1978 (12) TMI 107 - AT - Income Tax

Summary

Issues:
1. Disallowance of business expenditure related to quality cut by FCI
2. Disallowance of bad debt claims
3. Disallowance of interest under sections 139(8) and 217(A)
4. Disallowance of new account expenses and donation
5. Disallowance of claim for deduction representing quality cut by FCI

Analysis:
1. The assessee contested several disallowances made by the ITO and confirmed by the AAC. One such disallowance was related to a business expenditure of Rs. 14,710 claimed for quality cut by the Food Corporation of India (FCI). The ITO rejected this claim stating it did not pertain to the relevant year. The Tribunal remitted this matter back to the ITO for re-examination based on evidence provided by the assessee, including correspondence with FCI, to determine if the claim was valid.

2. The disallowance of bad debt claims, one in the name of A. Arumugam and the other in the name of Karuppiah Pillai, was also contested. The Tribunal upheld the disallowance of the debt in the name of A. Arumugam but allowed the claim for bad debt in the name of Karuppiah Pillai, noting that the assessee had made efforts to recover the debt but legal action was not pursued due to the unlikelihood of recovery.

3. Regarding the disallowance of interest under sections 139(8) and 217(A), the Tribunal held that the assessee's counsel conceded the liability to pay interest, precluding the right to appeal based on a third member decision. The Tribunal rejected the grounds for appeal on this issue.

4. The disallowance of new account expenses and donation was not contested before the AAC and therefore not addressed by the Tribunal.

5. The final issue pertained to the disallowance of a deduction claim of Rs. 14,710 representing quality cut by FCI. The Tribunal directed a re-examination by the ITO based on evidence provided by the assessee, including correspondence with FCI, to ascertain the validity of the claim. The matter was remitted back to the ITO for fresh disposal in accordance with the law.

In conclusion, the appeal was treated as partly allowed, with certain disallowances upheld while others were remitted back to the ITO for further examination and decision.