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TMI Blog2016 (7) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... imentary bottles given in the market as samples all over India. Ld. CIT (A), after noticing the factual mistake committed by the AO in treating the amount of 4,21,087/- as unascertained liability, has rightly deleted the same. So, finding no illegality or perversity in the order passed by the ld. CIT (A), we hereby decide ground against the revenue. Addition on commission - Held that:- CIT(A) deleted the addition of 70,000/- made by the AO on the ground that the assessee has paid the commission to M/s. Paras Commercial Corporation, Cuttack, a consignment agent on 02.09.2008 on a monthly commission of 10,000/- per month and the assessee company has raised the bill and paid it after deducting TDS. From the perusal of agreement and Form 16A it is apparently clear that since the agent has not raised any bill since March 2009, the assessee on the basis of agreement provided an amount of 70,000/- from September, 2008 to March, 2009 after deducting the tax at source i.e during the relevant financial year. So, the mistake committed by the AO has been rectified by the CIT (A) and the findings returned by CIT (A) need no interference. - Decided against the revenue. Addition u/s 41 - Held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 19,01,217/- as bad debt in absence of supporting documents? 3. The Objector, by filing the present cross objection, sought to set aside the impugned order dated 30.09.2013 passed by the Commissioner of Income-tax (Appeals)-VIII, New Delhi qua the assessment year 2009-10 on the ground that :- "That, on the facts and in circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in sustaining the disallowance u/s 14A to the extent of ₹ 500,000/- without any justifiable reasons and without appreciating that the appellant had already identified and suo mottu offered an amount of ₹ 260,564/- being expense attributable in earning exempt income." 4. Briefly stated the facts of this case are : pursuant to the notice under section 143(2) and 142 (1) of the Income Tax Act, 1961 (for short 'the Act') issued during scrutiny proceedings, Shri Raj Pal, Assistant Manager (Accounts) of the assessee company put in appearance, filed requisite details/information, books of accounts which have been examined on test check basis. Assessee company is into the business of manufacturing and selling of natural mineral water under the brand name, HIMALYAN, sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation furnished by the assessee not tenable, the AO came to the conclusion that assessee company had recovered ₹ 5,00,00,000/- in FY 2007-08 relevant to AY 2008-09 from promoters against disputable claims by debtors for discount and rebate and thus ₹ 5,00,00,000/- were kept by the assessee for provision in its books of account for discount and rebate and has not claimed any expenses, discount and rebate during FY 2007-08 relevant to AY 2008-09 except expenses incurred after takeover. So, the provision for discount and rebate written back out of ₹ 5,00,00,000/- which was received in the hands of assessee in FY 2007-08 and kept as provision, is the profit of previous year relevant to AY under consideration chargeable to tax u/s 41 of the Act and thereby made an addition of ₹ 3,07,88,306/-. 8. AO further noticed form profit & loss account that assessee has debited a sum of ₹ 19,01,217/- as bad debts written off. Assessee was called upon to file the details and justification of bad debts written off which he has filed but finding the explanation not tenable, the claim of the assessee of bad debts has been disallowed and thereby made an addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for earning exempt dividend income. 12. Before invoking provisions contained under Rule 8D(2)(iii), the AO has not recorded his dis-satisfaction of the correctness of the claim of expenditure made by the assessee nor AO came to the conclusions that, "the claim of the assessee that no expenditure has been incurred" is incorrect. Assessee has come up with a categoric plea that except for incurring expenditure of ₹ 2,60,564/- on account of salary paid to Executive (Finance), no other expenditure has been incurred for earning of the said dividend income. AO has not disputed the audited books of account maintained by the assessee in respect of investing and earning dividend income along with expenditure incurred thereon, lying at page 65 of the paper book. From the books of account, the AO has not identified any other expenditure incurred by the assessee for earning the aforesaid dividend income but proceeded to invoke the provisions contained under Rule 8D (2)(iii) merely on the basis of guesswork, that too without recording his dis-satisfaction as to how the claim of the assessee, "that no other expenditure has been incurred", in earning the dividend income. At the same time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. Ld. CIT (A), after noticing the factual mistake committed by the AO in treating the amount of ₹ 4,21,087/- as unascertained liability, has rightly deleted the same. So, finding no illegality or perversity in the order passed by the ld. CIT (A), we hereby decide ground no.2 against the revenue. GROUND NO.3 OF ITA No.6536/DEL./2013 17. The CIT (A) deleted the addition of ₹ 70,000/- made by the AO on the ground that the assessee has paid the commission to M/s. Paras Commercial Corporation, Cuttack, a consignment agent on 02.09.2008 on a monthly commission of ₹ 10,000/- per month and the assessee company has raised the bill and paid it after deducting TDS. From the perusal of agreement and Form 16A available at page 77 of the paper book, it is apparently clear that since the agent has not raised any bill since March 2009, the assessee on the basis of agreement provided an amount of ₹ 70,000/- from September, 2008 to March, 2009 after deducting the tax at source i.e during the relevant financial year. So, the mistake committed by the AO has been rectified by the CIT (A) and the findings returned by CIT (A) need no interference. Hence, ground no.3 is deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,01,217/- made an addition thereof to the income of the assessee which has been deleted by the CIT (A) by making following observations :- "Ground no. 5 is part of ground no 4 the case of debts return off ₹ 19,01,217/- was shown in the schedule 18 of Tax Audit Report. This is again minimum of the payment to write off of bad debts as much as he selects U/S 36(i)(vii) read with section 36(ii) as irrecoverable in the accounts of the assessee. The AO should make a watch of these figures in subsequent years to know business activities of the appellant and tax it properly in due course. Hence, this addition of ₹ 19,01,217/- is deleted. This ground of appeal is allowed." 21. For the sake of repetition, it is reiterated that the assessee needs not to bring on record any material or evidence to write off any amount of bad debt as irrecoverable to prove the fact that the debt has actually become bad. When the AO has not disputed the books of account and the assessee has duly recorded the written off amount of debt of ₹ 19,01,217/- in the profit & loss account and after complying with the conditions contained u/s 36(1)(vii) read with section 36(2), the addition made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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