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TMI Blog2010 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer took the view that the assessee did not have a legal right to claim the subsidy and, therefore, could not take the matter to court by way of a suit to claim the same. As such, it was not a bad debt in the terms described in Section 36(1)(vii) of the said Act – CIT(A) confirmed the order of AO – ITAT reversed the order of AO and CIT and allowed the deduction u/s 37(1) – held that - . It is true that the subsidy was given by the government to the assessee, who was in the business of selling fertilizers so that fertilizers were available at a lower price to the farmers. The assessee had calculated the subsidy in the earlier year provisionally on the basis of the claim made. However, when the final rates of the subsidy were co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of the business of the assessee and was, therefore, allowable as a deduction. 3. The facts are that in the year in question, the assessee had written off an amount of Rs 14.79 lacs by way of subsidy not received, which had been shown in the earlier year as a receivable, as per the mercantile system of accounting followed by it. The assessee claimed this amount as a bad debt under Section 36(1)(vii) of the said Act. 4. The Assessing Officer did not agree with the view taken by the assessee and came to the conclusion that the said amount did not fall within the purview of Section 36(1)(vii) of the said Act inasmuch as it did not amount to a bad debt. The Assessing Officer took the view that the assessee did not have a legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs so that fertilizers were available at a lower price to the farmers. The assessee had calculated the subsidy in the earlier year provisionally on the basis of the claim made. However, when the final rates of the subsidy were communicated by the Fertilizer Industry Coordination Committee (FICC), the same were sought to be adjusted as subsidy not received. We agree with the learned counsel for the appellant/ revenue that the assessee had wrongly claimed it as a bad debt under Section 36(1)(vii) of the said Act. However, we find that the Tribunal has examined the matter in the correct light and allowed the same as an expenditure under Section 37(1) of the said Act. A plea was raised by the learned counsel for the revenue that the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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