TaxTMI 
TaxTMI 
2021 (12) TMI 760
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....ng the business advances written off amounting to Rs. 1,47,81,233. 2.2 The learned AO has erred in concluding that advance written off will be loss of capital and it cannot be claimed as business expenditure under section 37 or as trading loss under section 28 of the Income tax Act, 1961. 2.3 The learned AO has erred in concluding that the advances written off cannot be treated as irrecoverable for the reason that the assessee is still trying to recover the money from Golden Gate Corporate Services India Pvt. Ltd. 2.4 The learned CIT(A) has erred in concluding that the write off of business advances cannot be considered as a trading loss or business expenditure for the year under consideration. 2.5 The learned AO and CIT(A) failed to appreciate that the company to which advances were made has been struck off from the list of companies by the Ministry of Corporate Affairs. 2.6 The learned AO and CIT(A) failed to appreciate that the business advances written off was advanced in the normal course of business. 2.7 The learned AO and CIT(A) erred in not appreciating that the claim of business advances written off satisfies all the in....
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....sory etc. It is observed by the Ld. AO that more than 80% of the gross revenue of the assessee is generated by holding seminars and conferences. 2.2 The assessee in the course of its business intended to conduct a conference during April, 2015 in Dubai. The assessee entered into an agreement with Golden Gate Corporate Services India hereinafter referred to as Golden Gate for making necessary arrangements in Dubai for conducting conference. Golden Gate is a domestic company providing services of event management and hotel room arrangements. The assessee paid advances to Golden Gate towards booking the conference hall, rooms for guests and their boarding and lodging arrangements in Dubai as per the agreement the assessee entered into with. As per the agreement the assessee advanced monies to Golden Gate to pay advances for booking accommodation and other facilities in Dubai. It is submitted that assessee had previous satisfactory dealings with Golden Gate for conducting similar conferences in August 2014 and February 2015 in Dubai. 2.3 The assessee paid advance payments of Rs. 1,42,03,233/ till 31st March 2015 and Rs. 40,00,000 on 7th April 2015 for booking hotels/accommodation....
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....eof is written off or off any earlier previous years Therefore the claim of the assessee as made in the return of income that this amount is bad debt written off fails the condition laid out in section 36(2)(i) of IT Act,1961. Therefore, the amount of Rs. 1,47,81,233/ cannot be claimed as bad debt written off. c. Further, an advance is placed in the balance sheet and it does not form part of P&L account. Therefore any advance written off will be loss of capital for the assessee and it cannot be claimed as business expenditure u/s 37 of IT Act, 1961 or trading loss u/s 28 of the IT Act, 1961. d. Furthermore from the assessee's submission it is seen that the assessee is still trying to recover the money from Golden Gate Corporate Services India and it cannot be said that money is irrecoverable to the assessee. e. Based on the above discussion, the amount of Rs. 1,47,81,233/- claimed under the head of bad debt written off is disallowed and added back to the income of the assessee". Assessee had filed alternate submission to treat the expenses as a trading loss u/s. 28 of the Act. The Ld.AO after considering submissions of assessee held as under: ....
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...., 2018-19 and 2019-20. The appellant has not produced anything to which could have shown that the amount had become irrecoverable during FY 2015-16 i.e. the year under consideration. In fact the cases for cheque bouncing for the balance amount were filed after the end of FY 2015-16. As such it cannot be said that the amount of Rs. 1,47,81,233/- had become irrecoverable during year under consideration and that during the year under consideration the appellant had exhausted all remedies available to it to recover these amounts. In fact during the year under consideration the appellant had not even filed cases related to bouncing of all the cheques as the remaining cases were filed in subsequent years. So the claim of the appellant for allowing it trading loss during year under consideration needs to be rejected. As regards the reliance of the appellant on various decisions, the same is misplaced as in the appeal under consideration the appellant has failed to show that the amount had become irrecoverable during the year under consideration. So as such it cannot he considered as a trading loss or the business expenditure of the year under consideration. Considering above the grounds o....
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.... 4.3 The assessee has claimed trade advances written off as nonrecoverable as an expenditure u/s 37(1) of the Act or alternatively as a trading loss u/s. 28 of the Income Tax Act. As per the above judicial pronouncements the claim of assessee under different section from the initial claim is justified and hence allowable. 4.4 U/s 37(1) of the I r Act, any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of the business or profession shall be, allowed in computing the income chargeable under the head "Profits and gains of business or profession". 4.5 The assessee Company has paid trade advance which became irrecoverable and written off. The said expenditure is not covered in sections 30 to 36 of the Act. The expenditure incurred is not a capital expenditure. To find out whether an expenditure is on the capital account or on revenue, one must consider for what purpose was the money laid out? Was it to acquire an asset of an enduring nature for the benefit of the business or was it an ongo....
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....46/De1/2015 dated 20.04.2018. Shriram EPC Ltd v. DCIT 1.T.A. Nos.1604 & 1740/CHNY/2016 dated 08.01.2020 CIT v. Mysore Sugar Co. Ltd [1962] 46 1TR 649 (SC) TRF Ltd v. CIT [2010] 323 ITR 397 (SC) Devi Films Private Ltd v. C1T, 75 ITR 301 (Mad) CIT v. ITC Ltd [2015] 63 taxmann.com 176 (Calcutta) 5. On the contrary, the Ld.Sr.DR relied on the orders passed by authorities below. We have perused the submissions advanced by both sides in light of records placed before us. 6. From the documents placed in the paper book at page 179 onwards, we note that assessee proceeded under section 138 of N.I. Act against the Managing Director of Golden Gate Corporate Services. We note that the Ld.CIT(A) in his order recorded that there is an arrangement between assessee and the MD of Golden Gate Corporate regarding refund of Rs. 1,61,68,069/-. It is also recorded that partial payment of Rs. 15 Lakh was paid by Golden Gate to assessee upto 24.07.2015. Subsequently post dated cheques issued by the MD of Golden Gate bounced. 6.1 Admittedly the money advanced by assessee to Golden Gate was for the purposes of business. The Ld.AO rightly rejected the ....