TaxTMI 
TaxTMI 
2022 (2) TMI 42
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has raised the following grounds of appeal: "1 Ld. CIT (A) erred in law and on facts in confirming action of AO in not considering addition of Rs. 82,54,455/- made on account of disallowance of custom duty paid set aside for verification to the file of AO. Ld. CIT (A) erred in not appreciating that appellant in compliance with the direction submitted complete evidence of payment of custom duty in the relevant previous year along with bills of entries that were set aside for verification. Ld. CIT (A) ought to have adjudicated and deleted disallowance of custom duty paid. It be so held now. 2 Ld. CIT (A) erred in law and on facts in confirming rejection of claim of netting of interest by AO while computing deduction u/s 80IA of the Act. Both the lower authorities failed to appreciate detailed submissions made by appellant establishing nexus between interest income and expenditure to justify the claim that only net 'interest income' to be taken out from the calculation of profits of the business for computing deduction u/s 80IA of the Act as per the ratio of the latest judgment of the Hon'ble Apex Court. Ld. CIT (A) ought to have granted netting off inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O in the giving effect order to the direction of the ITAT has not given the benefit of the deduction for the custom duty as provided by the Ld. CIT-A in his order dated 5th January 2007. As such, the AO in his order dated 31st December 2012 under the provisions of Section 143(3) r.w.s. 254 of the Act has not given any benefit of deduction as directed by the Ld. CIT-A in the order dated 5th January 2007. 9. The assessee against the order of the AO preferred an appeal to the Ld. CIT-A who denied the benefit to the assessee in his order dated 4th December 2013 by observing that there was no such direction arising from the order of the ITAT dated 21st October 2011 for allowing the benefit of the deduction of the custom duty paid by the assessee during the relevant year. 10. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 11. The Ld. AR before us filed a Paper Book running from pages 1 to 113 and filed the chronological events as detailed under: Sr. No. Date Particulars 1 28-11-00 Return of income filed 2 31-03-03 Assessment order u/s. 143(3) of I.T. Act 3 05-03-04 Order passed by Hon'ble CIT(A) 4 03-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emently supported the order of the authorities below. 17. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, originally the proceedings initiated against the assessee under the provisions of Section 143(2) of the Act which raised up to the ITAT. The assessee for the first time before ITAT claimed the deduction on account of custom duty for Rs. 82,54,455/- by making additional claim. The ITAT in ITA No. 1481/Ahd/2004 vide order dated 3rd of December 2004 was pleased to admit the claim and allow the deduction to the assessee subject to the verification. The relevant finding of the order of the ITAT reads as under: "...in the additional ground raised the assessee wants relief on account of applicability of section 43B. In the facts and circumstances of the case, we are of the considered opinion that in view of the decision in Berger Paints (supra) the entire amount of excise duty/custom duty paid by the assessee in particular accounting year is allowable under section 43B of the Act, as deduction in respect of that year, irrespective of the amount of excise duty/custom duty included in value of assessee's clos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, the AO passed order giving effect dated 31st December 2012 without giving the benefit of the custom duty as claimed by the assessee. On appeal the Ld. CIT-A has also denied the benefit of the claim of the assessee in his order dated 4th December 2013. 23. Before the adjudicating the issue raised by the assessee before us whether the claim of the assessee for the deduction of the custom duty is admissible in the given facts and circumstances, we take a note of the fact that the assessee has claimed the deduction for the custom duty in the proceedings under Section 143(3) of the Act first time before the ITAT which was admitted and allowed subject to the verification by order dated 3rd December 2004. Thus, the question arises, the claim which have been made by the assessee in the proceedings under Section 143(3) of the Act, can the assessee made a similar claim in the income escapement proceedings. 