TaxTMI 
TaxTMI 
2012 (8) TMI 41
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....l. They are reproduced herein below for consideration:- "1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the disallowance claimed by the assessee as bad debts amounting to Rs.7,46,308/- irrespective of the fact that the assessee could not establish that the debt was really bad and was not recoverable. The ld. CIT failed to appreciate the fact that the entire transaction has taken place during the period Jan'06 and Feb'06 and out of Rs.12,55,808 the assessee received Rs.5,09,500 during the month of Feb and March'06 including last cheques of Rs.2,74,750/- on 27/-3/06 and remaining Rs.7,46,308 outstanding at the end of March'06 have been shown as bad debts written off when the debt was not sufficie....
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....g section 14A of the Act and an addition of Rs.2,50,000/- was made for want of documentary evidence for agricultural expenses claimed. 4. Ground No.1: Deleting the disallowance of the claim of bad debts for Rs.7,46,308/- by the learned CIT(A):- During the course of assessment proceedings it was noticed by the learned AO that the assessee had claimed bad debt for Rs.7,47,308/-. The learned AO enquired as to whether the claim of bad debt was justified. In response, the assessee gave various submissions. However, the learned AO for the reasons cited in the assessment order arrived at the view that the debt was not established to be bad and irrecoverable. The assessee carried the matter before the learned CIT(A). After considering the rival ....
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....before us. Now it is a settled law by the decision rendered by the Hon'ble Supreme Court in the case of T. R. F. Ltd. Vs CIT reported in 323 ITR 397 that "it is not necessary for the assessee to establish that debt to have become irrecoverable. Bad debts can be charged to the profit & loss account of the assessee if they are written off in the books of accounts of the assessee as irrecoverable." Following the ratio laid down by the Hon. Appex Court this ground raised by the revenue is dismissed. 7. Ground No.2: Deleting the addition of Rs.10,67,445/- on account of interest invoking section 14A of the Act:- On verifying the Schedule VI of the balance sheet filed by the assessee it was observed by the learned AO that the assessee had ma....
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....ome from which is exempt u/s 10(34) of the Act from interest bearing fund (Rs.80,56,190/-) ] / average borrowings (Rs.2,26,80,772/-) = Rs.10,67,445/- sic. Rs.10,66,974/-. 8. The matter was taken up before the learned CIT(A). The learned CIT(A) after examining the scope of section 14A of the Act and referring to following judicial pronouncements arrived at the following conclusion:- JUDICIAL PRONOUNCEMENTS (a) H.H. Marajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gowalior Vs Union of India, (1971) 1 SSC 85 (b) Ahmed G. H. Ariff Vs C. W. T. (1970) 76 ITR 471 (page 478) (c) Keshavji Ravji & Co. Vs CIT (1990) 183 ITR 1 (d) Hero Cycles Vs CIT, 20 DTR 213 (Chd.) (e) S. R. Bommai Vs Union of India, AIR (1994) SC 1918 H 1....
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....ly Rs.60,78,419/-, and as such, on this ground also the working under sec. 14A/Rule 8D is not applicable." 9. The learned DR argued in support of the order of the learned AO. On the other hand, the learned AR vehemently argued stating that the assessee had made investment earning income exempt u/s 10(34) of the Act from her own funds and not from interest bearing funds. It was therefore, prayed that section 14A of the Act will not be applicable in the present case. 10. We have heard the rival submissions and carefully perused the materials placed before us. From the order of the learned CIT(A) it is evident that the assessee had made investment of Rs.60,78,419/- earning income exempt from tax. This fact is not disputed by the revenue ....