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TMI Blog2013 (6) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... g amount written off. 3. The assessee in this case is engaged in the business of real estate development and allied activities. During the year assessee ha written off an amount of Rs. 10 lacs in respect of the amount refunded to the broker Sh. Jagdish Nain. It was submitted that Sh. Jagdish Nain, broker had paid a sum of Rs. 10,00,000/- to the farmers for purchase of 15.60625 acres of land in village Badshahpur. As the farmers were unwilling to sell the land, the amount of Rs. 10 lacs paid by the broker to the farmers remained unrealized. This amount of Rs. 10 lacs was claimed as amount written off. Assessing Officer opined that the above claim of the company was not genuine. He opined that assessee has not produced any communication / re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons have been mentioned, who have received the payments. It has been stated by the Ld. Authorised Representative that the deal could not materialize so the amount has been written off. In the order, Assessing Officer has observed that the sum of Rs. 10 lacs can only be allowed as eligible for deduction u/s. 36(1)(vii), if the same has been included in the income for any previous year. but in the instant case there is no such case as it is a reimbursement of the advance payment given to the farmers on behalf of the broker and it is not bad debt. So provision of section 36(1)(vii) r.w.s. is not applicable on the facts of the case. Furthermore, amount of Rs. 10 lacs is also not allowable u/s. 37(1) of the I.T. Act as payment made by broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of Sh. Jagdish Nain duly acknowledged alongwith the bank statement. 6.2 We have carefully gone through the above submissions and documents submitted by the assessee. We find that it is undisputed that assessee was engaged in the purchase and sale of land through brokers. In one such dealing Sh. Jagdish Nain had paid a sum of Rs. 10 lacs to the land owners on behalf of the assessee. The said deal did not materialize as no agreements could be reached regarding the rate of sale. The land owners to whom a sum of Rs. 10 lacs was paid, forfeited the same and did not return it. In these circumstances, assessee company had to reimburse Shri Jagdish Nain a sum of Rs. 10 lacs. The same amount was duly paid through the account payee cheque. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into account the intention of the assessee, it is well settled that it is the intention of the assessee which would matter in deciding as to whether the property purchased were intended for carrying on business or to hold it as an investment coupled with the line of the business carried on by the assessee - Decided in favor of the assessee." 6.3 We find that the ratio from the above High Court decision is also applicable on the facts of the case. A sum of advance of Rs. 10 lacs which was paid by Shri Jagdish Nain was on behalf of the assessee and the payment was related and incidental to the assessee's business. The loss of the amount paid and the consequential reimbursement to Sh. Jagdish Nain was also incidental to the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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