24. Reassessment proceedings under Section 147 of the Act are for the benefit of the revenue and not for the assessee as held by the Hon'ble Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 (SC)/64 Taxman 442. It is not for the taxpayer to conve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inst the assessee under the provisions of section 147 of the Act. The assessee in response to the notice issued under section 148 of the Act by the AO filed return of income dated 18-02-2005. The AO found that the assessee while calculating the deduction under section 80IA of the Act has taken certain other income under consideration as detailed below: (i)Interest income Rs. 5,91,30,485/- (ii)Dividend income Rs. 15,726/- (iii)Other income (a)Exchange rate difference Rs. 13,37,569/- (b)Excise credit Rs. 2,61,759/- (c)Kasar/Vatav Rs. 5,687/- (d)Excess provision of written back of bonus Rs. 2,85,809/- Rs. 18,90,824/- Rs. 74,50,143/- (iv)Export Incentives (DEPB) Rs. 2,09,507/- (v)sundry balances Total Rs. 6,86,96,685/- 28. However, the AO in his order dated 21-03-2006 has excluded the aforesaid income while computing the deduction available to the assessee under section 80IA of the Act. 29. Aggrieved assessee preferred an appeal to the learned CIT-A, who vide order dated 05-01-2007 confirmed the order of the AO. 30. Bei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the sister concern to procure the machineries. As per the assessee, the impugned interest income was made out of the borrowed fund. Likewise, the money advanced to the sister concern represents the working capital of the assessee which is out of the borrowed fund. Thus the assessee, contended that there is a direct nexuses between the interest income and the expenses. The assessee in support of his contention also filed the copy of the annexure bearing number 4A and 4B. 32. However, the AO disregarded the contention of the assessee by observing that the issue for the allowability of netting of interest was set aside by the ITAT to verify the issue in the light of the latest available Judgments. But the assessee failed to file the latest judgments on this issue as directed by the ITAT. Thus the AO excluded the gross amount of interest amounting to Rs. 5,91,30,485/- for calculating the deduction under section 80IA of the Act. 33. The assessee carried the matter before the learned CIT-A, who has also confirmed the order of the AO by observing as under: The appellant failed to establish any nexus of borrowed capital with bank FOR interest and interest on advances. The ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r hand the learned DR vehemently supported the order of the authorities below. 37. We have heard the rival contention of both the parties and perused the materials available on record. It is the 2nd round of litigation before us on the issue whether interest income should be excluded while computing the deduction under section 80 IA of the Act after netting of the expenses. Admittedly, the ITAT in the original proceedings under section 147 of the Act in ITA No. 1039/Ahd/2007 vide order dated 21-10-2011, has directed to the AO to allow the claim of the assessee after verifying the nexuses between the interest income with the interest expenses. If the nexuses is found then the AO was to allow such interest expenses against the interest income to work out the net interest income so as to exclude the same from the computation of the deduction under section 80IA of the Act. The relevant finding of the ITAT in ITA No. 1039/Ahd/2007 has already been reproduced in the preceding paragraph. 38. Thus, the remains no ambiguity the fact that it was the onus upon the assessee to establish based on the documentary evidence that the assessee has incurred interest expenses against the interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or reassess' the escaped income of an assessee. The use of the expression 'assess or reassess such income or recompute the loss or depreciation allowance' in section 147 after the conditions for reassessment are satisfied, is only relatable to the preceding expression in clauses (a) and (b) viz., 'escaped assessment'. The term 'escaped assessment' includes both 'nonassessment' as well as 'under assessment'. Income is said to have 'escaped assessment' within the meaning of this section when it has not been charged in the hands of an assessee in the relevant year of assessment. The expression 'assess' refers to a situation where the assessment of the assessee for a particular year is, for the first time, made by resorting to the provisions of section 147 because the assessment had not been made in the regular manner under the Act." 42. In view of the above, we hold that the claim of the assessee for the netting of interest income while computing the deduction under section 80-IA of the Act is not maintainable in the given facts and circumstances for the reason that the present proceedings before us are under Section 147 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ditors. Ld. CIT (A) failed to appreciate submissions that addition of obsolete stock written off at lower of cost or net relizable value as per policy of the company deserved to be deleted. It be so held now. 6 Alternatively and without prejudice to the above ground ld. CIT (A) ought to have allowed amount written off as business/trading loss appreciating that stock lying for a period of about 5 years became unsalable & obsolete. It be so held now. 7 Ld. CIT (A) erred in law and on facts in confirming addition made by AO of Rs. 44,573/- on account of non payment of PF & ESI amount within mandatory period. Ld. CIT (A) ought to have deleted addition. 