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TMI Blog2022 (4) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(2) r.w.s. 36(1)(vii) would not come into operation. Hence, we direct the Assessing Officer to grant deduction on account of trade advances written off. Accordingly, the ground raised by the assessee in this regard are allowed. - I.T.A No.312/Mum/2021 - - - Dated:- 29-3-2022 - SHRI M. BALAGANESH (ACCOUNTANT MEMBER) AND SHRI KULDIP SINGH (ACCOUNTANT MEMBER) Assessee represented by Shri Amit Khatiwala Department represented by Shri Sunil K Jha CIT DR ORDER Per: M. Balaganesh(AM): This appeal has been filed by the assessee against the order of the Principal Commissioner of Income-tax (Central), Mumbai-2 (hereafter PCIT) passed under section 263 of the I.T. Act, 1961 dated 19/01/2021 for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Ld.PCIT under section 263 of the Act. Instead, the assessee is challenging the allowability of the claim of bad debts, on merits. Accordingly, we are inclined to discuss the eligibility of the assessee to claim deduction of bad debts, on merits. 6. We find that assessee had made total provision for doubtful advances commencing from assessment year 2009-10 to assessment year 2015-16 to the tune of ₹ 15,64,28,164/-. In the year in which such provision was made, the assessee had duly disallowed the same in the return of income. On this fact, there is absolutely no dispute. During the year under consideration, i.e. A.Y. 2016-17, the assessee had claimed total trade receivables and advances written off in the sum of ₹ 18,84,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to the following entities:- Name Address PAN Amount (Rs.) Kingfisher Airlines C12, DDA Commercial Complex, IIT Gate, New Delhi AAACD5301J 6,11,88,807 MDLR Airlines MDLR House, S.C.O 2, 3, 4 Sector15, Old Judicial Complex, Gurgaon -122 001 AAECN5231C 36,85,310 Paramount Airlines Sardar Patel Road, Little Mount, Guindy, Chennai- 400 032 AACCP9164H 30,45,392 Blue Ocean Cruises Ground Floor, Old Kamani Chambers R. Kamani Marg Ballard Esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee had made an advance to M/s Blue Ocean Cruises to enable it to sell cruise tickets on its online portal. However, the said cruise did not operate as per the scheduled departures which resulted in dispute arising with them and subsequently, the said company had stopped operating cruises. Hence, the deposit lying with them became irrecoverable and accordingly assessee sought to write off the same and claimed deduction in the return. Similarly, the assessee had made advances to M/s Kafila Tours Travels with respect to booking for a charter flight. This booking was cancelled and the deposit was forfeited by them. Accordingly, this deposit became irrecoverable and accordingly assessee chose to write off the same treating it as irreco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Later, on coming to know of the fact that the deposits became clearly irrecoverable despite several efforts taken by the assessee, it chose to write off the same and claimed deduction accordingly. There is no dispute that the advances / deposits had indeed become irrecoverable; that those deposits / advances were made during the regular course of business of the assessee and hence, the write off of those deposits would clear fall within the ambit of a trading loss allowable under section 28 of the Act. Either way, this issue is no longer res integra in view of the decision of the Hon ble jurisdictional High Court in the case of Harshad J Choksi vs CIT reported in 349 ITR 250 (Bom). We find that the Ld.PCIT had observed that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79,611/- (-) ₹ 15,64,28,164/-) alone was debited to P L Account for the year under consideration on account of trade receivables and advances written off and claimed deduction accordingly. This sum of ₹ 3,20,51,447/- is also included in ₹ 18,84,79,611/-. The break up of ₹ 3,20,51,447/- is as under:- (a) Trade receivables written off - ₹ 2,48,71,992/- (b) Trade advances written off - ₹ 71,79,456/- Total - ₹ 3,20,51,447/- During the course of hearing, the Ld.AR before us, clearly stated that the Ld.AO in the giving ef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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