2016 (1) TMI 229 - HC - Income Tax

Disallowance of debt recoverable - CIT(A) confirmed the addition observing that it was not a debt recoverable but was in fact an advance made to the party for the purchase of material - Tribuna deleted the addition - Held that - The Tribunal had held the amount as business expenditure as the same was in the course of the business of the assessee. Learned counsel for the appellant was unable to show any illegality or perversity in the findings recorded by the Tribunal warranting interference by this Court. - Decided against revenue

Summary

Issues:
1. Whether the Tribunal was right in deleting the addition made by the Assessing Officer and confirmed by the CIT(A) regarding an advance amount not treated as a debt.
2. Whether the amount in question was a business expenditure.

Issue 1 Analysis:
The appellant-revenue filed an appeal under section 260A of the Income Tax Act against the Tribunal's order regarding an addition of an amount made by the Assessing Officer and confirmed by the CIT(A). The dispute was about whether the amount of Rs. 2,18,213/- was a debt or an advance. The CIT(A) confirmed the addition, stating it was an advance for material purchase, not a debt. The Tribunal also upheld this view, considering the advance for material purchase, not received by the assessee, as a business expenditure. The Tribunal's decision was based on the fact that the expenditure was in the course of the assessee's business.

Issue 2 Analysis:
The Tribunal held that the amount in question, Rs. 2,18,213/-, was a business expenditure as it was related to the business of the assessee. The Tribunal found no illegality or perversity in its decision, and the appellant's counsel failed to demonstrate any grounds for interference. Consequently, the Tribunal's decision was upheld, and the appeal by the revenue was dismissed.

In conclusion, the High Court upheld the Tribunal's decision regarding the disputed amount, treating it as a business expenditure incurred in the course of the assessee's business activities. The Court found no reason to interfere with the Tribunal's findings and dismissed the appeal by the revenue.