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TMI Blog2014 (2) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee firm held that the loss should be allowed as deduction u/s. 28 of the Act - every loss is not so deductible unless it is incurred in carrying out the operation of the business - the amounts written off were advanced during the course of carrying on of business and sprang directly from the business, the amounts forgone are business loss and are allowable – Decided against Revenue. - I.T. A. No. 3347 /AHD/2010 - - - Dated:- 7-2-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A. M.,JJ. For the Appellant : Shri J. P. Jhangid, Sr. D.R. For the Respondent : Shri P. M. Mehta ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal is filed by the Revenue against the order of CIT(A)-XIV, Ahmedabad dated 14.09.2010 for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses incurred by them to develop and enhanced the business. The amount is adjusted against the commission due on the business brought by them. It was further submitted that there are occasions where the advances given to such persons may not result into equivalent business proportionate to the commission resulting into writing of such advances after a period of 3 years. It was therefore submitted that the loss on account of non recovery of trading business was in the nature trading loss. The submission of the Assessee was not found acceptable to the A.O, for the reason that the amounts which were written off were in the nature of advances that were given to commission agents and according to the A.O. the amount could not be allowed as bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-07, the Co-ordinate Bench dismissed the appeal of the Revenue by holding as under:- 5. We have heard both the parties and gone through the facts of the case. While adjudicating a similar issue in the preceding year, the ITAT vide their aforesaid order dated 29.05.2009 concluded as under: "5. We have heard both the parties and gone through the facts of the case as also the decisions relied upon. Undisputedly, an amount of Rs. 21.69 lacs debited under the head of development expenditure, had been written off. According to the assessee, the business of the assessee entirely depended on the agents and efforts put forth by them and therefore, for developing the business, the assessee company advanced to various persons/agents. Since these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the amount became irrecoverable when the assessee wrote if off in its books of account. 6. In the case under consideration, the facts of the case reveal that the assessee had written off the amount. There is no evidence on record to suggest that the amounts were recoverable even when relevant details were available before the ld. CIT(A). In the absence of any contrary evidence we have no alternative but to presume that the amount became irrecoverable when the assessee wrote it off in its books of account, as concluded by the Hon'ble Bombay High Court in the aforesaid decision.. 7. In the case of Mastek Ltd., (supra), relied upon on behalf of the assessee, a similar issue was considered by the ITAT in the light of decision of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said M/s. Mohmad Peer Mohmad of Nasik had approached the assessee firm, to pay the amount to M/s. Gokaldas Virjibhai of Sangli. On reference Hon'ble High Court concluded that as held in CIT vs. Equitorial Pvt. Ltd. (1974) Taxation 37(3)-82, the debt owed by M/s. Mohmad Peer Mohmad of Nasik was one which sprang directly from the business, of the assessee and was allowable as a bad debt, and, consequently therefore, a trading loss under section 28(1). It is no doubt true that every loss is not so deductible unless it is incurred in carrying out the operation of the business. (vide CIT vs. Nainital Bank Ltd. (1965) 55 ITR 707 (SC). In that view of the matter, therefore, for the reasons stated Hon'ble High Court held that the said loss being a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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