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TMI Blog2014 (3) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... -. 2. That the appellant has written-off bad debts in audited profit and loss account and passed relevant entries in the books of accounts during the year under consideration and therefore bad debts claim disallowed by A.O. and confirmed by CIT(A) be allowed. 3. On peculiar facts and circumstances of the case of the appellant, whatever amount realized and collected by the appellant is credited against the account of the debtor and whatever amount not realized has been written-off which may please be allowed. 4. That the appellant has submitted paper book running into pages 1 to 101 along with audited balance-sheet, profit and loss account etc. wherein also bad debt is debited. However, without considering this factual aspect in proper pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then A.O. after considering the facts of the case disallowed the claim of the assessee. Now, during the year under consideration, the assessee sold the residential house for a sum of Rs.25 lacs worth of which was considered by the assessee Rs.50 lacs. In this way, the assessee further claimed a deduction of Rs.25 lacs as bad debts. This claim of the assessee was not accepted by the A.O. by holding that loss was derived from selling of capital assets. The another opportunity was given by the A.O. to the assessee. The assessee claimed before the A.O. that loss on account of immovable property is business loss not capital loss, which was not found tenable to the A.O. on the ground that residential house became the part of the block of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission. It is not in dispute that appellant received immovable assets on settlement of dues from debtor. The value of movable assets was considered to be one crore rupees. Accordingly the difference was written off in the accounts of debtor last year as bad debts. Since account of the debtor was already closed last year by recovery of immovable assets, no new amount could have been written off and therefore the same cannot be considered as bad debts. Since immovable assets were taken against outstanding dues and difference in value was already written off as bad debts, there is no question of writing off of loss on sale of immovable property as bad debts. The provisions relating to bad debts are clear. The amount has to be written off in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome in earlier years. In view of this conditions of section 36 (2) was not satisfied. The same cannot be allowed as bad debts. Appellant has not proved this as loss incidental to business and therefore the same is also not allowed as business loss. In view of this the entire claim of bad debts is found to be incorrect and addition made by the assessing officer in this regard is confirmed". 4. Now the assessee is before us. Ld. Counsel for the appellant contended that Rs.25 lacs has been written off by the company as irrecoverable in the books account. He further has drawn our attention on assessee's own case for A.Y. 05-06, where identical bad debts of Rs.80.20 lacs was allowed by the Hon'ble 'A' Bench, Ahmadabad in ITA No.1829/Ahd/2009 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred an expenditure in boring tube well with intention of creating a facility which would have provided water for a pretty long time, through water found was unsuitable and tubewell turned out to the useless - Whether expenditure incurred in boring tubewell was capital expenditure, notwithstanding that tubewell turned out to be useless - Held, yes. ii. CIT vs. R.G. Scientific Enterprises (P.) Ltd. [2009] 311 ITR 401 (Delhi) Bad debts - Assessment year 1995-96 - Two Directors had, on behalf of assessee-company, made down payment of Rs.9 lakhs to one company 'K' for purchase of a premises for assessee - Later, they resigned and transaction for said purchase could not be completed - since 'K' refused to return money, after waiting for three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k no action to realize them - In 1960 firm sold assets resulting in shortfall year of Rs.37,440 which was claimed as bad debt - Whether debt had become bad in assessment year 1960-61- Held no - Whether, in view of the facts that no action was taken to realise assets and claim shortfall, debt was liquidated in 1953 on taking over assets and no debt was outstanding thereafter - Held, yes v. Aspinwall & Co. Travancore Ltd. vs. CIT [1998] 230 ITR 587. Bad debts - Assessment year 1981-82 - Assessee company advanced certain amount to its sister concern Loan was outstanding - Subsequently, aforesaid loan was converted into shares, which were sold by assessee at a loss - Tribunal took a view that said loss was in nature of capital loss - In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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