9911796707
TMI Blog2012 (4) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act, 1961 is against law and facts on the file in as much the Ld. Commissioner of Income Tax (Appeals) was not justified to arbitrarily uphold the action of the Ld. Assessing Officer in disallowing a sum of ₹ 35,94,577/- written off as irrecoverable by the appellant on account of Cenvat credit. 2. He was further not justified to arbitrarily uphold the disallowance of ₹ 17,064/- out of interest account. 3. The brief facts of the case are that during the course of assessment proceedings the Assessing Officer noted that the assessee had written back the CENVAT credit of ₹ 35,94,577/- and claimed the same as an expenditure. The explanation of the assessee in this regard was that during the preceding years i.e. t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in any other previous year, nor was a part of the sales nor part of the debtors during the year or any previous year/s. The Assessing Officer thus held that the claim of CENVAT irrecoverable did not fall in the category of bad debts. With regard to section 37, the Assessing Officer observed that it covers any expenditure laid down or extended wholly and exclusively for the purposes of business or profession and the same had to be allowed as an expense. The Assessing Officer noted that the assessee was in the process of closing down its business and profession but the claim of CENVAT irrecoverable was nowhere an expense carried out for the purposes of business. The said CENVAT had to be claimed against the sales. It was further he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 37 of the Act was an entry routed to reduce the profits of business. Further plea of the learned D.R. for the Revenue was that the said expenditure does not relate to the year under consideration. The expenditure has not been incurred for the purposes of business and the same is not allowable as an expenditure. It was further contended by the learned D.R. for the Revenue that closing down of business could not be equated for the purposes of business. 7. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in respect of the deduction claimed on account of CENVAT amounting to ₹ 35,94,577. The assessee was engaged in the business of manufacturing and trading of yarn and fib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le against the non production of excisable items, was written off. The question arises in the present appeal whether the said writing off the CENVAT credit is allowable as business expenditure in the hands of the assessee. 9. Under the provisions of section 37(1) of the Act, deduction of an item on expenditure is allowable where the following conditions are satisfied: i) The expenditure should not in the nature described under sections 30 to 36; ii) The expenditure must have laid out wholly and exclusively for business; iii) The expenditure must not be personal in nature; iv) The expenditure must not be capital in nature. 10. Various tests have been laid down by various High Courts and the Apex Court in relation to the allowabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
