TaxTMI 
TaxTMI 
2022 (4) TMI 1231
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....ds/2011 dated 26.07.2012, relating to the Assessment Year 2006-07. 2.According to the appellant / assessee, they are a partnership firm and they filed their return of income for the assessment year 2006-07, on 31.10.2006 admitting a total income of Rs. 37,31,370/-, which was originally processed under section 143(1) of the Income-tax Act, 1961 (in short, the Act) on 11.04,2007. However, while passing the assessment order under section 143(3) on 30.12.2008, the respondent disallowed the claim of bad debts to the tune of Rs. 22,94,000/-. Challenging the said assessment order, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals)-1, Coimbatore, who by order dated 26.05.2011, dismissed the same thereby confirming ....
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....rchase of property, however, the same was not taken into consideration by the authorities below. The learned counsel also placed reliance on a decision of the Hon'ble Supreme Court in the case of Badridas Daga Vs. Commissioner of Income Tax [(1958) 34 ITR 10 (SC)], wherein, it was held as follows: "In the result, we are of opinion that the loss sustained by the appellant as a result of misappropriation by Chandratan is one which is incidental to the carrying on of his business, and that it should therefore be deducted in computing the profits under Section 10(1) of the Act. In this view, the order of the lower court must be set aside and the reference answered in the affirmative. The appellant will get his costs of this appeal ....
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....sing officer disallowed the said claim, on the premise that the same was neither revenue nor was it a loan or debt incurred in respect of the business carried on by the appellant in the relevant accounting year. 9.The order of the assessment was challenged by the appellant before the appellate authority and it was pleaded that they were intending to raise a loan for the purpose of expanding its business by increasing the capacity of the lodge and the neighbouring building owners also intended to offer their business complex to the appellant; and therefore, the amount was advanced in good faith in the course of carrying on the business of the appellant. However, the said plea was not accepted and the disallowance made by the assessing off....
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....believed at all. If that was so, Shri K.P.S.Prakash would not have stated in the first instance that the amount was sought for purchase of land at Coimbatore. He could have very well stated that it was for the purpose of acquiring the adjacent land. In the complaint filed before the Police, there was not even a whisper that the proposal was for expansion of the assessee-firm's business. It is clear that the amounts were paid for the partner's personal purpose only. Nothing was produced before the CIT (Appeals) to show that assessee had any intention to purchase any adjacent property for expansion of the business. It would also be naïve to believe that assessee would have paid a sum of Rs. 25 lakhs just like that without any agr....
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....n assessee from proving that the debt was incurred during the course of business, for the purpose of its business. We are, therefore, of the opinion that the authorities below were justified in disallowing the claim of the assessee." 11.It could be seen from the findings of the authorities below that after analysing the entire pleadings and the submissions made on either side, they have in unequivocal terms, held that there was no material available to prove that the loss incurred by the appellant / assessee was for the purpose of acquiring the property at Coimbatore for expansion of its business and hence, the same was not treated as business loss / bad debts. Such a finding rendered by the authorities below, based on the material evide....