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TMI Blog2023 (8) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO, since the amount in question was not taken into account in computing the income of the assessee in any previous year as required u/s 36(2) of the Act. Nor this amount is in the nature of revenue receipt in any earlier year. Rather the amount in question is excess payment made by the assessee. Further, as rightly been held by the CIT(A), this amount cannot also be claimed as business expenditure since the liability of the assessee to make payment of interest on late payment of purchase cost was only limited to Rs. 2,90,070. The assessee being the payer was required to deduct tax as per law. Thus any excess payment made by the assessee over the amount net of TDS cannot be said to be an expenditure incurred wholly and exclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been filed by the assessee challenging the impugned order dated 16/02/2023, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals),52, Mumbai, [ learned CIT(A) ], for the assessment year 2011 12. 2. In its appeal, the assessee has raised the following grounds: 1. The Ld CIT(A) erred in not appreciating that the assessee had written off the amount of Rs. 58,104/- as bad debt in the books of account and it was allowable as deduction. 2. Without prejudice to Ground No. 1, the Ld CIT(A) erred in not appreciating the amount of Rs. 58,014/- was incurred wholly and exclusively for the purpose of business and was allowable as deduction under section 37(1) of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed from Steelco Pacific Trading Ltd. The assessee was asked to explain as to why the said claim be not disallowed. In response thereto, the assessee submitted that the TDS on interest credited to parties account is not recoverable and therefore the same was claimed as bad debt. The Assessing Officer ( AO ) vide order dated 28/03/2014, passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that the amount in question is not in the nature of revenue receipt in any earlier year nor it was offered to tax at any point of time since it does not represent any revenue receipt. The AO further held that the TDS is the tax liability of the deductee and hence the same cannot be said to partake the chara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount cannot be claimed as a bad debt, as rightly been held by the AO, since the amount in question was not taken into account in computing the income of the assessee in any previous year as required under section 36(2) of the Act. Nor this amount is in the nature of revenue receipt in any earlier year. Rather the amount in question is excess payment made by the assessee. Further, as rightly been held by the learned CIT(A), this amount cannot also be claimed as business expenditure since the liability of the assessee to make payment of interest on late payment of purchase cost was only limited to Rs. 2,90,070. The assessee being the payer was required to deduct tax as per law. Thus any excess payment made by the assessee over the amount ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest expenses. In the absence of any proof regarding the expenditure incurred wholly and exclusively for the purpose of business, the AO disallowed the LC Discounting Charges of Rs. 8,48,605 and added the same to the total income of the assessee. 10. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue by observing as under:- 6.2 I have considered the facts of the case and submissions of the appellant. The appellant had to make the payment of Rs. 3,75,06,653/- on account of purchases made from Delta Iron Steel Co. Pvt. Ltd. The Letter of Credit (LC) was opened for 90 days. Since the supplier wanted immediate payment, it got its invoices discounted from its bank which charged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure is incurred for the purpose of appellant's business. Therefore, these grounds stands dismissed. Being aggrieved, the assessee is in appeal before us. 11. We have considered the submissions of both sides and perused the material available on record. The assessee made the purchases from Delta Iron and Steel Company Private Limited, which insisted on early payment. As per the assessee, it agreed to the terms of the seller that the bill discounting charges would be borne by the assessee if the seller gets its invoices discounted by the assessee s banker. At the end of March 2011, when the supplier insisted on payment, the total value of purchases made by the assessee was Rs. 3,75,06,653. The assessee opened the letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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