9911796707
TMI Blog2022 (5) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... t they are incidental in the business of real estate development - HELD THAT:- From the assessment order, we notice that the A.O. has fixed a limit of Rs. 50 lakhs for this purpose and accordingly, disallowed advances exceeding Rs. 50 lakhs. Admittedly, that cannot be a criterion for making disallowance of the claim made by the assessee - AO has allowed claim in respect of a party, but disallowed similar claim made in respect of very same person only for the reason that the said advance is on higher side. This stand of the AO is also not acceptable. CIT(A) has expressed the view that the assessee has not proved before the A.O. that the attempts made by it for recovery of the amount has failed and further the debtors were not financially sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be examined either u/s. 28 or u/s. 37 of the Act. Accordingly, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by the Ld. CIT(A) on this issue and restore the same to the file of the A.O. with the direction to examine the claim of the assessee u/s. 28/37 of the Act. The assessee should be given adequate opportunity of being heard. X X X X Extracts X X X X X X X X Extracts X X X X ..... owed a sum of Rs. 1,94,34,380/-, as it represented smaller advances of less than Rs. 50.00 lakhs on the reasoning that these kind of write off is incidental to the business. 3. Before Ld. CIT(A), the assessee placed its reliance on the decision rendered by Hon Tale Supreme Court in the case of TRF Limited Vs. CIT 323 ITR 397 and contended that the amount written off as bad should be allowed as deduction. However, the Ld. CIT(A) took the view that writing off of bad debt is not an empty formality and assessee cannot convert any live amount to bad debt only on the basis of technical rule of write off. The Ld. CIT(A) further observed that the assessee has not produced any evidence to prove that the debtors were not in financially sound positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed Rs. 1.65 crores. If the A.O. is accepting that the amount of Rs. 13.00 lakhs was not recovered from that company, there is no reason to hold that the other amount of Rs. 1.65 crores could be recovered by the assessee. Accordingly, he submitted that the reasons given by A.O. for making the disallowance is not legally justified. The Ld. A.R. further submitted that the AO has rightly observed, while allowing claim of Rs. 1.94 crores that the loss of advance given for purchasing property is quite incidental in the business of real estate development. Accordingly he contended that the quantum of write off of the advance should not be a criteria for disallowing the claim. He further submitted that the amount written off as per the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount has failed and further the debtors were not financially sound to repay the debt. We notice that the assessee has canvassed its claim as bad debts u/s. 36(1)(vii) of the Act and hence it has placed its reliance on the decision rendered by Hon Tale Supreme Court in the case of TRF Limited (supra). The Ld. CIT(A) also appears to have proceeded on that line only by observing that writing off of bad debt is not an empty formality and assessee cannot convert any live amount to bad debt only on the basis of technical rule of write off. 10. However, in our view, the advances given for purchase of land in the normal course of business of carrying on real estate development, if not recoverable could be allowed as either trading loss u/s. 28 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
