TaxTMI 
TaxTMI 
2014 (1) TMI 1631
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....t, illegal, arbitrary, illusory and the expenditure may kindly be allowed. 2. That his action in making the addition of Rs. 5,86,052/- based on assumptions, suspicion, surmises that they relate to persons specified u/s 13(3) is without any basis and therefore the addition is unjust, illegal, arbitrary, illusory and the expenditure may kindly be allowed. 3. That his action in not allowing the benefit of section 11 & 12 in respect of Rs. 5,86,052/- is unjust, illegal, arbitrary, illusory6 and the expenditure may kindly be allowed." 2. Brief facts are: Assessee is a charitable hospital for relief of blinds. During the course of assessment proceedings the assessing officer, inter alia, made addition of Rs. 20,19,950/- by observing that....
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....joinder thereon and contended on this issue as under: "2. An amount of Rs. 20,10,950/- was claimed as bad debts written off u/s. 36(2) of IT Act. Out of this a sum ofRs.5,86,052/- related to unpaid bills of individual patients whose names, addresses could not be traced since they related to bills made in the preceding financial years. Section 36(2) reads as under:- "i) No such deduction shall be allowed unless such debt or part thereof has been taken in computing the income of assessee of previous year in which the amount of such debt or part thereof is written off or for an earlier previous year, or represents money length in the ordinary course of business of banking or money landing which is carried on by the assessee. " It may ....
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....regard observation of the AO in the Remand Report has not been controverted that these bills do not relate to persons specified u/s. 13(3) of the IT Act, which has been observed by AO that bills could be pertaining to persons specified u/s. 13(3) of the IT Act. So, these are the persons covered u/s. 13 of the IT Act. In this regard specific opportunity was given so as to give rejoinder on the observation and finding of the AO in the Remand Report, but, Ld AR of the appellant has tried to get shelter of Sec. 36(2) of the I.T. Act. He should have given specific reply of the observation of the AO that theSe15ils are not pertaining to persons specified u/s. 13 of the IT Act. In my considered opinion taxability of the Trust registered u/s. 12A o....
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....rm part of the hospital income in earlier years, a fact which has not been disputed by the department. As these bills were outstanding since couple of years and there was bleak hope of their recovery the assessee trust by a proper decision wrote off these as bad debts in books of accounts. The lower authorities have disallowed the claim on two counts: (i) That the addresses are not verifiable; and (ii) There is possibility that section 13 may have been violated. 3.1. Reliance is placed on Hon'ble Supreme Court judgment in the case of TRF Ltd. Vs. CIT 323 ITR 397 for the proposition that after amendment in law it is not necessary for the assessee to establish that the debt in fact has become irrecoverable. For allowability of claim ....
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....by the assessee sec. 13(1) cannot be invoked on surmises and conjectures. 4. Ld. DR supported the order of lower authorities. 5. We have heard the rival contentions and perused the material available on record. From the record it clearly emerges that the amounts in question are unpaid hospital bills of earlier years, which were included in the income of the charitable hospital. It has not been disputed that assesse could not have detained the patients and not discharge them due to unpaid bills. This would have been a matter of jeopardy for the assessee as these patients had no money and for detaining them the lodging and boarding was to be provided by the assessee. Besides, its object being charitable, if some amount remained unpaid, ....