8 Confirming levy of interest u/s 234A/234B/234C & 234D is not justified. 9 Initiation of penalty u/s 271(1)(c) of the Act is not justified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal." 45. The assessee vide letter dated 31-03-2020 has raised the additional ground of appeal as reproduced hereunder: "1. Ld. CIT(A) erred in law and on facts in confirming disallo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the A O was erroneous. In the absence of any defence of the appellant, it is held that there is no requirement to interfere with the order of the ld A O. Consequently, the addition made by the A O of Rs. 82,20,059/- is confirmed and the ground of appeal No. 3 raised is dismissed." 50. Being aggrieved by the order of the Ld. CIT-A the assessee is in appeal before us. 51. The AR before us submitted that the amount of interest was paid to ICICI bank by taking the fresh loan from ARCIL. The learned AR for us reiterated the contentions made before the authorities below. 52. On the contrary learned DR vehemently supported the order of the authorities below. 53. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the amount of depreciation claimed by the assessee on the amount of interest capitalised in the year under consideration was denied by the AO on the reasoning that there was no payment of interest by the assessee. As such the amount of interest was converted into the principal amount of loan which was taken over by ARCIL and thus there was no interest payment made by the assessee. 54. Admittedl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n made the regular course. There is no allegation by the revenue that such accounting adjustments have not been made in the books of accounts. Thus, in view of the above we hold that the assessee has made the payment of interest expenses on the loan borrowed from ICICI bank by converting the same into of fresh loan from ARCIL. Accordingly we hold that, the assessee cannot be denied the depreciation allowance on the amount of interest capitalised on the machines. Consequently, set aside the finding of the learned CIT-A, and direct the AO delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 56. The second issue raised by the assessee is that the learned CIT-A erred in confirming the addition made by the AO for Rs. 3,59,653/- representing the prior period expenses. 57. The assessee in the year under consideration has effectively claimed an expense of Rs. 3,59,653/- as prior period expenses after making the adjustment of the prior period income. The AO during the assessment proceedings sought an explanation from the assessee further such prior period expenses were crystallized in the year under consideration. But there was no explanation furnish....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of the character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other." 63. In view of the above, we find difficult to convince ourselves with t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the amount pertains to a car on which depreciation was claimed thus the item assumes character of a revenue nature. Assuming that appellants theory of scrap sale is correct, even then scrap is generated from stock and hence the item becomes a revenue item. Consequently, in view of absence of any cogent evidence, the addition made by the ld A O of Rs. 80,000/- is confirmed and the ground of appeal raised is dismissed." 69. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 70. The Ld. AR before us contended that loan liability was representing against the fixed assets being capital in nature. Therefore, the provisions of section 41(1) of the Act are not applicable in the given facts and circumstances. 71. On the contrary, the Ld. DR vehemently supported the order of the authorities below. 72. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the revenue has found that there was a liability the books of the assessee which was outstanding since many years. The amount of liability was of Rs. 80,000/- only. As such the assessee in the preceding years has acquired a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....btained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year." 75. A plain reading of the above provisions reveals that it is applicable with regard to an allowance or deduction in respect of loss, expenditure or trading liability incurred by the assessee. But the depreciation claimed by the assessee, though it is an allowance, but it is not in respect of loss, expenditure or trading liability as envisaged under the provisions of Section 41(1) of the Act. Accordingly, we are of the view that such outstanding liability against the car cannot be treated as trading liability and therefore the same is outside the purview of the provisions of Section 41(1) of the Act. In holding so, we draw support and guidance from the judgement of Hon'ble Supreme Court in the case of Nectar Beverages (P.) Ltd. reported in 182 Taxman 319, wherein it was held as under: "Where any allowance or deduction had earlier been made in respect of any loss, expenditure or trading liability and, subsequently, the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ock of assets. It was also contended that though unit No. 1 is not in operation but still the assessee is incurring normal wear and tear on such assets. 