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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 ..... And Shri T. R. Meena,JJ. For the Appellant : Shri N. C. Amin, A. R. For the Respondent : Shri O. P. Batheja, Sr. D. R. ORDER Per : Shri T. R. Meena, Accountant Member This appeal is filed by the assessee against the order of the CIT(A)-VI, Ahmedabad, order dated December 03.11.2010 for A.Y. 2006-07. The effective grounds of appeal are as under: 1. That the learned CIT(A) has erred both in law and on the facts of the case in confirming disallowance of bad debts claim of Rs.25,00,000/-. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor. Therefore, he did not allow the loss claimed by the assessee as business loss. Further, the company had made booking advance of Rs.50,000/- for a car to M/s. Pal Peugot Ltd. However, the assessee company neither received the car nor recovered advance money as the said company became bankrupt. In this way, the assessee claimed bad debts written off Rs.50,000/- during the year under consideration, which was also not acceptable to the A.O. on the ground that the assessee never shown advances in the p l account as income of the assessee and it had not been fulfilling condition as prescribed in Section 36(2) of the I.T. Act. He further held that the assessee simply has written off the amount without any reasonable cause or any efforts made for recovery as held by the Hon ble Gujarat High Court in case of Dhall Enterprises and Engineers (P) Ltd. Further, the value of the residential bungalow at Rs.50 lacs was not based on any valuation report or evidence. The notes on account attached with balance sheet and p l account for A.Y. 05-06 clearly state that the amount of Rs.1 crore is fully realizable. In view of the above reasons, the ld. A.O. disallowed bad debts of Rs.25.5 lacs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of booking advance to Pal Peugeot Ltd, the same was advance and not taken as income 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 for A.Y. 2005-06 by following Hon ble Supreme Court decision in case of TRF Ltd. vs. CIT in Civil Appeal No. 5292 of 2003 order dated 09.02.2010. He further reiterated the argument made before the CIT(A) on bad debts. He further relied upon the decision of ITAT, Mumbai Bench in case of ITO vs. Reliance Engineering Associates (P) Ltd. in ITA No. 6931 (Mum) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only a business loss and had to be allowed as such Letter written by assessee to Assessing Officer revealed that amount had been advanced to K for purchase of a capital asset for assessee Whether conclusion arrived at by Tribunal that non-recovery of said sum was a business loss was contrary to assessee s letter which made position explicit that it was advanced for purchase of a capital asset Held, yes Whether, therefore Commissioner (Appeals) was justified Held, yes iii. Hon ble ITAT, Ahmedabad A Bench decision in case of Dy.CIT vs. Panchmahal Steel Ltd in ITA No.1680/Ahd/2010 for A.Y. 2004-05, wherein the assessee had written off advance made for purchase of capital goods, which was not allowed as business loss u/s.37 of the IT Act. iv. G.P. Singhi vs. CIT [1986] 158 ITR 782 (Delhi) Bad debt Assessed was partner in a firm which advanced certain sum to a company against mortgage of assets On demanding payment, assets were handed over to firm in 1953, which took 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 Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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