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TMI Blog2010 (5) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... while passing the order, the Hon'ble ITAT did not consider the documents submitted in paper book as stated in point no.5 below pertaining to disallowance of Bad Debts and stated at page no 18 of the order as under: "Before us nothing was brought on record either to prove that the amounts were advanced in the course of business as no such agreements were filed before us nor controverted the findings of the Learned CIT (A) except making statements." Since the details and proof was not furnished either to the A.O., CIT (A) or before us the claim cannot be allowed on the basis of submission alone." 5. During the appellate proceedings, the applicant had submitted a paper book before the Hon'ble ITAT on 05.01.2009, which included: - Details of Bad Debts / advance written off at page 47 of the paper book. - Letter dated 01/10/1998 received from Universal Foods at Pages 49-53. - Profile of Universal Exports at pages 54-57. - Agreement dated 14/05/1999 with Orion Exports at pages 58-62. - Agreement dated 14/05/1999 with Orion Exports at pages 63-66. - Extract of submissions before the learned Commissioner of Income Tax (Appeals) at pages 77-78. - At the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted the following amount with reference to bad debt claim which are considered in para 62 & 63 of the order of the learned CIT(A): - i) Universal Foods ₹ 37,02,356/- ii) Oriental Exports Rs.1,00,00,000/- (approx) iii) Surajmal Industries ₹ 29,15,695/- Thus even the total of the amounts as submitted before the learned CIT(A) is not even ₹ 2,92,70,003/- but ₹ 2,86,18,001/-. Accordingly the ground is considered to that extent only. 30.The learned counsel referred to the facts regarding bad debt claim and submitted that the amount from Universal Foods and Oriental Exports pertains to its abandoned business of export and import of cashews and the amounts were written off at the time of merger of AgrEvo and Rhone- Poulenc with the assessee company as they are found to be not receivable and in order to represent correct balance at the time merger these amounts were written off. It was submitted that the amount pertaining to Surajmal Industries satisfy the conditions of section 36(2) and other amounts are loss incidental to the business. If they are not allowed as bad debt they should be allowed as business loss. The learned counsel relied upon variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady decline in cashew prices, the business went into loss and the management discontinued the business." 33. As can be seen from the above the amounts were taken as approximate figures without establishing the correct amounts involved. Moreover the learned CIT(A) has considered this aspect in its entirety and the findings of the learned CIT(A) in para No. 63 to 74 are as under: - "63 In respect of the action of the Assessing Officer, the appellant's representative has submitted that out of total bad debt of ₹ 1,72,70,0043/-, an amount of ₹ 1,66,18,001/- pertained to dues from the following parties. i) Universal Foods ₹ 37,02,356/- ii) Oriental Exports Rs.1,00,00,000/- (approx) iii) Surajmal Industries ₹ 29,15,695/- 64 It was submitted that the appellant considered these amount as having become bad debts. During the merger of AgrEvo and Rhone-Poulence, the company reviewed all its receivables and wrote off amounts that were found as not receivable. The appellant had started a new cashew business in the financial year 1999- 2000. Substantial advance/credits were given to the supplies, at the initial stage of operation. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. 68 The leaves only issue of allowing the deduction as originally claimed. Since the major portion of the amount claimed represented amounts due from M/s. Universal Food and M/s Oriental Exports, the appellant's representative was asked to substantiate that in respect of the amounts outstanding which were written off and claimed as deduction under section 36(1)(vii) of the Act, the conditions laid down in Section 36(2) of the Act, the satisfaction of which is a condition precedent for allowance of deduction, were satisfied. In this respect, he was also asked to file the copies of the agreements the appellant company had with M/s. Universal Foods and M/s. Oriental Exports, to examine the nature of transactions the appellant company had with these two concerns. Inspite of repeated request, in regard to agreement with M/s. Universal Foods, the copy of the agreement could not be produced. 69 In respect of arrangement with M/s. Oriental Exports, the appellant's representative has submitted a copy of the agreement. A perusal thereof reveal that the appellant had sometime in 1998 entered into an agreement with the said concern. In terms of the said agreement, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om M/s. Universal Exports claimed as deduction both under the head bad debt and Aventis Integration expenses, since the appellant's representative has not been able to produce any evidence indicating the nature of transaction lending to the payment made, its admissibility as loss cannot be accepted. 73 In respect of the amount due from Sujanil Chemo Industries as well, the appellant's representative has not been able to produce any evidence that the transaction entered into with the said company satisfies the conditions prescribed in Section 36(1)(vii) read with Section 36(2) of the Act. 74 In the circumstances, the claim of the appellant in this direction cannot be accepted. Hence, the allowance of deductions of ₹ 1,72,70,003/- and of ₹ 1,20,00,000/- respectively claimed as bad debt and Aventis Integration expenses cannot be accepted. The action of the Assessing Officer in this direction is held as correct though for different reasons discussed above and, therefore, is sustained. The appeal in respect of Ground No. 10 is, therefore, disposed off as dismissed." 34. Before us nothing was brought on record either to prove that the amounts were advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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