TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1480
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....143(3) of the Act. 2. First ground of appeal is about upholding the disallowance of bad debts of Rs. 4. 71 crores written off by the assessee during the year under consideration. During the assessment proceed-ings, the AO found that the assessee had claimed bad debts of Rs. 4, 71, 27, 259/- with regard to two parties, namely, ATV Projects India Ltd(ATV)-Rs. 2. 24 and VHEL Ltd. (VHEL)- Rs. 2. 47 crores, that the assessee claimed that the above amounts represented the earlier years' provision for bad debts, that same were offered to tax. The AO directed the assessee to justify the stability of the present deduction as per the provisions of section 36(1)(vii) of the Act. After considering the reply of the assessee, dated 03/11/2001, he held t....
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....tion 36 (2) of the Act and relied upon the case of Travancore Tea Estates Company Ltd. (197 ITR 528) and observed that amounts in question were outcome of breach of obligation by the lessee/agents of the assessee, that it had admitted that legal proceedings were initiated for breach of obligations by the contracting parties, that there was some mutual arbitration/settlement, that as a result of such understanding amounts had been waived off by the assessee, that the amounts could not be treated as bad debts and would not qualify for deduction u/s. 36 of the Act, that the dues from the respective parties who was amounts by way of lease rentals, that same were not in the nature of advances made to them or other sums due from them as a result ....
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....HEL had failed to pay the rentals, that assessee had initiated court proceedings against both the parties, that the matter was settled mutually, that out of the total dues the assessee could recover only a part of said amount, that the AO disallowed the claim made by the assessee under the head bad debts written off. It is a fact that the assessee is a NBFC and was advancing loans to its customer as one of its objects. It is not denied that assessee was entitled to get rentals from both the parties and that they did not make the payments. The decision of the assessee to write off Rs. 4. 71 crores was a commercial/business decision. The AO/FAA's cannot question the business prudence of an assessee. It is said that AO should not enter into th....
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....ted the profit and loss account by an amount of Rs. 10 lakhs under the head legal and professional fees. He directed the assessee to file an explanation in that regard. After considering the same, he observed that disputed amount was paid by the assessee to its 100% subsidiary entity, namely, MRR Trading and Investment Company Ltd. (MRR), that the assessee had claimed that it had no officer space for its operation in Mumbai, that MRR had agreed to allow it to use the office premises hired by it and owned by Roman Catholic Cathedral Trust (RCCT), that RCCT file a suit against the subsidy company for eviction of the premises stating that other group businesses of MRR were using the premises, that an out of court settlement was reached with RC....
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....DR supported the order of the FAA. 3. 3. We have heard the rival submissions. The undisputed facts are that assessee was using the premises of its subsidiary company, that RRCT initiated court proceedings, that out of court settlement was made by the assessee, that it paid Rs. 10 lakhs on behalf of the subsidiary company, that the AO and the FAA held that the disputed amount was of capital nature. We find there is no doubt about incurring of expenditure. The assessee has not acquired any capital asset by paying Rs. 10 lakhs to RCCT. So, reversing the order of the FAA and relying upon the case of Madras Auto Services Private Ltd (supra), we decide second ground in favour of the assessee. 4. Third ground of appeal is an alternative ground t....
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....in the subject assessment year. (b) The grievance of the appellant is that in view of the fetter (of eight years) in carrying forward depreciation for the assessment year 1997-98 up to the assessment year 2002-03, the set off of the same cannot be allowed in this assessment year. (c) We find that the impugned order of the Tribunal while allowing the assessee-respondents' claim follows the decision of the Gujarat High Court in General Motors India Pvt. Ltd. v. Deputy CIT reported in [2013] 354 ITR 244 (Guj) wherein on identical facts it was held that the unab sorbed depreciation for the assessment year 1997-98 up to the assessment year 2001-02 could be allowed to be set off, if it was still unabsorbed on April 1, 2001. The above de....