9911796707
TMI Blog2011 (2) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... re summarized hereinbelow: (1) In ground Nos. 2, 3 and 4, it is stated that the ld. CIT(A) has erred by upholding the disallowance of bad debts on export bills amounting to Rs.1,94,99,064. (2) In ground Nos. 5, 6, 7, 8, 9 and 10, it is stated that the ld. CIT(A) has erred in upholding the disallowance of, irrecoverable advances written off being inter-corporate deposits with Aishwarya Belting and Allied Industries Pvt. Ltd. amounting to Rs.10 lakhs and Rs.25 lakhs paid as advance to Microcom Systems written off without furnishing any reasons, in all aggregating to Rs.35 lakhs. (3) In ground Nos. 11 and 12, it is stated that the ld. CIT(A) has erred in disallowing interest and penal charges for Rs.6,21,401. The ld. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer i.e. Vijaya Bank is only a letter from Chief Manager, Vijaya Bank to the Deputy General Manager, R.B.I. to request to consider the case favourably vide Annexure-3, to this order. This letter cannot be equated with the certificate of approval for write off. The relevant circular is made part of this order as Annexure-4, in Para 4 of this circular reads as under. "4. After the "write off" has been permitted authorized dealers may submit the duplicate GR/SDF forms in question to the Reserve Bank along with R-Return, duly certified as under:- "Write off of ................... (Amount in words and figures) permitted in terms of AP(DIR Series) Circular no.30 dated April 4, 2001. Date........... Stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the earlier name of the appellant. In fact I find strength in A.O's conclusion that the intercorporate deposit with ABAI was not at all for the purpose of business of the appellant because the business of appellant and ABAI were entirely different and not linked even remotely. Secondly I consider such deposit cannot be termed as a debt. Debt always presupposes the relationship of creditor and debtor or lendor and borrower i.e., a person in need of money requesting for debt i.e., borrower and the other fulfilling such request i.e., lender. Here no such relationship can be visualized between ABAI and appellant. Such amount cannot also be allowed as a trade loss u/s 37(1) of IT Act because such deposit is not for the purposes of business. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not complied with the norms of Foreign Exchange Management Act wherein an exporter who has not been able to realize the outstanding as per dues despite best efforts has to approach the authorized dealer who had handled the relevant shipping documents with appropriate supporting documentary evidence with a request for write off of the unrealized portion. Such approval are granted subject to certain conditions. With respect to advances made to other companies ld. DR asserted that there were no business nexus between the appellant and recipient of the advances, hence it cannot be considered to be a bad debt incurred in the course of the business of the assessee. 8. We have heard the rival submissions and perused the paperbook ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the statutory requirement for writing off as irrecoverable the concerned debt in the books of the assessee for the purposes of the Act. It is not essential that the debtor's individual account be squared off by an appropriate credit entry. In the instant case the amount in question was debited in the profit and loss account with a corresponding credit to bad debt reserve account. Hence, this condition also stood fulfilled in the case of the assessee. In view of the aforesaid facts and discussions, the assessee was entitled to grant of deduction of a sum of Rs.11,46,432 claimed as bad debt in the year under consideration." 9. It is a settled law that when the assessee arrives at a decision that certain debts have become bad and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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