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TMI Blog2022 (6) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... ed alternative plea to allow the same u/s 28 as the advance could not be recovered for more than three years - CIT(A) upheld the order of AO on the ground that there is no sales to the party and its name is not in the list of debtors. On alternative plea, CIT(A) held that the assessee has not made any effort to recover the advance. We find that the Hon ble Jurisdictional High Court in PCIT Vs Shreno Ltd. [ 2021 (2) TMI 188 - GUJARAT HIGH COURT ] while relying upon the decision of Hon ble Supreme Court in the case of T.R.F. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT ] held that where the assessee company write off outstanding interest on the advances paid to its subsidiary as a irrevocable when net worth of subsidiary eroded, the assessee s cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,19,879/- on which declared gross profit of Rs. 3.12 cores, which is 31.72% as against the preceding year at 31.31% on total sales of Rs. 9.30 crores. The case of assessee was selected for scrutiny. The Assessing Officer during the assessment, besides the other additions, made disallowance of bad debt of Rs. 1,31,589/-. The Assessing Officer during the assessment, noted that the assessee had debited an amount of Rs. 1.75 lacs on account of bad debts. In order to ascertain the claim, the Assessing officer asked the assessee to furnish bills and ledgers of parties whose debts written off. In response thereof, the assessee submitted a combined ledger of bad debts. The assessee was again asked to justify the claim of bad debts written off. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 08/10/2015. The ld. CIT(A) after considering the submission of assessee held that the amount written off did not arise on account of sales. The payment was made on account of advance for purchase of stock in trade and not of any kind of fixed asset. The Assessing Officer distinguished the case relied upon by the assessee on the ground that when there is no sale and debtor is in the list of debtor in the name of Limbani Salt Industries, the claim of bad debt does not arise. On alternative plea for allowability under Section 28 of the Act, the ld. CIT(A) held that the claim of assessee is not tenable as the written off in the present case is within three years. In the decision cited by the assessee, the advances were converted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITO Vs Shree Gouri Shankar Jute Mills Ltd.(supra). 5. On the other hand, the Sr. DR for the Revenue supported the orders of the authorities below. The ld. Sr. DR for the revenue further submits that written off bad debts does not arise on account of sales. The amount was advanced for making purchases and does not qualify as a bad debts. The ld. CIT(A) distinguished the decision relied by the ld. AR in the case of ITO, Ward 1(1), Kolkata Vs Shree Gouri Shankar Jute Mills Ltd. (supra) as the fact of said case are different. 6. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We have also deliberated upon the various case laws relied on by the lower authorities and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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