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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 ..... R at the time of hearing and necessary endorsement was made by him in our file. Accordingly, grounds 1, 2 & 6 raised by the assessee are hereby dismissed, as not pressed. 3. The surviving grounds remain to be addressed is with regard to allowability of claim of advances written off on merits. 4. We have heard the rival submissions and perused the materials available on record. The return of income for the assessment year 2016-17 was filed by the assessee on 30/11/2016 declaring loss of Rs. 85,70,15,438/-. The assessment under section 143(3) of the Act was completed on 29/12/2018 determining the total loss at Rs. 85,67,45,962/- after making disallowance under section 40(a)(ia) of the Act to the tune of Rs. 2,69,476/-. In the said return, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 to 2015-16 - Rs. 15,64,28,164/- 2)Debit to P&L Account during A.Y. 2016-17 - Rs. 3,20,51,447/- Total Trade Receivables under Advances - Rs. 18,84,79,611/- Accordingly, the assessee, in the balance-sheet as on 31/03/2016 relevant to assessment year 2016-17 had written off a sum of Rs. 9,59,04,877/- from trade receivables and a sum of Rs. 6,05,23,287/- from loans and advances. The total of these two sums works out to Rs. 15,64,28,164/- being the provision made in earlier years and duly disallowed in the returns of the respective years and since a sum of Rs. 15,64,28,164/- was written off and claimed as deduction by the assessee by utilizing the provision made in earlier years (which is purely a balance-sheet item), only a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtals such as assessee to make an advance deposit to them which will be adjusted towards issue of air tickets by the airlines over a period of time. In case of full services carriers, a bank guarantee would be required to be given by the travel portals. In this background, we find that assessee had made deposits with Kingfisher Airlines, MDLR Airlines and Paramount Airlines. The Ld.AR submitted that these three Airlines had declared bankruptcy and could not repay the unutilized deposits lying with them either by way of payment or by way of issue of airline tickets. Hence, the deposits made by the assessee with those Airlines became irrecoverable which was sought to be written off by the assessee during the year and deduction claimed accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Once a trade deposit / trade advance made by the assessee during the course of business which became irrecoverable at a subsequent point of time, the write off of such irrecoverable deposits / advances would squarely be a trading loss for the assessee which would be allowable as deduction under section 28 of the Act. In fact, from the perusal of the balance-sheet of the assessee we find that assessee had not written off in the year in which those advances have been made. It had initially treated the same as doubtful advances and made provision for such doubtful advances in the books by debiting to P&L Account and the said provision was duly disallowed by it in the return of income filed for the respective assessment years, i.e. A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the ld. Assessing Officer to grant deduction for an amount of Rs. 6,05,23,287/-. 10. As stated earlier, a sum of Rs. 15,64,28,164/- included in the total sum of Rs. 18,84,79,611/- was claimed as deduction during the year on account of trade receivables and advances written off. This sum of Rs. 15,64,28,164/- as stated (supra) had not been claimed as deduction by debiting to P&L Account during the year. Instead, it was claimed as deduction by adjusting the provision made in earlier years (which is purely a balance-sheet item). It is not in dispute that in the years in which such provisions were made, the assessee had voluntarily disallowed the same in the return of income. Hence, the remaining sum of Rs. 3,20,51,447/- (Rs. 18,84,79,611/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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