2018 (3) TMI 431

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....6,521 as prior period expenses in the profit and loss account. The Assessing Officer while completing the assessment u/s 143(3) of the Income-tax Act, held that the amount represents expenses pertaining to earlier assessment years which was written off this year. According to the A.O. the assessee could not explain when the amount of expenses had crystallized. It was concluded by the Assessing Officer that the expenses was not incurred during the previous year relevant to the assessment year and hence cannot be allowed as a business expense for the assessment year 2006-2007. 3. Aggrieved by the order of the assessment, the assessee has preferred an appeal to the first appellate authority. Before the first appellate authority it was conte....

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....dual customer wise break up cannot be obtained was known to them only during the financial year 2005-06 and the amount acquires the character of an expenditure in that year, i.e., the amounts debited by the principal broker crystalised into an expenditure only during A.Y. 2006-07. Therefore, it is to be allowed as an expenditure of assessment year 2006-2007. (b) Alternatively, since the assessee could not recover the amount from the individual customers from whom it is to be recovered, it has to be treated as a "Bad Debt" and has to be allowed as an expenditure in the year in which it is written off. 4. The CIT(A) rejected both the contentions of the assessee and dismissed the appeal of the assessee. Aggrieved by the order of th....

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....nto account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. 7. This therefore, means that the assessee has to prove satisfaction of both Section 36(1)(vii) and Section 36(2)(i), viz. that the bad debt has been written off and that the bad debt has been taken into account in computing the income of the assessee in any one of the years mentioned in Clause-(1) of subsection (2) of Section 36. 8. A reading of the order passed by the Tribunal does not show that an enquiry in that regard has not been undertaken and therefore, we are of the view that the matter requires reconsideration by the Tribunal and the Tribunal shou....