TaxTMI 
TaxTMI 
2016 (2) TMI 662
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....00/-; and c) Disallowance u/s 14A of Rs. 6,73,650/- 2. We heard the parties and perused the record. The assessee is a partnership firm carrying on the business in pharmaceutical products on wholesale basis. The first issue relates to disallowance of claim of Rs. 3,50,000/- made by the assessee as bad debts. The AO noticed that the assessee had given an advance of Rs. 3,50,000/- to a person named as Shri Nilesh Shah and the assessee has claimed the same as bad debt. The assessee submitted that the above said advance was given for starting a new business which did not materialize. Further the assessee could not recover the advance and hence it was written off. The AO further noticed that the assessee should have offered the above said amou....
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....tion with a view to start new venture in the pharmaceutical lines. Hence, the claim of the assessee that the advance was given in the normal course of business was not substantiated. The tax authorities were right in holding that the loss of advance cannot be claimed as bad debt, since the same was not offered as income in any of the years. In the absence of any material to show that it was a trading loss, we are of the view that the ld. CIT(A) was justified in confirming the disallowance of Rs. 3,50,000/- made by the AO. 6. At the same time, we find merit in the alternative submission of the assessee. Since the disallowance of Rs. 3,50,000/- has been confirmed by us during the year under consideration, the said amount offered by the asses....
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.... was not shown to us that the assessee has not built any new structure by incurring these expenditures. Accordingly, we are of the view that the amount of Rs. 2,90,000/- spent by the assessee is in the nature of revenue expenditure, since the same has been incurred on maintenance of the existing business premises of the assessee. Accordingly, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the impugned addition. 9. The next issue relates to the disallowance made u/s 14A of the Act. The ld. AR submitted that the AO has applied the provisions of Rule 8D of the Income Tax Rules, 1962 for the year under consideration even though he said Rule is not applicable to the assessment year 2007-08. He further submitted t....