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TMI Blog2016 (4) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... s as allowable u/s. 37 of the Act. The Revenue is unable to either point out any distinction on facts or law thereto. We accept assessee’s arguments against the impugned disallowance and hold that its claim of bad debts in question of 20, 40,451/- is allowable as loss u/s. 28/37 of the Act. - Decided in favour of assessee Disallowance of land development expenses - Held that:- As during the course of hearing that neither the Revenue has been able to support the impugned disallowance @ 20% hereinabove after pointing out specific material rebutting contents of the relevant evidence on record nor the assessee leads us to any cogent evidence for having incurred whole of the expenditure for developing its akota land stated hereinabove. We observe in these facts that both the parties have failed to discharge their respective onuses in support of and against the land development claim. We feel appropriate in the larger interest of justice in these facts and circumstances that a lump sum disallowance of 2,50,000/- instead of 24,95,422/- in question would be just and proper - Decided partly in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... /- as debts as shown in the profit & Loss Account of J. Upendra Enterprises (proprietary business of the Appellant) submitted alongwith the return of Income and Tax Audit Report. In respect of Advances made to Moogambiga Suppliers (Pls. see page Nos. 187,188,192 to 194 of the Paper Book) for the purpose of purchase of materials, transport etc., out of the same, amount of ₹ 190450/- remained outstanding and could not be recovered. Further, the Appellant advanced sum of Rs.Wj,00,0007- to Molin Mission Church (Pls. see page Nos. 192,and 193 of the Paper Book) and ₹ 8,50,000/- to RRRDA (Rural Research & Rehabilitation Development Agency) (Pls. see page Nos. 190 and 191 of the Paper Book) as Earnest Money deposits for obtaining construction work for building houses in Thiruvallur District and surrounding areas for the benefit and welfare of SC/ST people at an estimated cost of ₹ 2,10,000/- as per house under Scheme of Rural Resources Research & Development Agency for which the S. Anandaraj was President. Later on it was found that so called office bearers and members of the agency had the sole intention of cheating the Appellant and misappropriate the funds fraudulentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no obligation on the assessee to establish that the debt has become bad. In the decision of Bombay High Court, Order of Special Bench in case of DCIT v. Oman Internation Bank (287 ITR AT 8) has been upheld. Reliance is also placed on the following judgments wherein it is held that once the amount is written off in the books of accounts as bad debt, the same has to be allowed: i) CIT v Star Chemicals (Bombay) (P) Ltd. ( (313 ITR 126 (Bom) ii) CIT v Morgan Securities & Credits (P) Ltd. ((2007) 292 ITR 339 (Del.)) Hi) TRF Limited v. CIT (Appeal No. 5293 of 2003) (S. C) 1.5 Further, reliance is also placed on CBDT Circular No. 551 dated 23rd January, 1990 (183 ITR (St) 7, which has been discussed in Delhi High Court decision in case of Morgan Securites & Credits (P) Ltd. 1.6 In view of the same, decision in the case of dhall Enterprises & Engineers (P) Ltd. (supra) is no longer a good law. 1.7 In view of the same, advances of ₹ 20,40,451/- written off be allowed as deduction as business loss. 3.2 I have carefully considered the submission of the Ld. Counsel and the facts of the case. Out of the amount of ₹ 18,50,000/-, the amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course of business become irrecoverable and an assessee write off the same as irrecoverable thereby claiming a deduction, the same amounts to trading loss as allowable u/s. 37 of the Act. The Revenue is unable to either point out any distinction on facts or law thereto. We accept assessee's arguments against the impugned disallowance and hold that its claim of bad debts in question of ₹ 20, 40,451/- is allowable as loss u/s. 28/37 of the Act. This substantive ground succeeds. 5. This leaves us with assessee's second substantive ground challenging disallowance of ₹ 24,95,442/- of land development expenses. He had debited various sums of leveling expenses, land wire fencing expenses and land development expenses of ₹ 8,54.440/-, ₹ 4,49,100/- and ₹ 42,81,434/- as per assessment order. He would submit the relevant ledger account. The Assessing Officer sought for relevant details thereof like bills, vouchers and registers after noticing that whole of the expenses were incurred in cash. He took cognizance of the fact that land development expenses of ₹ 9,90,400/- was incurred in assessment year 2003-04 and ₹ 7,32,634/- in the next assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harat Patel, Shri Sudhir Patel, Shri Sanjay Patel (HUF) and Shri N.B. Patel (HUF). No vouchers were seen to be maintained for these expenses. The Ld. Counsel could not explain the basis and the purpose of these expenses. Though, copies of vouchers of some of the expenses were furnished, the same were not furnished before the Assessing Officer. These expenses were incurred in cash and on self made vouchers where the addresses of the payees are absent. The expenses are thus not subject to verification. Since, the appellant had not furnished the vouchers before the Assessing Officer and could not explain the basis ' of daily payments even during appellate proceedings, the Assessing Officer was justified in j disallowing 20% of the expenses of ₹ 38,61,940/-. The finding of the Assessing Officer is in order and the same is sustained. The disallowances so made are confirmed. The additions of ₹ 24,95,422/- ( ₹ 9,90,400/- + ₹ 7,32,634/- + ₹ 7,72,388/-) are confirmed. The fourth ground of appeal is accordingly dismissed." 7. We have heard both the parties who reiterate their respective pleadings for and against the substantive ground raised in the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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