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TMI Blog2015 (3) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... ch funds.But,the availability of funds has to be proved.We find that in the matter of mutual funds it may not be true. The assessee had made an alternate argument and we are of the opinion that considering the facts of the case,in the interest of justice, matter should be sent back to the file of the AO to determine the interest disallowance within the parameters of the alternative argument. As far as administrative disallowance is concerned,we are of the opinion that disallowance @ 1% will be sufficient to meet the end of justice.Ground of no.2 is decided in favour of the assessee,in part. Deduction on account of retention money - AO had disallowed the deduction on account of retention money because assessee had not claimed it at the time of filing of return and that it had not filed revised return - CIT(A) allowed the claim - Held that:- As an appellate authority, if the FAA had admitted the new claim then in our opinion he has rightly applied the provisions of law. Upholding his order, we decide ground against the AO. - ITA No. 265/Mum/2011, ITA No. 2460/Mum/2012, & ITA No. 2210/Mum/2012 - - - Dated:- 4-3-2015 - S/Sh.Joginder Singh, Judicial Member Rajendra,Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out prejudice to the above, the CIT (A) erred in disregarding the appellant's contention that should any part of the interest be disallowed; the appellant should be permitted to capitalize such interest and enhance the cost of acquisition of the shares/units to which said expenditure is held to be related. 3. The appellant craves leave to add, alter, amend, modify or delete any of the grounds taken in appeal ITA No. 2460/Mum/2012,AY.2007-08:(Appeal by the Assessee) 1. The Ld. Commissioner of Income Tax (Appeal), ['CIT(A)'], erred in confirming the action of the Assessing Officer ('AO') in disallowing bad debts of ₹ 34,30,813/- written off by the Appellant during the previous year. 2.Your Appellant submits that on the facts and circumstances of the case and on a proper appreciation of the provisions of section 36(1)(vii) of the Income Tax Act, 1961 ('the Act'), the CIT(A) ought not to have disallowed any bad debts. 2. The ld. CIT(A) erred in confirming the action of the AO in disallowing expenditure of ₹ 226,215 under Section 14A of the Act. Without prejudice to above, the CIT(A) CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 24.87 Crores.The Assessing Officer (AO) finalised the assessment on 29.12.2008 u/s.143(3) of the Act,determining the income of the assessee at ₹ 26,69,83,241/-. 2. First ground of appeal is about disallowance of bad debts of ₹ 69.22 Lakhs. During the assessment proceedings, the AO found that the assessee had written off an amount of ₹ 90.49 Lakhs as bad debts during the year out of which an amount of ₹ 21.27 Lakhs pertained to Ahmadabad Municipal Corporation. The AO allowed the said amount and balance of ₹ 69.22 Lakhs was disallowed by the AO. He made enquiry in this regard and held that the only evidence produced by the assessee was by way of single correspondence letter informing the outstanding payment, that the amount mentioned in the letter and in the books of accounts did not match, that the assessee did not produce any evidence to indicate that amount outstanding against each of the clients had been disputed, that the parties had not spelt out the reason for not making the payment, that there was no evidence to draw the conclusion that the payment in or likelihood was not receivable, that in respect of the list of not provided ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that details of bad debts and evidences demonstrating efforts made for recovery of bad debts were laking. In our opinion after the decision of TRF Ldt.(supra)the legal position is very clear and that is to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable :it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. We have gone through the paper book of the assessee and it is found that amount in question has been actually written off. We further find that issue of bad debts has been decided in favour of the assessee by the Tribunal while deciding the appeal for the AY. 2005-06(ITA/ 3378/Mum/2009).Considering the above facts and legal position, we decide first ground of appeal in favour of the assessee. 6. Next effective ground of appeal is about confirmation of disallowance made by the AO u/s. 14A of the Act. During the assessment proceedings, the AO found that the assessee, as on 31.03.2006, had invested its funds in the unquoted equity shares and mutual funds as well as quoted mutual funds to the tune of ₹ 2307.18 Lakhs, that it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making investment in mutual funds,that while deciding the appeal for the AY 2007-08, the FAA, vide his order dated 26.12.2011,had accepted the contention of the assessee and had deleted the disallowance in respect of the interest,that the department had not challenged the order of the FAA before the Tribunal,that for the subsequent two AY.s.the assessee had made a claim for interest and same was allowed by the FAA.He relied upon the cases of Reliance Utilities Power Co.Ltd.(313 ITR 340),HDFC Bank Limited (ITA No.330 of 2012,Bom HC), Polyolefins Industries Ltd.(ITA No. 3897 of 2010,Bom-HC) and Hero Cycles Ltd.(323ITR518).He alternatively argued that interest disallowance should be limited to interest only for those instances where there was overdraft at the time of making mutual fund investment and only for the period till which there was overdraft in bank account. With regard to disallowance of Administrative Expenses the AR contended that dividend was directly credited to bank account, that no administrative expenses were incurred for collection, that no disallowance for administrative expenses should be made, he placed reliance of decision of Hon'ble Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the order for the last AY.Ground no.2 is allowed in favour of the assessee in part. 12.Third ground of appeal pertains to claim for depreciation of ₹ 1.42 Crores. During the assessment proceedings, the assessee made a claim of further additional depreciation amounting to ₹ 1,25,87,517/- due to difference in depreciation rate from 25% to 60% for the AY 2004-05 and 2005-06. It was contended that assessee had claimed depreciation, @ 25% instead of 60%. The FAA rejected the claim made by the assessee and held that it was not allowable during the year under consideration as it pertained to Ay 2004-05 and 2005-06. 12.1.Before us,AR stated that letter dated 02.12.2009 was submitted before the AO, that the AO did not reject the claim of the assessee on merits,that he had rejected the claim only on the ground that the assessee did not make the claim in its return of income or revised return of income, that the FAA had not examined the facts of the case and had summarily dismissed the ground that claim can made before the AO otherwise then by filing revised return. In his support he referred cases of Balmukund Achary (310 ITR 310), Ramco Internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions and perused the material before us.We find that the only dispute between the assessee and department is correct amount of losses. After considering the facts of the case, we are of the opinion that, in the interest of justice, matter should be restored back to the file of the AO to examine the issue afresh. He is directed to allow the correct amount of loss after affording a reasonable opportunity of hearing. Ground no.4 is decided in favour of the assessee, in part. ITA No. 2210 AY-2007-08 14.First ground of appeal filed by the AO is about foreseeable losses. While deciding the appeal filed by the assessee. We have restored back the matter to the file of the AO for deciding the issue. We have held that the appellate authorities can admit the fresh claim in light of the decision of Pruthvi Brokers Shareholders (supra).In our opinion, the order of the FAA does not suffer from any legal infirmity. It is also found that the FAA had accepted the claim of foreseeable loss in the AY.s. 2008-09 and 2009-10, but, the AO did not file any appeals before the Tribunal wherein he had reversed the order of the AO in disallowing foreseeable loss. Consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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