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TMI Blog2013 (11) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... T] - The bad debts written off in the books of account should be allowed as an allowable expenditure and the assessee does not have to establish that written off debts have become bad and irrecoverable – Decided against Revenue. Disallowance u/s 40(a)(ia) – Reimbursement of expenses to clearing and forwarding agent – Labour charges – Held that:- Following Maryline Shipping and Transports Ltd [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - The provisions of section 40(a)(ia) of the Act have no application to the amounts already “paid” by the assessee during the financial year and they are applicable to the amounts “payable” as appearing in the balance sheet as on 31st March of the relevant financial year – Due to absence of discussion by lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the fact that the said payments falls within the ambit of section 194C(3) of the IT Act. 4. On the facts and circumstances of the case, and in law, the Ld CIT (A) has erred in deleting the disallowance u/s 40(a)(ia) of Rs. 1,24,601/- being a labour charges incurred for loading and unloading and Rs. 2,24,103/- labour charges for packing goods of exports made by the AO on account of non-deduction of TDS without appreciating the fact that these payments are in the nature of contract payments u/s 194C of the IT Act. 3. Briefly stated relevant facts of the case are that the assessee is an individual engaged in the business of manufacturing and trading goods and filed return declaring the income of Rs.39.19 lakhs. Assessment was comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Indian Aluminium Co. Ltd. vs. CIT (79 ITR 514) was cited for the proposition that trading debt should spring directly from carrying on of a business or trade and it should be incidental to such business . After hearing the assessee, CIT (A) appreciated the submissions and granted relief to the assessee holding that the same is allowable as business loss u/s 37(1) of the I.T. Act. 6. During the proceedings before us, Ld DR argued stating that there is no evidence to demonstrate that the said debt is incidental to the business of the assessee. The claim becomes eligible for debiting once the assessee discharge the onus and the same is on the assessee as he made the claim of deduction. 7. Per contra, Ld AR for the assessee brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the debtors and if the debts relates to the advances of trade or otherwise. The perusal of the records do not provide relevant information on what are goods the assessee intended to purchase from the debtors and if the said debtors deal with such goods or not. Nobody has gone into this issue. It is not known whether first of all if the assessee deals in such goods which were to be supplied by the impugned four parties. These becomes relevant for concluding that the debts in question falls in trading zone and in the capital field. The contents of para 4.3 relied upon by the Ld Counsel does not indicate that assessee has given advances and not brought goods . It is not ipso facto indicates that the advances given are for purchase of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bad debts written off in the books of account should be allowed as an allowable expenditure and the assessee does not have to establish that written off debts have become bad and irrecoverable. Considering the above settled nature of the issue, at the level of Hon ble Supreme Court, we are of the opinion that the order of CIT (A) does not call for any interference. Accordingly, ground no.2 raised by the Revenue is dismissed. 10. Ground no.3 relates to invoking of the provisions of section 40(a)(ia) of the Act in respect of Rs.80,800/- being reimbursement of expenses to the clearing and forwarding agent on behalf of the assessee. AO disallowed the claim saying that the assessee failed to make TDS and furnish relevant TDS certificates. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and part of it is payable by the assessee at the end of the financial year. Mentioning the lack of relevant discussion in the orders of the lower authorities and for want of fact, Ld Counsel mentioned that the ground no.3 and 4 may be set aside to the files of the AO for deciding the issue afresh in accordance with the Special Bench decision in the case of Maryline Shipping and Transports Ltd (supra). 14. We find merit in the argument of the Counsel, therefore, we are of the opinion that ground no.3 and 4 should be set aside to the files of AO for limited purpose of the examining the facts about the payments and in case the amounts are paid by the assessee in the financial year 2006-2007, the assessee is entitled to relief in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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