9911796707
|
Home
Issues:
- Claim for deduction of Rs. 5,32,500 disallowed by CIT(A) - Assessment of write-off as bad debt by ITO - Additional ground raised for allowance as trade loss under s. 28 - Rejection of additional ground by CIT(A) - Appeal before ITAT for reconsideration Analysis: The appeal before the Appellate Tribunal ITAT CALCUTTA-B involved the disallowance of the assessee's claim for deduction of Rs. 5,32,500 by the ld. CIT(A). The assessee company, engaged in managing agency and acting as agents for various companies, had advanced a sum of Rs. 5 lakhs to another company, which was eventually nationalized. The ITO treated the write-off as a bad debt, but conditions under s. 36(2) were deemed unsatisfied as the company was not in the money-lending business. The ld. CIT(A) rejected an additional ground raised by the assessee for allowance as a trade loss under s. 28, citing lack of prior claim during assessment proceedings. However, the ITAT observed that the CIT(A) should have considered the claim under s. 28, especially since the debt was secured against assets and machinery of the debtor company, which was nationalized. The ITAT set aside the CIT(A)'s order for fresh consideration, emphasizing the need to evaluate the date on which the debt became bad, as indicated by a letter from the Ministry of Industries. The ITAT's decision was influenced by the Supreme Court's ruling in Badridas Daga vs. CIT (1958) 34 ITR 10 (SC), emphasizing the applicability of s. 28 for claims not falling under specific sub-clauses. The ITAT criticized the CIT(A) for disregarding relevant facts on record and failing to adequately address the additional ground raised by the assessee. The ITAT directed the CIT(A) to reexamine the matter in light of the Ministry of Industries' communication regarding the repayment status of the nationalized company. Ultimately, the ITAT allowed the assessee's appeal for statistical purposes, signaling a favorable outcome pending the CIT(A)'s reassessment in accordance with the law.
|
