2012 (6) TMI 883 - AT - Income Tax

Summary

Issues involved: Appeal against the order of the Commissioner of Income-tax u/s 143 for the assessment year 2006-07.

Grounds of appeal:
1. Challenge to orders of authorities as being against law, equity, and facts.
2. Disallowance of bad debts of Rs. 30,00,000.
3. Disallowance u/s 40(a)(ia) of Rs. 54,750.
4. Disallowance u/s 40A(3) of Rs. 9,874.
5. Disallowance of Car Maintenance and Car depreciation of Rs. 15,950.

Details of the Judgment:
- The assessee, deriving income from money lending and a wind mill, filed a return declaring total income of Rs. 1,51,600 for the assessment year 2006-07.
- During assessment, it was found that the assessee admitted additional income of Rs. 1.15 crores, with Rs. 30 lakhs written off as bad debts.
- The Assessing Officer (AO) disallowed the bad debts as the assessee failed to provide details of debtors and nature of debts, holding them not genuine u/s 36(1)(vi) of the Income-tax Act.
- Disallowances were also made for non-deduction of TDS on interest payments and non-payment of insurance premium by crossed cheque or DD.
- The AO disallowed car maintenance and depreciation partially for personal use.
- The CIT(A) confirmed the AO's order, leading to the appeal before the ITAT.
- Regarding bad debts, the ITAT held that the debts were not proven genuine, rejecting the appeal.
- On disallowance u/s 40a(ia), the ITAT found the provision not applicable due to the turnover and additional income declared by the assessee.
- Disallowance u/s 40A(3) for insurance premium to General Insurance Company was upheld as not covered under Rule 6DD exemptions.
- Ground No.5 was rejected for not being raised before the CIT(A).
- Additional grounds on interest charges were allowed as consequential relief to the assessee.
- The appeal was partly allowed by the ITAT.

Conclusion: The ITAT upheld disallowances of bad debts and insurance premium, while allowing relief on disallowance u/s 40a(ia) and additional interest charges.