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advances written off, Income Tax

Issue Id: - 2320
Dated: 25-10-2010
By:- praveenkumar makam

advances written off


  • Contents

advances written off is an eligible expenditure as per IT Act? if it is eligible under which section? and give me the relevant case laws

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Showing Replies 1 to 3 of 3 Records

Page: 1


1 Dated: 26-10-2010
By:- CA Rachit Agarwal

Please clarify the purpose for which the advances was given? There are different judgements dealing with various types of advances. 

Advance word is very broad in nature.


2 Dated: 28-10-2010
By:- praveenkumar makam

dear agarwal sir,

advances given for purchase of cement which amounts to 89 lakhs, nown that company went to BIFR, so we want to write off such amount please refer regarding this and its case laws

 


3 Dated: 28-10-2010
By:- CA Rachit Agarwal

If the advance for cement is in nature for the purchase of Factory Building or other fixed assets, then such advance would take the colors of Capital in nature and would not be allowed as deduction.

However if the cement purchase was for trading purpose or the cement to be used for the repair, then such advance would take the colors of revenue in nature and would be allowed as deductible expenditure.

Supreme Court in CIT v. Mysore Sugar Co. Ltd. [1962] 46 ITR 649 (SC)-


Page: 1

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