TaxTMI 
TaxTMI 
2014 (8) TMI 1207
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....d return of income declaring a loss of Rs. 105,750,031/- which was subsequently revised to Rs. 109,013,943/-. During the assessment proceedings it was noted by the AO that the assessee had in its Profit & Loss account claimed write off of advance Rs. 12,099,000/- and write off of deposits Rs. 61,065,000/-. The AO sought explanations from the assessee on these claims. The submission of the assessee was that the advance written off represented customs duty deposited by M/s IBM Products Ind. Pvt. Ltd., and subsequently recognized by it as a receivable when the business of M/s IBM Products Pvt.Ltd., was acquired by it. As per the assessee during the impugned assessment year it was found that there was no probability of recovering money from the customs department. As for the deficit of Rs. 61,065,000/- written off, submission of the assessee was that this was service tax paid classified initially as an asset and later written off. 4. As per the assessee it had acquired in financial year: 2005-06, a business from M/s IBM India, and transfer of such business to the assessee was on a going concern basis. Therefore, the assets and liabilities of the seller became assets and liabilities of....
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....re and character of the amounts written off. The details furnished by the assesee with regard to the deposit written off of Rs. 6,10,65,000/- did not show whether it pertained to trading asset or capital asset. Thus, as per the CIT(A) the assessee had failed in discharging the onus resting on it to establish, that the claim of write off were allowable. 8. Now before us, learned AR submitted that the sum of Rs. 1,20,99,000/-was additional customs duty paid by M/s IBM and treated by it as current asset. As per the learned AR, when the business of M/s IBM was acquired by the assessee, the nature of the asset and liabilities remained very same. Customs duty earlier paid by M/s IBM which was treated as refundable and due from the customs department, was not at all recoverable. Having recognized this, assesseee had effected a write off of the amount during the relevant previous year. As for the claim of service tax write off the argument of the learned AR was that the service tax paid by the assessee was subsequent to the acquisition of the business from M/s IBM. Relying on paper book at pages 109-110 learned AR pointed out that invoices raised by M/s IBM Ind. Pvt. Ltd., on the assessee....
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....rs and heard the rival contentions. First we take up the issue of write off of Rs. 1,20,99,000/-. The claim of assessee is that it represented additional custom duty deposited by M/s IBM Ind. Pvt. Ltd., which was found to be not recoverable subsequent to acquisition of business from M/s IBM Ind. Pvt. Ltd., However, nothing has been brought on record by the assessee to show that the additional customs duty deposited by M/s IBM Ind. Pvt.Ltd., was not on capital account, but on trading account only. Assessee also did not furnish the agreement relating to global transfer of business between M/.s IBM and M/s Lenovo. There was no evidence as to which products were imported by M/s IBM Ind.,Pvt Ltd., on which the additional customs duty was deposited by it. Assessee had simply effected a write off and failed to support its claim for allowance under the IT Act. CIT(A) has specifically mentioned in its order that even before him the assessee could not file any record proving the character of the write off. In such circumstances, we are of the opinion, that disallowance of Rs. 1,20,99,000/- was rightly sustained by the CIT(A). 12. Coming to the disallowance of write of Rs. 6,10,65,000/-, cla....
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....y the AO for the reason that the expenditure was incurred by the assessee for retaining the customer/dealer base of M/s IBM Ind.Pvt.Ltd., which resulted in acquiring an enduring benefit. In its appeal before the CITA) the argument of the assessee was that similar issue was decided by this Tribunal in assessee's own case for the assessment year 2006-07. Learned CIT(A) relying on the decision of the Tribunal mentioned supra, allowed the claim. Learned DR has fairly admitted that the issue stood covered in favour of the assessee. However, according to him, the marketing support service agreement was only an appendix to the main agreement for acquiring business from M/s IBM Ind. Pvt. Ltd., and therefore, the outgo was essential in the capital field. Nevertheless, we find that Co-ordinate Bench of the Tribunal has allowed the claim of the assessee in its order dated 16-03-2012 in ITA No.1457(B)/10 for assessment year 2006-07, holding as under; " Having heard both the parties and having considered their rival contentions and the material on record, we find that the question before us is whether the payment for the marketing support agreement is revenue or capital in nature? The assesse....