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TMI Blog2017 (4) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax as well as amenities amount paid to the assessee in the earlier assessment years. Thus, from the aforesaid material placed on record, we are satisfied that in reality there is no difference in rental income claimed to have been received by the assessee as per the return of income and as attempted to be made out by the department on the basis of the TDS amount shown in Form 26AS. Accordingly, we delete the addition - Decided in favour of assessee. Disallowonce of business expenditure - assessee had not carried out any manufacturing and business activity and is only effecting sales for stock clearance - Held that:- AO has not denied the fact that the assessee is carrying on its trading activity by disposing of the stock availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Member The aforesaid cross appeals by the assessee and the department are against common order dated 19.02.2015 of learned CIT(A)-14, Mumbai for the assessment year 2011-12. 2. ITA 3646/Mum/2015 The only issue arising in assessee s appeal is in relation to addition of rental income of ₹ 33,62,157/- 3. Briefly, facts are assessee a company, was in the business of manufacturing and exporting of carpet and dhurries. For the assessment year under consideration, the assessee filed its return of income on 30.09.2011, declaring loss of ₹ 25,99,955/-. During the assessment proceedings, the AO noticed that, though, in the return of income, assessee has shown rental income of ₹ 89,08,860/-, however, as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasoning that no reconciliation statement has been filed by the assessee explaining the difference. 5. The learned AR reiterating the stand taken before the CIT(A) submitted that the licensee did not deduct tax at source on the amenities amount paid in the earlier assessment year, hence, deducted in the impugned assessment year. Therefore, the TDS shown in the Form 26AS was higher compared to the income actually received by the assessee for the year under consideration. He also submitted that the licensee did not deduct tax at source on the service tax amount, which was only deducted in the impugned assessment year, as a result of which the difference arose. To substantiate such fact, the learned AR drew our attention to the reconcili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AY 2007-08 to 2010-11. In support of such claim, the assessee has also produced copies of ledger account of the concerned parties. However, as it appears none of the departmental authorities have taken care to properly verify the reconciliation statement submitted by the assessee with reference to Form 26AS as well as the ledger account copies and the return of income filed for the previous assessment years, wherein the assessee claimed to have declared the income corresponding to excess TDS amount. On the basis of documents submitted before us, it has been demonstrated by the assessee that the excess TDS in the impugned assessment year is on account of non-deduction of TDS on service tax as well as amenities amount paid to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has failed to demonstrate the claim of bad debt by furnishing evidence that they are created during the ordinary course of business and despite its effort assessee had failed to recover the debt. He also disallowed interest expenditure by stating that since the assessee has stopped its manufacturing activity long back, there is no necessity for the assessee to incur interest expenditure by availing loan. Accordingly, he disallowed the expenditure claimed amounting to ₹ 88,40,658/- Aggrieved, the assessee challenged the disallowance before the CIT(A). The learned CIT(A) after considering the submissions of the assessee being convinced that the assessee had carried out its business activities allowed assessee s claim of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the stock available with it. If that is the case, certainly the assessee requires infrastructure/establishment to carry on its business activity even if it relates to disposing of the stock available with it. For carrying on such activity also assessee has to employ person by incurring salary cost, rent payment and many other ancillary and incidental expenditures like electricity, conveyance etc. Similarly, there can be no dispute that bad debts are in course of its regular business activity. Once it is held so, there is no need for the assessee to demonstrate that it has failed in its attempt to recover the debt from the parties. The only requirement being, the assessee has to write off the debt in its books of account. As far as in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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