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TMI Blog2010 (2) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... s an allowable deduction - expenditure was incurred in order to procure business – Held that:- Intention has to be seen as the amount was spent towards advancement of business - It is a business expenditure and, therefore, has rightly been allowed as it is not specifically covered by any statutory provision wherein it has to be disallowed - In favour of the assessee Claim of bad debts – disallowance - assessee thought that it was uneconomical to file suits against such defaulting clients no suits were filed – Held that:- This alone cannot be a ground for disallowing the claim of bad debts - After amendment to the provisions of section 36(2) read with section 36(1)(vii) of the Act if the amount has been considered for computation of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in allow- ing the assessee's claim for deduction to the extent of Rs. 6,84,520 on account of rent paid to the hotel close to the factory at Rampur and transit house in contravention of the provisions of section 37(4) read with section 37(5) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally correct in deleting the addition of Rs. 1,47,831 towards payment of membership of club even though there is no material on record to substantiate that the expenditure is commercially expedient for the business of the assessee as required by the provisions of section 37(1) of the Income-tax Act ? (3) Whether, on the facts and in the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in favour of the Revenue and against the assessee. The order of the Tribunal is accordingly set aside to this extent. So far question No. 2 is concerned, this court held as follows : 7. "Coming to the question as to whether the payment made by the assessee towards the membership of the club is an allowable deduc- tion, we find that the expenditure was incurred in order to procure business. Whether the assessee was successful in getting any business or not is not the question. The intention has to be seen as the amount was spent towards advancement of business. It is a business expendi- ture and, therefore, has rightly been allowed as it is not specifically covered by any statutory provision wherein it has to be disallowed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of law and accordingly no interference is called for. We, therefore, uphold his order and dismiss the ground of appeal raised by the Revenue." 10. The apex court in Civil Appeal No. 5293 of 2003 (T. R. F. Ltd. v. CIT) decided on February 9, 2010, reported in [2010] 323 ITR 397 (SC) has con- sidered the question of deduction for bad debts with reference to section 36(1)(vii) of the Act. The apex court held that after April 1, 1989, the posi- tion has been altered by deleting the word "established" which existed ear- lier in section 36(1)(vii) of the Act and after April 1, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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