2020 (12) TMI 231

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Years 2006-07 and 2007-08, the issues involved in both the appeals are entirely different and therefore, both the writ appeals are being disposed of by separate orders. 2. The substantial questions of law arising in the present appeal filed by the Assessee, as framed by the Assessee, are as under: (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the bad debt was not written off as required by law as per the provisions of Section 36 of the Act, though the write off of the debt is made from the accounts of the debtors, and the amount of loans and advances at the year end in the balance sheet is shown as net of the provisions for impugned debt? (ii) Whether, on the facts and in ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The second party has paid an amount of Rs. 30,00,000/- (Rupees Thirty lakhs only) by way of cheques as security deposit interest free for due performance of the contract which the first party shall return without interest after completion of the first party's share of the total built up area including the penthouse as per the specifications and acceptance thereof by the second party and in the case the penthouse is not constructed for want of permission the settlement is made as per condition mentioned in clause 7." "7. The second party has also agreed to construct a penthouse exclusively for the first party admeasuring 1250 sq.ft. out of which 1000 sq.ft. at its own cost and for the balance 250 sq.ft. the cost of construction will be....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....id amount cannot be held as an expenditure and confirmed the order of AO. 9. We have heard both the parties and perused the material on record. The amount of Rs. 30 lakhs was still appearing in the balance sheet of assessee under the head "provisions for claims and compensation" and it was not written off in the books of accounts of assessee. Being so, it cannot be treated as bad debt in the assessment year under consideration. Accordingly, placing reliance on the judgment of Supreme Court in the case of M/s. T.R.F. Ltd., reported in [2010] 323 ITR 397 (SC) wherein held that:- "After the amendment of section 36(1)(vii) of the Income Tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....verable and deduction should have been allowed in the hands of the Assessee, since a provision was made with regard to the said compensation of Rs. 30.00 Lakhs. 6. Per contra, Mr.M.Swaminathan, learned Senior Standing Counsel appearing for the Revenue, argued that mere creating of a provision for the said advance of security deposit made by the Assessee in favour of the land owner will not entitle the Assessee to claim deduction, as the Assessee, by his own conduct, has shown it as outstanding receivable in the Balance Sheet of the Assessee for the relevant previous year. The fact that the Assessee has not written off the said claim against the land owner and has not actually paid the said amount to the land owner during this year, mere cr....