TaxTMI 
TaxTMI 
2019 (11) TMI 865
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....sifying the same under section 36(2) read with section 36(l)(vii) of Income Tax Act, 1961. 1.3 On facts and under the circumstances of the case, the Id. CIT(A) was unjustified in not appreciating and ignoring the fact that the management of the appellant company had decided to close down the business activities and the financial statements were prepared on the basis that the fundamental accounting assumption of going concern was no longer appropriate. 1.4 On facts and under the circumstances of the case, the Id. CIT(A) was unjustified in confirming the addition / disallowance made and has failed to appreciate the submissions of the appellant and has ignored various decisions in judicial discipline affirming the allowance of expenditure on the principle of commercial expediency. 1.5 On facts and under the circumstances of the case, the Id. CIT(A) has erred in confirming the addition u/s 36 of the Income Tax Act, 1961 whereas the appellant has claimed the expenditure u/s 37 of the Act and not under any of the provisions of section 36 of the Income Tax Act, 1961. Aggrieved with this confirmation of addition by the Id. CIT(A), the appellant prays that the addition of Rs. 5,62,8....
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....te them off in accordance with principle of commercial expediency as the assessee had decided to close down the business operations. The appellant craves leave to add, amend, alter, vary and/or withdraw any or all of the above grounds of appeal at any stage of the appellate proceedings and to make appropriate legal submissions during oral arguments. AGGRIEVED with the order framed by Id. CIT(A), the appellant has preferred this appeal before the tribunal having the appropriate jurisdiction to entertain and decide this appeal and prays that the additions and dis-allowances be deleted." 3. The grounds raised in the appeal of the Revenue are reproduced as under: 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in deleting disallowance of Rs. 45,00,000/- on a/c of loss on revaluation of foreign exchange on account of advance received. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 4. Briefly stated facts of the case are at that the assessee company was engaged in the business of providing project management consultanc....
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....ision for doubtful debt is expressly excluded from section 36(1)(vii) of the Act, then such provision cannot be claimed as deduction under section 37, even on the basis of 'real income theory'. 5.3 Regarding the claim of deposits written off of Rs. 2,86,057/- the submission of the assessee has been reproduced by the learned CIT(A), which is extracted as under : "1.3 The following submission of the plaintiff before the LAO on 20.11.2014 has been erroneously ignored by the Lao in framing the assessment. "Forfeiture of security deposit of Rs. 10,40,179 and Rs. 446,249 totaling to Rs. 14,86,428: A security deposit of Rs. 14,86,428 was paid as per clause 12 of the lease agreement for office premises leased by the company FF-06, 4th Floor, Corporate Sewa Park, Gurgaon. A copy of the lease deed as already been submitted. The lease agreement had a lock in period of 3 years and if premises were vacated before 3 years, the lessor was entitled for compensation equal to balance period of the lease. Since, the assessee company terminated the lease agreement, within a year from the date of agreement; the lessor was entitled for compensation equal to 2 years and 10 months' rent. However, due....
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.... judgment of the board, said: "Although the Act nowhere in terms authorizes the deduction of bad debts of a business, such a deduction is necessarily allowable. What are chargeable to income tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred, otherwise you would not arrive at the true profits and gains." In Badridas Daga v CIT(34, ITR 10,15) and Calcutta Co Ltd V CIT,(37 ITR 1,9)the Supreme Court quoted the observation of Lord Russell with approval and held that an item of loss or expenditure not falling within any of the express deductions may be allowed if it is deductible on ordinary principles of commercial accounting. The scheme of these sections is that profits and gains must be computed subject to certain express allowances and to certain express or implied prohibitions of deduction, but a deduction which is neither within the terms of the prohibition nor such that the specific allowance must be taken as the exclusive definition of its area, must be allowed if it is, on the facts of the case, a proper debit item to be charged against in....
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....walaprasad 107ITR 540;CIT v Jeya 164 ITR 318;CIT v Inden Bislers 181 ITR 69. In view of the above submissions the plaintiff prays for the deletion of the above addition....................." 5.6 After considering the submission of the assessee, the l.d CIT(A), following the decision of the Hon'ble Supreme Court in the case of Southern Technologies Ltd. (supra) upheld the finding of the Assessing Officer. 5.7 Before us, the Ld. counsel of the assessee filed a paper-book containing pages 1 to 190. The learned counsel of the assessee referred to the pages 80 to 101 and submitted that advances of salary were made in the regular course of the business and therefore lost due to non-recovery of the said advances, is in the nature of business expenditure and allowable to the assessee. Regarding the deposit written off, he submitted that deposit was given for lease of the building in regular course of the business and subsequent adjustment by the owner of the building for vacating prematurely, was a loss in regular course of business. He submitted that though the losses not being falling under section 36(1)(vii) were claimed under section 37 of the Act and, therefore, has been disallo....
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....or part thereof has been taken into 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. In the instant case, the claim of advances and deposit have not been considered for income in the year under consideration or in the earlier year(s), such advances or deposit written off are not eligible for deduction under section 36(1)(vii) of the Act. An assessee is entitled for claim under Section 36(1)(vii) , where by reason of the inability or insolvency of the debtor to pay, the money is unable to be recovered. In all other cases, the claim for allowance should have to be sustained under Section 37(1) which requires that the expenditure (not being of a capital nature) should have been wholly and exclusively incurred for the purpose of the business. 5.11 For claiming deduction under section 37 of the Act, the essential ingredients of the section are,: "(i) that it should be an expenditure of the nature not described in Sections 30 to 36 ; (ii) it should not be in the nature of capital expenditure or personal expenses of the assessee ; (iii) that it should be laid out or e....
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....a. These persons were hired for various projects sites. On verifications of the bills it was observed by the AO that Shri Amrik Singh has been paid salary of Rs. 7,02,420/- on which tax of Rs. 1,05,330/- has been deducted. Over and above he has been paid consultant charges for which bills were raised on 31.08.2012, 30.09.2012, 31.10.2012 and 30.11.2012. It was observed by the AO that these expenses were not pertaining to the year under considerations and same have been pertaining to the subsequent years. During the course of assessment proceedings revised bills were submitted before AO on the ground that there was a mistake in preparing the bills, however, AO observed that this mistake can happen in one or two bills but it cannot be repeated in all the bills submitted by Shri Amrik Singh. Further, the appellant failed to provide any evidence of rendering of services by Shri Amrik Singh in the year under consideration, when Shri Amrik Singh was being paid salary from the appellant company, how come he is separately being paid for the consultancy charges?. Therefore, the claim of expenses in the name of consultancy charges is not found tenable and same does not appears to be genuine ....
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....order of the lower authorities. 7.4 We have heard rival submission of the parties and perused the relevant material on record. We find that the learned CIT(A) confirmed the addition observing as under: "Decision I have considered the submission of the appellant and the observation of the AO made in the assessment order. It is seen that the appellant has claimed short term capital loss of Rs. 7,44,245/- on account of loss of assets which could not be recovered from the different sites. The AO has given a chart of the assets which could not be recovered by the appellant from the client's site and loss occurred on account of such loss of assets has been claimed as short term capital loss by the appellant by writing off such assets from the books of account. During the course of assessment proceedings the appellant did not submit any evidence of providing computers, office equipments and furniture to any person. The appellant has also failed to prove whether it has billed such loss occurred on account of non recovery of the assets from the client's site to the clients. It is also observed by the AO that appellant has claimed depreciation on such assets which were not in existence ....