2017 (2) TMI 343 - AT - Income Tax

Disallowance u/s 36(i)(iv) on account of bed debts - Held that - In the instant case, the assessee, on one hand, is claiming that the debt of the said party has been written off in its books of accounts, however, the Assessing Officer has stated that the said party was appearing as debtor in the balance sheet as on 31/3/2008. Thus, in the case, it needs verification whether the debt in question was written off in the year under consideration. In view of the above, we feel it appropriate to restore the matter to the file of the Assessing Officer, who is directed to ascertain from the books of accounts of the assessee, whether the bad debt in question has been written off by the assessee in its accounts for the year under consideration and then decide the issue in dispute in accordance with law. The assessee shall be afforded sufficient opportunity of hearing. Accordingly, the ground of the appeal is allowed for statistical purpose.

Summary

Issues Involved:
1. Disallowance of bad debts under section 36(1)(vii) of the Income-tax Act.
2. Adhoc disallowance of advertising expenses.
3. Disallowance of foreign traveling expenses.
4. Sustainability of impugned disallowances and assessment order.
5. Appellant's request to modify or delete grounds of appeal.

Analysis:

Issue 1: Disallowance of Bad Debts
The appellant challenged the disallowance of ?9,51,280 as bad debts under section 36(1)(vii) of the Income-tax Act. The Assessing Officer disallowed the claim as the cheques were dishonored in the subsequent assessment year, questioning the timing of the write-off. The Commissioner of Income-tax (Appeals) upheld the disallowance, stating that the debt was still shown as a debtor in the balance sheet for the relevant year. The appellant argued that the debt was written off during the assessment year under consideration, citing the TRF Ltd. case. The Tribunal found discrepancies and remitted the matter to the Assessing Officer for verification, directing a re-examination based on the write-off in the accounts for the relevant year.

Issue 2: Adhoc Disallowance of Advertising Expenses
The appellant contested the adhoc disallowance of ?32,340 on account of advertising expenses. However, this issue was not pressed by the appellant's representative during the proceedings, leading to its dismissal as infructuous.

Issue 3: Disallowance of Foreign Traveling Expenses
The appellant disputed the disallowance of ?3,25,851 on account of foreign traveling expenses. This matter was not pursued by the appellant during the proceedings and was dismissed as infructuous.

Issue 4: Sustainability of Disallowances and Assessment Order
The appellant raised concerns about the sustainability of the disallowances and the assessment order, alleging various legal and factual grounds. However, since these grounds were not pursued during the proceedings, they were dismissed as infructuous.

Issue 5: Request for Grounds of Appeal
The appellant sought the liberty to add, modify, amend, or delete any grounds of appeal during the hearing, with all grounds being without prejudice to each other. This request was noted for consideration during the proceedings.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remitting the matter of bad debts disallowance back to the Assessing Officer for verification. The other grounds of appeal were dismissed as they were not pursued during the proceedings.