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Issues:
1. Disallowance of weighted deduction under section 35B of the IT Act, 1961. 2. Disallowance of the claim of bad debt amounting to Rs. 8,60,057. Analysis: 1. The first issue pertains to the disallowance of weighted deduction under section 35B of the IT Act, 1961. The assessee, M/s Lucknow Chikan House, raised an objection regarding the disallowance of expenses totaling Rs. 3,76,004. However, during the appeal hearing, the assessee's counsel did not provide substantial arguments in support of the objection. The CIT(A) had disallowed specific items of expenses, including clearing and forwarding charges, packing, bank insurance, foreign traveling, and insurance. The tribunal rejected the assessee's objection, affirming the disallowance of the claimed deduction. 2. The second issue revolves around the disallowance of the assessee's claim of bad debt amounting to Rs. 8,60,057. The dispute arose from the export of goods to a party, M/s Club Michael Paris, and subsequent financial difficulties faced by the party. The assessee sought to claim bad debt deduction based on the deteriorating economic situation in France and the party's inability to make full payments. The CIT(A) distinguished between two claims: one related to a specific individual and the other to the party as a whole. The tribunal, after considering the circumstances, concluded that the claim for bad debt was valid. It emphasized that the claim was based on genuine belief in the irrecoverability of the debt, supported by actions taken by the assessee, such as seeking permission from the Reserve Bank and initiating recovery proceedings. Consequently, the tribunal allowed the deduction of Rs. 8,60,057 and dismissed the Department's objection regarding the allowance of Rs. 1,39,882.78. The appeal of the assessee was partly allowed, and that of the Department was dismissed.
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