2019 (6) TMI 1472 - AT - Income Tax

Tribunal partially allows appeal on plot expenditure & bad debt claim, dismisses appeal on electricity expenses. Decision date 24/06/2019.

Shri Dinesh Chhaganlal Thakkar Versus Income Tax Officer, Ward-5 (2) (3), Ahmedabad.

Shri Dinesh Chhaganlal Thakkar Versus Income Tax Officer, Ward-5 (2) (3), Ahmedabad. - TMI Issues Involved:1. Disallowance of expenditure incurred in connection with the cost of the plot.2. Disallowance of claim of deduction as bad debt or loss incidental to business.3. Disallowance of electricity expenses.4. General ground for allowing the appeal in toto.Issue-wise Detailed Analysis:1. Disallowance of Expenditure Incurred in Connection with the Cost of the Plot:The assessee, engaged in trading commodities and shares, sold a property for Rs. 3,40,50,000 and claimed a cost of acquisition of Rs. 84,31,880, including Rs. 20,74,880 towards transfer fees and development expenses. The AO disallowed the Rs. 20,74,880 expenditure due to lack of documentary evidence, which the assessee contested by providing details of payments made by cheque and a letter from the society. The CIT (A) upheld the AO's decision, stating the assessee failed to prove the additional cost by supporting evidence and that the expenses were capital in nature. The Tribunal found that the authorities did not point out any defects in the receipts provided by the assessee and noted that the payments were made through banking channels. The Tribunal reversed the disallowance, directing the AO to delete the addition, thus allowing the assessee's appeal on this ground.2. Disallowance of Claim of Deduction as Bad Debt or Loss Incidental to Business:The assessee, a franchisee of the Angel group, claimed a deduction of Rs. 54,87,027 as bad debts, which were amounts recovered by the Angel group from the assessee due to clients' defaults. The AO disallowed the claim, stating the assessee did not show these amounts as income in previous years, thus not satisfying section 36(2) of the Act. The CIT (A) confirmed the AO's decision, noting that the amounts were not part of the assessee's income. The Tribunal, however, found that such losses incurred in the course of business are eligible for deduction as bad debts, citing judgments from the Delhi High Court and Bombay High Court. The Tribunal allowed the assessee's appeal on this ground, recognizing the loss as revenue in nature and eligible for deduction.3. Disallowance of Electricity Expenses:The assessee claimed a deduction of Rs. 46,456 for electricity expenses, which the AO disallowed. The CIT (A) confirmed this disallowance. During the Tribunal proceedings, the assessee's representative did not press this ground of appeal due to the small amount involved. Consequently, the Tribunal dismissed this ground as not pressed.4. General Ground for Allowing the Appeal in Toto:This ground was a general plea for allowing all claims and deductions made by the assessee. Since the Tribunal provided specific rulings on each contested issue, this general ground was addressed through the detailed decisions on the individual issues.Conclusion:The Tribunal partly allowed the appeal, reversing the disallowance of the expenditure incurred in connection with the plot and the bad debt claim, while dismissing the appeal concerning the electricity expenses as not pressed. The order was pronounced on 24/06/2019 at Ahmedabad.