2015 (4) TMI 680

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....mpany, engaged in the business of conducting chits was assessed to income tax by the ACIT (Assessment), Circle, Bangalore. The assessee filed the returns of income on 28.11.2003 for the assessment year 2003-04 declaring a loss of Rs. 7,85,38,305/-. The return was processed under Section 143(1)(a) on 13.02.2004 granting a refund of Rs. 49,04,076/- including interest under Section 244A. The case was selected for scrutiny. After hearing the assessee, the assessment was concluded. The Assessing Authority disallowed the amount claimed under the heads royalty, bad-debts and bid-loss. Aggrieved by the said order the assessee preferred an appeal to the Commissioner of Income Tax (Appeals) who deleted the disallowances of royalty as well as bad-debt....

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.... account in the impugned year. This method determines results only when the contract is complete. It further observed the learned CIT(A) in spite of the details furnished by the assessee was constrained to hold and sustain the disputed disallowances of bid-loss, without finding any fault in the accounting of bid-loss as furnished before him in accordance with the direction of the Hon'ble Apex Court in the case of Bilhari Investments (P) Limited and therefore the Tribunal set aside the order and directed the Assessing Authority to allow the claim of the bid-loss granting a sum of Rs. 7,20,32,155/-. Aggrieved by the said order, the revenue is in appeal. 4. The substantial questions of law that arise for our consideration in these appeals are....

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....t the assessee did was, filed a written submission on 03.02.2006 stating that as the tickets have been bid at the early stage of the duration of respective chit groups, when there will be high competition, the assessee has been foregoing a higher amount of bid loss. This is due to the principle of the discounted auction flow where one has to forego a higher rate of discount and obtain a specified amount of money rather than at a later date. In other words, the assessee was explaining the principle followed by them, which results in bid loss. What the Assessing Authority wanted was to give evidence that the assessee actually incurred the said loss in following the said principle, which was not furnished. Therefore he disallowed the said bid ....