TaxTMI 
TaxTMI 
2015 (6) TMI 1161
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....arises for consideration is claim of bad debt to the extent of Rs. 20,98,200/-. According to the ld. Counsel, the assessee has business transaction with M/s Madras Polymounds. M/s Madras Polymounds refused to pay the amount due to the assessee on the ground that they could not recover the same from their customer outside India. Therefore, the assessee written off the amount outstanding to the extent of Rs. 20,98,200/- in the books of account. The Assessing Officer disallowed the claim of the assessee on the ground that the assessee even after writing off the amount in its books of account, has continued business with M/s Madras Polymounds. Even after writing off the amount, the assessee recovered Rs. 65,84,363/-. The assessee has also conti....
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....09] 319 ITR 299/[2010] 188 Taxman 24, and that of Hon'ble Bombay High Court in CIT v. HDFC Bank Ltd. [2014] 366 ITR 505/226 Taxman 132/49 taxmann.com 335, the ld. Counsel submitted that interest on loan borrowed cannot be disallowed under Rule 8D. According to the ld. Counsel, the interest paid by the assessee on the overdraft facility cannot be considered for disallowance. 4. The ld. Counsel further submitted that the assessee has also raised another ground for disallowance of club expenses. The Assessing Officer disallowed the claim of the assessee on the ground that no evidence was produced. According to the ld. Counsel, the assessee has produced bills and other material before the Assessing Officer, therefore, the expenditure incur....
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....n Madras Cricket Club and Cosmopolitan Club etc. However, no evidence was filed to show that these expenses are for business purposes. Therefore, the Assessing Officer has rightly disallowed the claim of the assessee. 9. Referring to the computation made u/s 115JB of the Act, the ld. DR submitted that the Assessing Officer found that Rs. 75,40,905/-was considered as excess claim disallowed. The ld. DR further pointed out that as per the books of account, the profit of the assessee was Rs. 89,05,442/-. While making adjustment in terms of Explanation 1 to section 115JB of the Act, the assessee reduced an amount of Rs. 89,05,442/- towards set off of brought forward losses and ultimately worked out the taxable profit at Rs. NIL. However, the A....
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.... that there was a loss in the course of business transaction. Admittedly, the assessee has written off the amount of Rs. 20,98,200/- in its books of account. The Hon'ble Apex Court in the case of T.R.F. Ltd. v. CIT [2010] 323 ITR 397/190 Taxman 391, considered the scope of bad debt as explained in the Income-tax Act, 1961 and found that once the assessee has written off the same in its books, it has to be allowed. Even otherwise, since it was a trading transaction and the assessee could not recover the amount since M/s Madras Polymounds refused to pay on the ground that they could not recover from their customer outside India, it has to be treated as a trading loss. Therefore, even if it could not be allowed as bad debt, it has to be al....
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....w after giving a reasonable opportunity of hearing to the assessee. 12. The next issue is with regard to club expenses. The assessee claims before the lower authorities that an amount of Rs. 40,169/- was incurred for entertaining foreign delegates in Madras Cricket Club and Cosmopolitan Club etc. Though the assessee claims that evidence was filed before the lower authorities, the CIT(A) found that no such evidence was file. Therefore, this Tribunal is of the considered opinion that if the assessee establishes that the expenditure was incurred for the purpose of business, it has to be allowed. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of t....