TaxTMI 
TaxTMI 
2019 (12) TMI 907
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....without appreciating the detailed written submissions filed by the Appellant on allowability of such amount. 3. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has wrongly interpreted the provisions of Section 36(1)(vii) read with Section 36(2) of the Act and also erred in affirming the view of the Learned AO which is misconceived, erroneous, unjustified and incorrect." 3. Brief facts of the case are that the assessee is in the business of providing service of operations, management and maintenance of telecommunication networks. During the course of assessment proceedings, the AO observed that the assessee had debited Rs. 38,34,42,562/- as bad debts comprising Rs. 22,21,54,111/- on account of settlement of claims and appended a note no. 31 to financial statements to that effect and 17,00,00,000/- not acknowledged by Reliance entities as debts. The assessee also furnished copy of settlement deed vide letter dated 24.12.2011 which provides for issuing credit note to Reliance Entities for an amount of 38.44 crores out of the total outstanding sum of Rs. 80.33 crores. The settlement deed further states that the assessee's invoice could not b....
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....e related parties. Even the auditors of the company in form 3 CD have mentioned u/s 41A(2)(b), the name of M/s. RTL and M/s. RCOM as related parties of the assesse company. The Ld. A.O. had relied upon the judgment of Supreme Court in the case of Sovereign Securities Pvt. Ltd. The Hon'ble High Court in para 4 of its order has held as under: "4. It is not possible to accept these contentions for more that reason. The attempt is to have a re-appreciation and re -appraisal of the factual materials on record. It has been currently found by the Assessing Officer, Commissioner of Income-tax (Appeals) and Income-tax Appellate Tribunal that the whole claim was based on firstly terming the other private Limited entity as a sub broker. During the assessment proceedings, it has been referred to as business loss. The attempt was to enable the companies to avoid paying tax on profits which are taxable. That conclusion has been arrived at by probing and piercing transaction and dealings. If the debts were indeed written off as bad in the accounts, then, there was no reason for conflicting versions emerging from the record. Both the authorities have found that the attempt wa....
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.... of Alcatel Lucent India Ltd. holding 67% shares and Reliance Communication Infrastructure Ltd. holding 33% shares and denied the observations of the authorities below as incorrect that Reliance Communication Ltd. and Reliance Telecom Ltd. were shareholders of the assessee company. The learned A.R. submitted that all the three entities, viz. Reliance Communication Ltd., Reliance Telecom Ltd. and assessee are separate legal entities operating independently. The learned A.R. also submitted that Alcatel Lucent India Ltd. is holding 67% of shares of the assessee and therefore it had significant control over the assessee. The learned A.R. submitted that despite the dispute of Rs. 80,34,47,720/-, the assessee could recover substantial amount and only Rs. 38,34,42,562/- became bad and ultimately written off. While rebutting the observations of the learned CIT(A) and AO regarding the address appearing on the letter head of the assessee company , the ld. AR submitted that was that of Reliance Infrastructure Ltd. The learned A.R. stated that the address of the assessee was one where its Registered Office was located and merely by using the address of an entity it cannot be said that the asse....
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.....R. submitted that since the assessee and other companies are related parties and therefore their claim have been worked out in such a manner so that the tax liability of assessee is reduced by claiming such huge loss. So far as the settlement deed dated 24.12.2011 was concerned, the learned D.R. submitted that all these are internal documents executed by various interested parties and therefore no credence can be lent to such type of documentations. The learned D.R., relied up on the decision in the case of M/s. Sovereign Securities Pvt. Ltd. vs. ITO in ITA No. 2715/Mum/2009 for A.Y. 2004-05 order dated 10.04.2012, which was confirmed by the Hon'ble High Court, as reported in (2014) 48 taxmann.com 105 wherein the decision the decision relied upon by the assessee in the case of T.R.F. Ltd. vs. CIT (2010) 323 ITR 397 (SC) has been referred to. Finally the learned D.R. submitted that in view of these facts and judicial precedents, the appeal of the assessee may kindly be dismissed. 8. We have considered the rival submissions and perused the material on record. The undisputed facts are that the assessee company is incorporated vide joint venture deed dated 07.05.2008 between Al....