79. However, the AO disregarded the contention of the assessee by observing that machines/fixed assets used in unit No. 1 have not been used for the purpose of the business. As per the AO, the use of the fix assets was 1 of the precondition for claiming the depreciation on these assets. Accordingly, the AO disallowed the depreciation claimed by the assessee and added total income of the assessee. 80. Aggrieved assessee preferred an appeal to the Ld. CIT-A, and reiterated its submission made during assessment proceeding. 81. However, the Ld. CIT-A after considering the fact in totality confirmed the order of the AO by observing as under: "11.2 I have carefully considered the submissions made by the appellant and the argument taken by the assessing officer in the light of material available on records. The appellant has reiterated the arguments taken before the A O it is an admitted fact of the case that the appellant has not undertaken any manufacturing activity from Unit-1 in respect of which depreciation was clai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unit No. 1, though not in operation during the year, but assets were previously used and ready to use for the purpose of the business. Thus, it can be said that there was passive use of these assets. 87. It is also not out of the place to mention that assets used unit No. 1 became the part of the block of assets and lost their individual identity. Accordingly, the assets deployed in unit No. 1 cannot be segregated for the purpose of the depreciation. These assets will remain part of the block of assets and therefore would be entitle for depreciation even in a situation that assets were not used for a particular year for the purpose of the business. Accordingly, we set aside the finding of the Ld. CIT-A, and direct the AO to delete the disallowance made by him. Hence, the ground of appeal of the assessee is allowed. 88. The issue raised by the assessee in ground No. 5 and 6 is that the Ld. CITA erred in confirming the addition made by the AO for Rs. 1,53,28,000/- representing the closing value of raw materials, spares, WIP and finished goods written off on account of obsolescence. 89. The assessee during the assessment proceedings claimed that there were certain forms of r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the stock comprises defective or rejected material. Assuming without conceding that the stock was defective or rejected, the appellant has not been able to produce any evidence in support of its submissions. Without prejudice. assuming that the stock was old absolute and hence unsalable then also the appellant has failed to support his reasoning with any cogent evidence. The argument of the appellant that the revaluation is justified in view of its consistent valuation of stock on the principle of cost or market price whichever is lower is actually self contradictory. The very fact that stock was revalued then its original value itself proves that the principle of cost or market price whichever is lower was not applied. Consequently as the appellant has failed in providing a satisfactory explanation with any evidence, the addition made by the ld A O of Rs. 1,53,28,000/- is confirmed and the ground of appeal No. 12 is dismissed. The impugned amount of Rs. 1,53.28,000/does not falls in the category of business or trading loss as it was not a loss which had occurred naturally but was self created. It is a settled principle of law that only those business losses can be allowed which oc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll certainly enhance the profit of the assessee. But, the same closing stock will become the opening stock in the subsequent year and the profit of the subsequent year will reduce by the amount of such claim of the assessee. Thus, we note that there will not be any impact on the income of the assessee if we see from the overall position. The year under dispute, the income of the assessee will get enhance and the income of the assessee by the same amount will get the decrease in the next year. Thus, overall there will not be any impact on the taxable income of the assessee on account of such adjustment in the value of the closing stock. We also note that