TaxTMI 
TaxTMI 
2013 (11) TMI 146
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....ng hr claim of the assessee of bad debts written off of Rs. 6,91,613/- without appreciating the fact that same are not allowable u/s 36(1)(vii) and the claim was later allowed by Ld CIT (A) u/s 37(1) as business loss. 2. On the facts and circumstances of the case, and in law, the Ld CIT (A) has erred in allowing the claim of bad debts written off of Rs. 65,79,761/- by the assessee without appreciating the fact that bad debts has not been proved bona fide. 3. On the facts and circumstances of the case, and in law, the Ld CIT (A) has erred in deleting the disallowance u/s 40(a)(ia) of Rs. 80,800/- being reimbursement of the expenses to the clearing and forwarding agent on behalf of the assessee, made by the AO ....
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....ssessee gave advances in the year 2004 to four parties claimed to be for the purchase of goods. AO disallowed the same stating that the same are in the capital field. As per the AO, the assessee gave advances and never brought the goods and he is of the opinion that the advances are not meant for trading activity. Since the value of goods was not included in the Profit & Loss Account, this should be treated as loans given by the assessee which are ineligible for write off in the P and L account. 5. During the proceedings before the CIT (A), assessee relied on the Hon'ble Supreme Court judgment in the case of CIT vs. Abdullabhai Abdul Kadar (41 ITR 545) for the proposition that in such matters 'the test is to see that debt is incident to ....
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....essee, therefore, failure to recover the said advances results in creation of business loss which is allowable u/s 37(1) of the Act. This so held by the CIT (A), therefore, order of the CIT (A) must be sustained on the issue. 8. We have heard both the parties on this issue and perused the order of the Revenue Authorities as well as papers filed before us in this regard. There is no dispute on the fact that assessee gave advances to these four parties. It is also a fact that the same were never recovered. Further, it is seen that the amounts belong to the year 2004 and there is no examination into the basic facts relating to whether advances were given for purchase of goods and the details of goods are not available on record. The dispute....
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.... the business of the assessee. It goes without mentioned that the AO shall grant a reasonable opportunity of being heard to the assessee. Accordingly, ground no.1 is set aside. 9. Ground no.2 relates to write off of the bad debts amounting to Rs. 65,79,761/- involving three parties and their details are as under: (i) Abdul Aziz Mohd Tahir Tex Traders Rs. 22,18,705/- (ii) Ahmed Kaid Al Habade Rs. 7,52,284/- (iii) Abu Tahir General Trading Co. Rs. 36,08,772/- Total Rs. 65,79,761/- 9.1. In this regard, Ld. Counsel mentioned that the issue of bad debts is covered by the series of binding judgment in the case of TRF Ltd. vs. CIT Ranchi, Civil Appeal No.5294 of 2003 dated 9.2.2010 for the....
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....other hand, Ld Counsel informed that so far as the sum of Rs.80,800/- is concerned, the amount was paid and, therefore, the provisions of section 40(a)(ia) have no application considering the Special Bench decision in the case of Maryline Shipping and Transports Ltd vide ITA 277/Visakh/2008 dated 29th March, 2012 for the proposition that the provisions of section 40(a)(ia) of the Act have no application to the amounts already "paid" by the assessee during the financial year and they are applicable to the amounts "payable" as appearing in the balance sheet as on 31st March of the relevant financial year. 13. Further, regarding the amounts ie Rs.2,24,103/- and Rs. 1,24,601/- mentioned in ground no.4, the Ld Counsel mentioned that part of t....