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TMI Blog2017 (5) TMI 1796X X X X Extracts X X X X X X X X Extracts X X X X ..... e amounts were advanced in the course of the business of the assessee, and it has not even been case of the AO either, and, there is also no dispute that this amount is no longer recoverable from the Sabarmati Salt Farmer s Society as it has been wound up. In these circumstances, the objection taken by the AO, in the original assessment proceedings, does not hold good any longer. In any case, as the assessee rightly claims, it is at best, even going by the improvised version of the AO, a case of bad debt or a loss incidental to business which is allowable anyway. CIT(A) s action of upholding the disallowance, for want of fund utilization report, is thus unsustainable in law and on the facts of this case. The approach adopted by the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le as deduction u/s 36(1)(vii) being in the nature of bad debts written off or u/s 37/28 of the Income Tax Act. It is submitted that it be so held now. 3. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee before us is a company, though without any share capital, set up under National Dairy Development Board Act, 2017, and this is second round of proceedings before this Tribunal. In the first round of proceedings, the assessee s claim of deduction of Rs 10,31,34,920 under section 36(1)(xii) of the Act, in respect of grants to various cooperative societies, came up for consideration before this Tribunal. The precise ground, raised by the assessee before the Tribunal, was as follows: 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E Bench in the case of Oil Industry Development Board (supra), relied on by the ld. Counsel of the assessee, expenditure incurred by way of disbursement of grants for objects and purposes authorised by the Act is allowable as deduction under section 36(1)(xii) of the I.T. Act, 1961. The plea of the ld. Counsel of the assessee that nonrefundable grants sanctioned, are claimed 8 ITA No. 454-AHD-2006 as deduction only when funds are already utilized/Fund Utilisation Report (FUR) are received, also needs verification at the end of the Assessing Officer. We, therefore, set aside the order of the Learned Commissioner of Income Tax(Appeals) on this issue and restore the matter back to the file of Assessing Officer with the direction that Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective plan expenditure in respect of Sabarmati Salt Farmers Society, Dhrangadhra was not found to be acceptable and therefore it is disallowed and added in the total income of the assessee. 6. Aggrieved by the disallowance so made, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) s short reasoning for confirming the disallowance is reproduced below for ready reference :- 4.3.1 Thus, the issue involved before the ITAT was the claim of deduction made by the appellant u/s. 36(l)(xii) of the IT Act, 1961. The directions given by the ITAT were also in relation to this section only. In a remand proceeding undertaken in pursuance of direction of the appellate tribunal, the scope of action is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to submit utilization report of such grant. Since, no such fund utilization report is available hence the action of the Assessing Officer of disallowing this amount is upheld and this ground of appeal is dismissed. 7. The assessee is not satisfied by the stand so taken by the CIT(A) and is in further appeal before us. 8. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. 9. As we deal with the grievance of the assessee, it is essential to bear in mind the fact that the reason of disallowance, in the original assessment proceedings, was that there was, according to the Assessing Officer, a possibility of the amount coming back to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fund utilization report cannot be ground enough to disallow the claim of the assessee. There is no dispute that the amounts were advanced in the course of the business of the assessee, and it has not even been case of the Assessing Officer either, and, there is also no dispute that this amount is no longer recoverable from the Sabarmati Salt Farmer s Society as it has been wound up. In these circumstances, the objection taken by the Assessing Office, in the original assessment proceedings, does not hold good any longer. In any case, as the assessee rightly claims, it is at best, even going by the improvised version of the Assessing Officer, a case of bad debt or a loss incidental to business which is allowable anyway. Learned CIT(A) s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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