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TMI Blog2021 (7) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... f the same was claimed as bad-debts in the books during the year. If so, the claim would be allowable u/s. 36(1)(vii) in terms of decision of Hon'ble Apex Court in TRF Ltd.[ 2010 (2) TMI 211 - SUPREME COURT ] . The ground stand allowed for statistical purposes. Disallowance of referral fee - it was concluded by Ld. AO that the assessee failed to produce evidences to support the referral fees paid by it - HELD THAT:- As submitted that the payment was as per Memorandum of Understanding dated 21/03/2011 which specify the terms of reference. The referral fee thus received by M/s. NSBL was offered to tax. The payment was after deduction of tax at source which is supported by TDS certificates. Keeping in view the submissions made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciating that the Assessee has been paying referral fees to the said company since many years after due compliance of TDS. Thus, the disallowance of ₹ 17,14,430/- is unjustified. As evident, the assessee is aggrieved by confirmation of disallowance of bad debts and another disallowance of referral fees paid by the assessee. 2. We have carefully heard the rival submissions, oral as well as written and perused relevant material on record including documents placed in the paper-book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 3. The material facts are that the assessee being resident corporate assessee is registered as non-banking finance company (NBFC). Accordingly, grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrower wrote a letter for waiver of entire amount of interest. Thus the outstanding amount of interest of ₹ 11.67 Lacs was not acknowledged as debt by the borrower even though the relevant entries were made by the assessee in the loan/advances account. Section 36(1)(vii) of the Income Tax Act, 1961 prescribes conditions for the write off of a debt which was due to it and these conditions have to be complied in totality to claim deduction u/s. 36(1)(vii). First of all the amount should be classifiable as a debt and if the amount is not acknowledged as a debt, the same cannot be claimed as a revenue deduction u/s. 36(1)(vii) of the IT Act, 1961. Prima facie the amount of interest was not acknowledged as a debt by Rajoo Barot and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply, it was submitted by the borrower that the loans were sanctioned directly through one of the sales representatives of the assessee. Thus, it was concluded by Ld. AO that the assessee failed to produce evidences to support the referral fees paid by it. It was also noted that pursuant to MOU between the assessee and M/s. NSBL, the assessee was paying separate charges for infrastructural facilities for utilizing the space and staff and therefore, the additional payment could not be allowed. Further, the fee was paid to parent company which was loss-making entity and therefore the payment was to avoid the instance of tax in the hands of the assessee. Finally, the same was disallowed and added back to its income. 6.2. The Ld. CIT(A) obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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