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2015 (12) TMI 757 - AT - Income TaxDisallowance of expenditure in respect of bad debts written off during the year - Held that - Assessee has placed reliance on the judgement of the Hon ble Apex Court in the case of TRF Limited vs. CIT reported at (2010 (2) TMI 211 - SUPREME COURT) in support of his contention that the claim of the assessee with regard to bad debt is allowable. We do not see any force in the contention of the ld.counsel for the assessee as in the present case the AO has demonstrated that the assessee has continued business transactions with the concerned party. It is also not disputed that the assessee has received payments from the concerned party. Moreover, assessee through its Authorized Representative agreed to the disallowance of bad debt and addition of the same. The judgement of Hon ble Apex Court in the case of TRF Limited vs. CIT(supra) relied upon by the assessee will not help to the assessee. Therefore, ground raised in the Assessee s appeal is rejected. - Decided in favour of assessee.
Issues:
1. Disallowance of expenditure on bad debts written off during the year. 2. Interpretation of relevant provisions under the Income Tax Act, 1961 regarding bad debts. 3. Application of legal precedents in determining the allowability of bad debts. Issue 1: Disallowance of expenditure on bad debts written off during the year The appellant contested the disallowance of expenditure amounting to Rs. 1,14,336/- in respect of bad debts written off during the year. The Assessing Officer (AO) disallowed the bad debt and made additional adjustments. The appellant argued that the AO was unjustified in disallowing the expenditure. The case was brought before the Commissioner of Income Tax (Appeals) who upheld the disallowance. The appellant then appealed to the Appellate Tribunal challenging the disallowance. Issue 2: Interpretation of relevant provisions under the Income Tax Act, 1961 regarding bad debts The AO observed that the appellant's business transactions with the debtor continued during the relevant financial year. The AO found that the claim for bad debt was premature as the business relationship was ongoing, and payments were received from the debtor. The AO proposed the disallowance, which was agreed upon by the appellant's Authorized Representative. The Tribunal noted that the appellant failed to provide evidence to support the claim for bad debt and upheld the disallowance based on the AO's findings. Issue 3: Application of legal precedents in determining the allowability of bad debts The appellant relied on the judgment of the Hon'ble Supreme Court in TRF Limited vs. CIT to support the claim for bad debt. However, the Tribunal found that the facts of the present case differed, as the appellant continued business transactions with the debtor and received payments. The Tribunal held that the appellant's claim for bad debt was not sustainable and rejected the appeal. The Tribunal emphasized that the judgment cited by the appellant did not apply to the current circumstances. In conclusion, the Tribunal dismissed the appellant's appeal regarding the disallowance of bad debts written off during the year, based on the findings that the business transactions with the debtor were ongoing, payments were received, and the claim for bad debt lacked sufficient evidence. The Tribunal's decision was in line with the interpretation of relevant provisions under the Income Tax Act, 1961 and the application of legal precedents in similar cases.
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