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TMI Blog2016 (6) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... BL and accordingly it is written off in the P&L Account under the head “advances of doubtful recovery written off”. This claim can never be comprehended by the scope of section 36(1)(vii) of the I.T. Act. As per the mercantile system of accounting and principles of Real Income Theory, the claim of the assessee during the period under consideration though related to the period April 1998 to March 1999 is allowable as the claim is finally crystallized during the period under consideration. In that view of the matter, the view taken by the department in disallowing the claim of the assessee is not sustainable for legal scrutiny and the same is hereby directed to be deleted. - Decided in favour of assessee - ITA 435/2006 - - - Dated:- 12- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L. Since the demerger took place pursuant to the order passed in October 1999 with effect from April 1, 1998, contention was raised that the money paid after April 1, 1998 was recoverable. CBL contended that it had rendered services in lieu of such payment. Ultimately, the assessee appointed a chartered accountant. The chartered accountant, after going into the facts of the case, reported that the contention of CBL was correct. In that view of the matter, for the assessment year 2002-03, the contention of CBL was accepted and the aforesaid sum was debited to its profit and loss account. The assessing officer and the CIT(Appeal) had refused to allow deduction on the ground that the expenditure related to the assessment year 1998-99 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts relate to the period April 1998 to March 1999, the dispute of liability was ultimately crystallized during the period under consideration by the report of the Chartered Accountant referring, inter alia that the CBL has insured amount during that period and it was declared as sick industry by BIFR and any amount from such industry is not recoverable as there is prohibition contained in the Sick Industries Act. Then only the assessee has determined finally that the amount is irrecoverable from CBL and accordingly it is written off in the P L Account under the head advances of doubtful recovery written off . This claim can never be comprehended by the scope of section 36(1)(vii) of the I.T. Act. As per the mercantile system of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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