9911796707
TMI Blog2024 (6) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure. The Supreme Court held that there was no element of a capital investment in making the advances and the loss incurred by the assessee was, therefore, a loss on the revenue side and was deductible. Similarly, in the case of Appollo Tyres Ltd [ 2012 (8) TMI 952 - ITAT, COCHIN] held that Business advances given for acquisition of revenue items is allowable to be written off u/s 37. Since the amount given is in the course of business, the same may be allowed to be written off u/s 37 of the Income Tax Act, 1961. Appeal of assessee allowed. - Sh. Kul Bharat, Judicial Member And Dr. B. R. R. Kumar, Accountant Member Assessee by : None Revenue by: Sh. Subhash Chandra, CIT-DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer vide its order dated 28.03.2013, made the addition of Rs.24,60,310/- in respect of this Trade Advance Written off in the Proprietorship concern M/s Rhea Distribution Co. under the head Trade Advances- Irrecoverable Written Off and Claimed as Expenses in the profit loss Account. The assessee preferred an appeal against the said order and ld. CIT(A) confirmed the addition. 7. Aggrieved, the assessee filed appeal before the Tribunal. 8. The ITAT passed the appellate order on 12.06.2018 setting aside the assessment and restored the issue to the file of the Assessing Officer. The Assessing Officer without going through the facts of the case, has repeated the addition of Rs.24,60,310/-. The ld. CIT(A) confirmed the addition. Aggrieved, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee where the same was shown as Trade Advance from FY 2005-06 to FY 2009-10. Along with this the assessee submitted the letter received from the company on the basis of which the amount was advanced to M/s MSPV Trading Pvt. Ltd. From the details submitted it is evident that the amount was paid as advance for purchase of goods. Neither the goods were supplied, nor amount advanced has been refunded. The above facts clearly depict that the said advance was for the purpose of the business of the assessee. Therefore there is a direct and proximate nexus between the business operation and the loss of advance amount which has been written off by the assessee. 12. Thus, the facts of the case are clear and apparent from the record. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell the next crop of the sugarcane grown by them exclusively to the assessee at current market rates and to have the advances adjusted towards the price of the sugarcane to be delivered to the company. In the year under consideration owing to drought, the sugarcane growers could not grow sugarcane and the advances remained unrecovered. A Government Committee recommended that the assessee should ex gratia forego some of its dues. The assessee, accordingly, waived its rights in respect of Rs. 2,87,422/- and claimed the said amount as a deduction under section 10(2)(xi) and 10(2)(xv) of the Indian I. T. Act 1922. The question was whether the said amount which was given up represented a loss of capital or was revenue expenditure. The Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company for constructing a cinema house. The said advance was made on the understanding that the company would lease out the cinema house to the assessee. When the financial position of the company became unsatisfactory and the cinema house was never built, the assessee wrote off the amount and claimed it as a bad debt. The sum appeared to have been paid as an advance payment of rent under the lease which was to come into existence. The amount was, therefore, held as allowable as a deduction. 20. In case of CIT vs. Anjani Kumar Co. Ltd., (2003) 259 ITR 114 (Raj.), the Assessing Officer noticed that a sum of Rs.52,489/- was written off on account of advance made to the agriculturist for purchase of agricultural land. The intention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax Vs. Appollo Tyres Ltd. [2013] 33 Taxmann.com 575 (Cochin-Trib.) held that Business advances given for acquisition of revenue items is allowable to be written off under section 37. 22. In Ramchandar Shivnarayan Vs. CIT (1978) 111 ITR 263, the Hon ble Supreme Court summed up the principles in the following words: If there is a direct and proximate nexus between the business operation and the loss or it is incidental to it, then the loss is deductable, as, without the business operation and doing all that is incidental to it, no profit can be earned. It is in that sense that from a commercial standard such a loss is considered to be a trading one and become deductable from the total income. 23. Hence, keeping in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
