2020 (2) TMI 157

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....ness of developing the computer software/hardware, embedded software etc., It filed its return of income for the AY 2012-13 on 30/11/2012 declaring a total income of Rs. 51,47,140/- and had shown book profit of u/s 115JB, Rs. 84,88,681/-. For the AY 2013-14, assessee filed its return of income on 30/09/2013 admitting income of Rs. 1,86,97,140/-. The returns were selected for scrutiny under CASS and during the course of assessment proceedings for AY 2012-13, the AO noticed that the assessee has debited an amount of Rs. 1,13,62,037/- as bad and doubtful debts, out of which, a sum of Rs. 51,05,623/- was paid to M/s Yenis Global Arts Inc. as advances towards purchase of computer licence. The assessee justified bad debt claim, stating that the a....

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.... disallowed by the A.O on the premise that no tax was deducted at the time of payment 4. Any other grounds which the appellant may urge either before or at the time of hearing." 4. As regards the first issue of advance paid for purchase of computer software, the ld. counsel for the assessee submitted that it is a software which is used by the assessee to embed it in the software product produced by it and therefore, it is in the nature of stock-in-trade and since assessee could not get any response from the party, the advance had to be written off and since it is a trade debt, it has to be allowed as a bad debt. 5. On the other hand, ld. DR drew our attention to the finding of the CIT(A) that advance was paid on 28/03/2012 an....

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....ugh the same, we find that the order of the civil court was ex-parte the said party and therefore, the decrees have been passed in favour of the assessee. Admittedly, both the AO and CIT(A) are not doubting the payment made to the said party. Since the assessee has not received the product, for which it has made payment, the assessee cannot be held liable. Since the authorities have not established that the assessee has received the money back, thus, the finding of the CIT(A) that it is diversion of income or application of income is not established with evidence. However, in the interest of justice, we are inclined to admit the additional evidence filed by the assessee and remand to the AO to examine the genuineness of the transaction and ....

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....he payments made to foreign parties in foreign exchange. AO has not questioned the genuineness of the transactions, but, disallowed it only on the ground that no TDS was made by the assessee. It is the CIT(A), who brought out that the genuineness of the transaction and the purpose of payments, is not established. Since the payments were made to the foreign parties, the provisions of section 195 would apply to the transaction. The powers of CIT(A) are coterminous with that of AO and he could do what the AO has not done. Even, the CIT(A) though has observed that it is to be disallowed u/s 195 has not brought out as to the income portion, on which, tax is to be levied in India. The case of the assessee is that the services are to be rendered o....