the Hon'ble Supreme Court in the case of Mahindra Mills Ltd vs. PB Desai Appellate Assistant Commissioner reported in 99 ITR 135 has held that the closing stock of the year will become the opening stock of the next year hence the same telescoped. The relevant observation of the Hon'ble Supreme court reads as under: Since the closingstock of one assessment year furnished the figure of the opening stock for the succeeding year, it followed that the record showing the closingstock of assessment year 1959-60 formed a part of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....encies who will not allow write off without proper investigation as writing off the value of closing stock would result in impairment of the balance sheet which will eventually jeopardize their recovery once the debt is labeled as bad. (iii) Approval by nominee directors to write off the value of closing stock in question is it self third party evidence. (iv) Auditors certificate on stock valuation and verification was already produced before Ld. A.O. as mentioned in our reply dated 24.12.2009 quoted pars 12, but the same is overlooked." 101. But none of the authority below has pointed out any defect in the submission of the assessee. It was also contended by the assessee that there was the change in the management of the company and therefore the new management has taken a decision. Thus, it is transpired that, the stock has been written off from the books accounts in systematic manner by the approval of the Board of Directors. Therefore, all these details cannot be brushed aside. 102. We note that in the similar and identical facts and circumstances, the Hon'ble Gujarat High Court in the case of Pr. CIT vs. Zydes Wellness Ltd. reported in 81 taxmann.com 15....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A O was erroneous. In the absence of any defence of the appellant, it is held that there is no requirement to interfere with the order of the ld. A O. Consequently, the addition made by the A O of Rs. 44,573/- is confirmed and the ground of appeal No. 14 raised is dismissed." 107. The Ld. AR for the assessee before us submitted that out of total amount of Rs. 44,573/-, a sum of Rs. 29,698/- was paid within the grace period of 5 days. Therefore the same should be allowed as deduction. The learned AR in support of his contention relied on the judgment of Hon'ble Gujarat High Court in the case of Amoli Organics (P.) Ltd reported in 221 taxman 116. 108. On the other hand, the Ld. DR vehemently supported the order of the authorities below. 109. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee is required deposit the employee's contribution towards the PF/ESI within the time specified under the respective Act. If it is not done so, the same is treated as income of the assessee under the provisions of Section 2(24)(x) read with Section 36 (1)(va) of the Act. Under the provision of PF and ESI Act, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on such fixed asset purchased along with the software was disallowed by the AO on the reasoning that the additions of the assets were bogus in nature. Nevertheless, the assessee was claiming depreciation on such fixed assets year after year including the year under consideration. However, the AO following the order of the earlier years has also disallowed the depreciation on such fixed assets at Rs. 2,74,83,963/- and added to the total income of the assessee. 113. Aggrieved assessee preferred an appeal to the Ld. CIT-A, who partly confirmed the order of the AO by observing as under: "4.3 I have carefully considered the submissions made by the appellant and the argument taken by the assessing officer in the light of material available on records. The impugned matter of disallowance of depreciation has now been more or less settled in view of order of Hon'ble jurisdictional Tribunal. The order of AO u/s. 143(3) / 254 for A Y 2005-06 dt 15-3-2013 indicates that though the disallowance of depreciation remains in principle, its quantum gets modified in view of order of the Hon'ble Tribunal. As indicated above, according to appellant as against total original disallo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing channels and relevant details of the said payment were shown to us and list of suppliers with invoices of machinery purchased were also submitted before the lower authorities. And ledger account of M/s. Vimpsan Precision Pvt. Ltd. was also submitted before the lower authorities. Apart from that reconciliation chart of plant and machinery with Dalal Mott Macdonald report were also submitted to the effect that machines were very much there and inspection was duly carried out by the surveyor. And Valuation Report certificate dated 26.05.2003 wherein before granting loan IDBI Bank carried out inspection and Valuation Report was duly prepared wherein details of all the machines were given. 