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TMI Blog2016 (7) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of justice we are restoring the matter back to the file of AO for fresh adjudication who will decide the issue after considering the submissions of the assessee Addition towards software expenses treated as short term capital loss - Held that:- We find that AO did not have the benefit of the claim made before the FAA as well as details of P L account groupings. To meet the ends of justice, we are restoring the issue to the file of the AO who would decide the issue after affording a reasonable opportunity of hearing to the assessee. Addition under the head unexplained credits - Held that:- We are of the opinion that the issue needs further verification at the level of AO. As per the settled principles of taxation jurisprudence opening balances of a particular year cannot be added u/s. 68 of the Act. The pages referred by the AR clearly show that the AO had ignored the vital facts that assessee had shown opening balances of the creditors while filing the explanation before him. Therefore, in the interest of justice we are restoring back the issue to the file of the AO for fresh adjudication as stated earlier. He is directed to afford a reasonable opportunity to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two judgments of the Hon ble Apex Court. Respectfully, following the above judgments, Ground raised by the AO is dismissed. ITA/3367/Mum/2009: 3. First Ground of appeal is about addition of ₹ 1. 80 lakhs. During the assessment proceedings, the AO found that the assessee had written off an amount of ₹ 1, 80, 175/- as provision for bad debts. He directed the assessee to furnish the details and allowability of its claims. Referring to the provisions of section 36(1)(viii) of the Act and after considering the submissions of the assessee, the AO disallowed the amount in question. 3. 1. Aggrieved by the order of the AO the assessee preferred an appeal before the FAA. Before him, it was argued that the disputed amount was towards provisions of bad debts written back and not towards bad debts written off. After considering the submission of the assessee, the FAA held that the assessee had not furnished the necessary details before the AO, that the assessee had submitted photocopies of ledger account, that same could not be considered by him, that the assessee had not shown reasonable cause for admitting new evidence. The FAA referred to the provisions of section 36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred an appeal before the FAA. Before him it was argued that FE loss debited to P L A/c. was due to difference of exchange rate at the time of issuing invoice and actual remittance received, that the FE loss was not on account of short recovery of export proceeds as held by the AO, that the AO had erroneously treated it as bad debts. After considering the submission of the assessee and the assessment order the FAA held that the AO had asked the assessee to submit details of FE loss, that no details were filed, that the assessee had submitted written reply during appellate proceedings, that no evidence was filed to substantiate the claim. Finally, he upheld the addition made by the AO. 4. 2. Before us, the AR contended that the assessee had submitted the note on foreign currency transaction at Schedule-15 to the notes on accounts , the details of freeing exchange loss was submitted vide its letter dt. 28. 8. 2006. He referred to page No 141, 142 147, 149, 151, 155, 157, 159, 163-65, 167 and 171 of the PB. He further argued that expenditure was allowable u/s. 37(1) of the Act. The DR supported the order of the FAA. 4. 3. We have heard the rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that AO did not have the benefit of the claim made before the FAA as well as details of P L account groupings. To meet the ends of justice, we are restoring the issue to the file of the AO who would decide the issue after affording a reasonable opportunity of hearing to the assessee. 6. Fourth Ground pertains to addition of ₹ 2. 08 crores under the head unexplained credits. The AO, during the assessment proceedings, found that the assessee had claimed that the amount in question represented creditors. He asked the assessee to furnish the reasons to show cause as to why the sundry creditors(general account- sales tax-46. 64 lakhs + provision for excise on gum assets-1. 38 crores+ customers stockists provision account -22. 18 lakhs) should not be considered as unexplained creditors. As per the AO the assessee did not file any details in that regard. The AO made a disallowance of ₹ 2, 08, 77, 139/- . 6. 1. Before the FAA, the assessee contended that the AO had failed to appreciate that those amounts were incurred as expenditure in earlier years and could not be disallowed during the year, that the disallowance in earlier years for sales tax and excise was made, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been omitted by the Finance Act, 1999 w. e. f. 1. 4. 2000. After considering the submission of the assessee the FAA held that as per the proviso of Section 72 the unabsorbed losses that were discontinued could be set off against the profit and gains, if any, of that business, that the assessee had no business income for the year, that the AO had rightly disallowed the claim. 7. 2. The AR made the same submission that were advanced before FAA. He referred to memorandum explaining the provision in Finance bill 1999, that the assessee was entitled to bring forward business losses of the earlier years. The DR relied upon the order of the FAA. 7. 3. We have heard the rival submissions and perused the material before us in our opinion provisions of section 72 would be applicable in the present case and not the provisions of section 71, as held by the AO and the FAA. We further find that the pre-condition of continuation of business has been dispensed with by the Fin bill 1999. Therefore, we are of the opinion that the claim made by the assessee should have been allowed. Reversing the order of the FAA, we decide the issue in favour of the assessee. As a result, appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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