of such amounts u/s. 36(1)(vii) of the Act as ‘irrecoverable’ was fair and proper.The entire claim of the assessee for write-off of bad debts u/s. 36(1)(vii) of the Act amounting to ₹ 40,89,838/- was justified and the CIT(A) ought to have allowed it, instead of restricting it to ₹ 22,56,998/- only. Disallowance of prior period expenses - Held that:- Ostensibly, the expenditure in question does not pertain to the period under consideration, which is evident from the invoice raised by M/s. Safire Hotels Ltd.. There is also no material on record to show that the liability represented by the invoice of M/s. Safire Hotels Ltd. dated 20.01.2006 crystallized during the year so as to be deductible in computing assessee’s income for the year under consideration following the mercantile system of accounting. In the course of hearing, it was specifically put to the learned counsel for the assessee to show as to in what manner the liability crystallized during the year and not in the preceding assessment year as sought to be canvassed by the Revenue based on the date of the invoice raised by M/s. Safire Hotels Ltd.. No satisfactory explanation has been rendered before us and therefore we deem it fit and proper to sustain the action of the lower authorities in disallowing the impugned claim being a prior period expenditure. Disallowance of legal and professional charges - Held that:- The matter be re-visited by the Assessing Officer after allowing the assessee a reasonable opportunity to produce all the relevant material in support of the impugned expenditure. Needless to say, the Assessing Officer shall consider the submissions and material put-forth by the assessee on its merits and thereafter adjudicate this aspect afresh as per law. We may add here that if the Assessing Officer is not satisfied with the submissions of the assessee and proceeds to make a disallowance, the same shall not exceed a sum of ₹ 7,42,435/-, i.e. the amount sustained by the CIT(A) in the impugned order
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