2013 (6) TMI 621

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....isallowance of Rs. 10,00,000/- representing amount written off. 3. The assessee in this case is engaged in the business of real estate development and allied activities. During the year assessee ha written off an amount of Rs. 10 lacs in respect of the amount refunded to the broker Sh. Jagdish Nain. It was submitted that Sh. Jagdish Nain, broker had paid a sum of Rs. 10,00,000/- to the farmers for purchase of 15.60625 acres of land in village Badshahpur. As the farmers were unwilling to sell the land, the amount of Rs. 10 lacs paid by the broker to the farmers remained unrealized. This amount of Rs. 10 lacs was claimed as amount written off. Assessing Officer opined that the above claim of the company was not genuine. He opined that asse....

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....t dated 21.2.2008 has been filed, wherein, name of the persons have been mentioned, who have received the payments. It has been stated by the Ld. Authorised Representative that the deal could not materialize so the amount has been written off. In the order, Assessing Officer has observed that the sum of Rs. 10 lacs can only be allowed as eligible for deduction u/s. 36(1)(vii), if the same has been included in the income for any previous year. but in the instant case there is no such case as it is a reimbursement of the advance payment given to the farmers on behalf of the broker and it is not bad debt. So provision of section 36(1)(vii) r.w.s. is not applicable on the facts of the case. Furthermore, amount of Rs. 10 lacs is also not allowab....

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....acs; copy of account payee cheque for Rs. 10 lacs issued in favour of Sh. Jagdish Nain duly acknowledged alongwith the bank statement. 6.2 We have carefully gone through the above submissions and documents submitted by the assessee. We find that it is undisputed that assessee was engaged in the purchase and sale of land through brokers. In one such dealing Sh. Jagdish Nain had paid a sum of Rs. 10 lacs to the land owners on behalf of the assessee. The said deal did not materialize as no agreements could be reached regarding the rate of sale. The land owners to whom a sum of Rs. 10 lacs was paid, forfeited the same and did not return it. In these circumstances, assessee company had to reimburse Shri Jagdish Nain a sum of Rs. 10 lacs. The ....