9. The assessee requested Assessing Officer on 4th May, 2015 and on 12.08.2012 and on 19.09.2012 requesting the Assessing Officer to carry out the physical inspection of the machines. But ld. A.O. did not bother to inspect the same for the reason that ITAT did not give him direction to physically inspect the machines wherein in department appeal filed before the ITAT directed the ld. A.O. that he shall pass reasoned order by giving reasonable sufficient opportunity to the assessee conside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT(A) ought to have deleted total disallowance. It be so held now. 3 Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of Rs. 5,90,392/- claimed as prior period expenses relying upon appellate order of immediately earlier year. Ld. CIT(A) ought to have granted set off prior period expenses with prior period income. It be so held now. 4 Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of Rs. 99,800/- depreciation claim with respect to closed Unit I. Ld. CIT(A) ought to have deleted disallowance of depreciation claimed on assets forming block of assets of unit not permanently closed. It be so held now. 5 Confirming levy of interest u/s 234A/234B/234C & 234D is not justified. 6 Initiation of penalty u/s 271(1)(c) of the Act is not justified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any other grounds of appeal at the time of or before the hearing of the appeal." 121. The first issue raised by the assessee in the ground no. 1 and 2 of appeal is that the Ld. CIT-A erred in confirming the disallowance of the depreciation for Rs. 1,74,17,074/- and Rs. 6,07,062/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 87 of this order in favour of the assessee. The Ld. AR and the DR also agreed that whatever will be the findings for the Assessment Year 2007-08 shall also be applied for the year under consideration i.e. AY 2008-09. Hence, the grounds of appeal filed by the assessee is allowed. 127. The issue raised by the assessee in ground no. 5 and 6 are either incidental or premature to decide. Hence the same is dismissed being infructuous. 128. In the result, appeal of the assessee is partly allowed. Coming to ITA No. 1345/Ahd/2014 an appeal by the assessee for A.Y. 2009-10 129. The assessee has raised following grounds of appeal: "1 Ld. CIT (A) erred in law and on facts in confirming action of AO in disallowing depreciation of Rs. 1,80,63,211/- on tangible assets. Ld. CIT (A) ought to have deleted disallowance made by AO appreciating submissions & documentary evidence placed on record. 2 Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO without verification of purchase bills of assets or payment to suppliers for assets recorded in asset register corroborated by report of Dalai Mott Macdonald. Ld. CIT (A) ought not to have confirmed dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reciation for Rs. 1,80,63,211/- on opening WDV. 131. At the outset we note that the issues raised by the assessee in its ground of appeal for the AY 2009-10 is identical to the issues raised by the assessee vide additional ground in ITA No. 218/AHD/2014 for the Assessment Year 2007-08. Therefore, the findings given in ITA No. 218/AHD/2014 shall also be applicable for the year under consideration i.e. AY 2009-10. The appeal of the assessee for the assessment 2007-08 has been decided by us vide paragraph No. 117 to 118 of this order in favour of the assessee. The Ld. AR and the DR also agreed that whatever will be the findings for the Assessment Year 2007-08 shall also be applied for the year under consideration i.e. AY 2009-10. Hence, the grounds of appeal filed by the assessee is allowed. 132. The issue raised by the assessee in ground no. 5 is that the Ld. CIT-A erred in confirming the addition made by the AO for Rs. 18,27,854/- representing the prior period expenses. 133. At the outset we note that the issues raised by the assessee in its ground of appeal for the AY 2009-10 is identical to the issues raised by the assessee vide groundno-2 in ITA No. 218/AHD/2014 for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The Ld. AR before us contended that the bad debts has actually been written off by the assessee in the books of accounts. Therefore, the same cannot be disallowed or treated as provision for the doubtful bad debts based on the nomenclatural. 139. On the contrary, the Ld. DR vehemently supported the order of the authorities below. 140. We have heard the rival contentions of both the parties and perused the materials available on record. For claiming the deduction as bad debts under the provisions of section 36(1)(vii) of the Act, it is prerequisite that amount of bad debts has been offered to tax as provided under subsection (2) of section 36 of the Act. The relevant extract of the provisions of section 36(2) of the Act reads as under: (2) In making any deduction for a bad debt or part thereof, the following provisions shall apply- (i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking....