2015 (8) TMI 985

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..... ility on the Assessee in terms of the agreement entered into with IHCL to ensure that the money collected on sale of the Diners Club cards was deposited with the IHCL. The failure by the Assessee's employees to do so resulted in a legal liability on the Assessee to make good the loss to IHCL. Consequently, the money paid by the Assessee to IHCL should have been allowed as business loss by the AO and the CIT(A). In the circumstances, the ITAT was justified in directing the AO to allow the deduction claimed by the Assessee. - Decided in favour of assessee. - ITA No. 562/2015 - - - Dated:- 12-8-2015 - Dr S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr Raghvendra Singh, Junior Standing Counsel For the Respondent : Mr Sa .....

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..... ed payment from the Assessee. The Assessee informed the AO that it had filed a civil and criminal case against the delinquent employees. The Assessee was able to recover only ₹ 1,25,766. The balance amount was claimed as business loss under the head 'fraud payment'. 6. The AO rejected the Assessee's contention that the aforementioned amount should be written off as bad debts. Accordingly, ₹ 36,28,233/- was added back to the total income. 7. The CIT(A), on an analysis of the copies of the original and amended agreement entered into between Assessee and IHCL, came to the conclusion that the only financial transaction between the Assessee and IHCL was with respect to payment of call centre operation fee, software .....

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..... me of IHCL. In the light of the above clauses, the explanation offered by the Assessee that some of its employees had effected sales of Diners Club cards of and failed to deposit the amount collected appears to be plausible and ought to have been accepted by the AO and the CIT (A). There was a legal liability on the Assessee in terms of the agreement entered into with IHCL to ensure that the money collected on sale of the Diners Club cards was deposited with the IHCL. The failure by the Assessee's employees to do so resulted in a legal liability on the Assessee to make good the loss to IHCL. Consequently, the money paid by the Assessee to IHCL should have been allowed as business loss by the AO and the CIT(A). In the circumstances, the .....

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