1989 (1) TMI 168 - AT - Income Tax

Summary

Issues:
1. Disallowance of trading loss
2. Entitlement to deduction under s. 80-G

Disallowance of Trading Loss:
The judgment pertains to appeals by the assessee and the Department against the order of the CIT(A) regarding the disallowance of a trading loss of Rs. 67,153 for the assessment year 1978-79. The dispute arose from the non-delivery of goods exported by the assessee to a French firm due to alleged defects. The assessee claimed to have sold the goods at a reduced price, incurring the loss. The IAC (Asst) disallowed the claim, citing the requirement of RBI permission for writing off amounts related to foreign parties. The CIT(A) upheld the disallowance, emphasizing the lack of evidence on the settlement of the dispute with the foreign buyer and the absence of proof of RBI permission. The ITAT concurred with the CIT(A), noting the insufficiency of evidence regarding the agreement between the parties and the lack of clarity on RBI's approval for the write-off.

Entitlement to Deduction under s. 80-G:
The second issue raised by the assessee was the denial of a deduction under s. 80-G by the CIT(A). The assessee had made donations to two Foundations and claimed a deduction of Rs. 10,000, which was not considered by the IAC (Asst). The CIT(A rejected the claim, stating that the assessee failed to provide evidence of compliance with s. 80-G(5) regarding the Foundations. The assessee contended that certificates under s. 88 and confirmation letters from the Foundations were submitted to the IAC (Asst), but were not considered. Additionally, assessment orders of the Foundations for the same year showed registration under s. 12-A(a) and benefit under s. 11. The ITAT found merit in the assessee's claim and remitted the issue back to the IAC (Asst) for a thorough examination on merit, with the direction to consider the claim if the assessee's income turned out to be positive.

---