TaxTMI 
TaxTMI 
2021 (5) TMI 301
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....debited a sum of Rs. 2,31,02,343/- against the head sundry balances written off. Notice was given to the assessee, the assessee furnished the ledger copy of the parties whose transaction was made in earlier year and claimed by him in his books of accounts during the current financial year. The assessee has also shown the same as bad debts written off. The assessee nowhere explained the transaction essential during the course of business, therefore, the said sundry balance written off a sum of Rs. 2,31,02,343/- was disallowed and added to the income of the assessee. The assessee also received the loan of Rs. 40,00,000/- from Quest Softech (India) Ltd. and Rs. 10,23,793/- from Rajat Diamond Exim Pvt. Ltd. The genuineness of the said loan was not proved, therefore, both the loans were disallowed and added to the income of the assessee. After same disallowance u/s 14A r.w. Rule 8D. The total income of the assessee was assessed to the tune of Rs. 2,82,93,960/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us. ISSUE NO.1 4. Under this issue the assessee has ....
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....or in any earlier previous years or the money should have been lent in the ordinary course of business of banking or money lending carried out by the assessee. In the instant case, the nature of the amounts written off do fit in the above referred sub-section. Out of the amount of Rs. 2,31,02,343/-, Rs. 36,35,000/- pertains to advances given to employees of associate companies. Firstly, advances given to employees would not have been accounted as income in the assessee's hands. Further in this case, the advances have been given to employees of associate companies and not of the assessee. The counsel for the appellant had furnished a few copies of the appointment letters and resignation letters of some of the employees. It is seen that they have been hired by Arshiya International Ltd. and BDP (India) Pvt. Ltd. but not with the assessee company. Therefore, there is no way this advances were offered as income in any of the previous years. Also the counsel could not prove either during the assessment proceedings or during the appellate proceedings that these incomes have been considered as income in any year. With regard to the loan of Rs. 1,94,67,341/- given to Mega Meditex Ltd.,....
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....0 lakhs also does my represent money lent either by &dap Enterprises or by the assessee in the course of banking or money lending business. The assessee does not carry on any such business nor did Boleti; Enterprises carry on such business. Since the conditions of section 36(2)(i) of the income tax Act have not been satisfied the advance of Rs. 60 lakhs cannot be successfully thinned as bad debts written off. The Hon'ble ITAT Mumbai in the case of G.R. Pandya Share Broking Ltd. v. Income-tax Officer, 4(1)(2) [2008) 26 SOT 431 (Mumbai) held as under : 26. Keeping in view of the facts and circumstances of the case, we are of the considered opinion that assessee is entitled to claim for deduction of the bad debt on its writing off in the books of account from its total income under section 360) (vii, of the Act only with regard to the brokerage which has been taken into account while computing the total income of the assessee. Since the cost of the scrips were never taken into account, while computing the income of the assessee, it cannot be called to be the bad debt for the purpose of section 36(I)(vii) of the Act it can, at the most to he termed as the trading loss....
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....T 13 ITR 336" 13. Four conditions which govern the grant of an allowance under this clause have been enlightened in the decision reported in Surangpur Cotton Mfg. Co. Ltd v. C1T 119831 1.13 ITR 166/12 Taxman 259 (Gun. (0 The debt or loon should L., in respect of a business which is carried on by the assessee in the relevant accounting year. (ii) The debt should have been taken into account In computing the income of the assessee of the accounting year, or of on earlier accounting year or should represent money lent in the ordinary course of his business of honking or money-lending. (iii) The amount of the debt or loon, or port thereof, which is claimed as a deduction, should have become bad. (iv) The amount should be written off as irrecoverable in the accounts of the assessee for that accounting year in which the claim for a deduction is made for the first time. 14. The contention of the learned counsel for the assessee is that as part of the debt had to be written off the same should have been allowed as revenue expenditure, and that the Assessing Officer has chosen to treat the same as capital loss. which is not correct in la....