TaxTMI 
TaxTMI 
2018 (7) TMI 2312
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.... 21,35,504/- out of Rs. 28,47,339/- of Attimari Coolie Expenses claimed to have incurred by the assesse. Since the said expenditure have not been incurred under any statutory, judicial, commercial or administrative obligation and therefore not permissible as deduction, the same is required to be disallowed in full."" 3. Briefly stated facts are that the assessee company is engaged in the business of mechanical engineering & construction contract during the year under consideration. The AO noticed during the course of assessment proceedings that it has claimed Attimari Coolie Expenses of Rs. 28,47,339/-. The assessee was asked to explained these expenses with evidences. The assessee stated that it has incurred specific expenses with headload workers and construction workers from the unorganized sectors. It was explained that Attimari Coolie Expenses were incurred due to government patronage in union control in the state of Kerala and assessee has no alternative other than to pay these expenses in the system established. Since the assessee could not produce any evidence and could not explain the business connection with these expenses, the AO disallowed the entire Attimari Coolie ....
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....entire payment to workers' associations has been made in cash. Moreover, on certain dates, the payment to a particular association exceeds Rs. 20,000/- (supra). The issue involved is whether the Union can be treated as agent of laborers. It is true that an Union or Association represents its members, but in order to constitute agency, the principal should be bound by every action of its agent. The appellant ahs not been able to establish this requirement, in respect of the Union/ Association to whom payments have been made. Therefore, the appellant's contention is not accepted and it is held that rule 6DD (k) is not applicable in the case of appellant. 7.5 Moreover, considering the fact that the entire expenditure has been made in cash, the genuineness of expenditure cannot be verified. However, except the above mentioned payment of Rs. 1,16,433/- remaining did not exceed Rs. 20,000/-. Therefore, considering the nature of payment, AO's argument, and the appellant's submission, it is considered reasonable and fair, if the disallowance made is restricted to 25% of the addition made. Consequently, the addition made of Rs. 4,73,245/- is reduced to Rs. 1,18,311/-. No separate a....
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....d as retention by the client and will be released to the assessee company after the guarantee period. In few of the cases the same is not released due to some technical and/or other reasons and has to be written off in the books of account as are not recoverable from the clients. But the AO was not convinced and he disallowed the claim of bad debt of Rs. 1,25,68,662/-. Aggrieved, assessee preferred the appeal before CIT(A). 11. The CIT(A) allowed the claim of the assessee by observing in Para 9.2 of his appellate order as under: - "9.2 I have gone through the facts of the case, the assessment order and the contentions and submissions of the appellant. The AO has not allowed the deduction mainly on the ground that the appellant has foiled to establish that the debts' which were written off were genuine debt in the first place. It is not the case that the amounts were not taken to the profit and loss account. Once the business credits another party for a good or service; and shows it as revenue receipt it becomes a debt which is eligible for consideration u/s. 36(1)(vii) of the Act, once it is written off in the books. It is not a case where the writing off is proved ....
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....t even after 01-04-1989, it is not necessary for assessee to establish that has become irrecoverable. Once the bad debts or part thereof has been written off in the books of accounts of the assessee, that is enough for claiming deduction as bad debt. Hon'ble Supreme Court has held in Para 3 and 4 as under:- "3. For the sake of clarity, we re-produce herein below provisions of Section 36(1)(vii) of the Act, both prior to 1st April, 1989 and post-1st April, 1989. "Pre-1st April, 1989: Other deductions. 36.(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-- (i) to (vi) xxxx xxxx xxxx (vii) subject to the provisions of sub-section (2), the amount of any debt, or part thereof, which is established to have become a bad debt in the previous year. Post-1st April, 1989: Other deductions. 36.(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-- (i) to (vi) xxxx xxxx xxx....