2013 (6) TMI 311

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....nt of the expenses debited under the head of quality rejection by the Assessing Officer. Learned counsel appearing for the appellant submitted that the Commissioner of Income-tax (Appeals) ("the CIT(A)") and the Income-tax Appellate Tribunal have erred in directing the deletion of the aforesaid additions made by the Assessing Officer. The provisions as contained under section 36(1)(vii) of the Income-tax Act were not applicable and in the light of section 36(2)(i) of the Act, the aforesaid additions were rightly made by the Assessing Officer. We have considered the aforesaid contentions of the appellant. The factual position in the case is that the original return of income was filed by the respondent on August 26, 2008, for the asses....

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.... filed by the respondent was not questioned or challenged by the Assessing Officer. Even the rejection of the material was not negated by the Assessing Officer. The documents filed by the respondents were clearly showing that part of the material supplied was rejected by the authorities in Ukraine. The reasons given was that the aforesaid material was found to be unfit for human consumption in Ukraine and if the aforesaid material was found unfit for human consumption in Ukraine, then it was also unfit for human consumption in India and, therefore, disallowance was set aside and the claim of the assessee was allowed. This order of the Commissioner of Income-tax (Appeals) was assailed by the Revenue before the Income-tax Appellate Tribunal, ....

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.... shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. Explanation.-For the purpose of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the account of the assessee." "36.(2)(i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or ....