2022 (6) TMI 1060

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....red in confirming disallowance of Rs. 1,31,589/- on account of bad debts." 2. The brief facts of the case are that the assessee is engaged in the business of exporting and local trading of all kinds of dyes, chemicals, pigments, pharmaceuticals and commission agent. The assessee filed its return of income on 13/09/2013 declaring total income of Rs. 94,08,260/-. The assessee has shown total sales of Rs. 9,84,19,879/- on which declared gross profit of Rs. 3.12 cores, which is 31.72% as against the preceding year at 31.31% on total sales of Rs. 9.30 crores. The case of assessee was selected for scrutiny. The Assessing Officer during the assessment, besides the other additions, made disallowance of bad debt of Rs. 1,31,589/-. The Assessing Off....

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....ident from the ledger account of the party that the amount was advanced for purchase of stock in trade and not any fixed asset.The amount was written off as the same was not recovered for more than three years. The loss of this account is allowable under Section 28 of the Act. The assessee also relied on the decision of Kolkata Tribunal in ITO Vs Shree Gouri Shankar Jute Mills Ltd. in ITA No. 1185/Kol/2012 order dated 08/10/2015. The ld. CIT(A) after considering the submission of assessee held that the amount written off did not arise on account of sales. The payment was made on account of advance for purchase of stock in trade and not of any kind of fixed asset. The Assessing Officer distinguished the case relied upon by the assessee on th....

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....her the material was supplied nor was the advance returned. The assessee made advance on 17/10/2008 and write off the amount in the books in financial year 2012-13 i.e. relevant for A.Y. 2013-14. The amount of write of is very small comparative to the income offered by the assessee. The claim of bad debts is genuine and bonafide. To support his contention, the ld. AR of the assessee relied on the decision in ITO Vs Shree Gouri Shankar Jute Mills Ltd.(supra). 5. On the other hand, the Sr. DR for the Revenue supported the orders of the authorities below. The ld. Sr. DR for the revenue further submits that written off bad debts does not arise on account of sales. The amount was advanced for making purchases and does not qualify as a bad debts....