TaxTMI 
TaxTMI 
2021 (11) TMI 1213
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....law and therefore, the order so passed is bad in law, arbitrary and void ab-initio. 3. That on the facts and in the circumstances of the case and in law, the Ld. Pr. CIT erred in exercising jurisdiction u/s 263 by setting aside the assessment order with the direction to make fresh assessment with regard to bad debts claimed of Rs. 56, 97,379/- by the appellant even though the issue relating to bad debts has been discussed and scrutinized by the Assessing Officer while framing the assessment u/s 143(3) of the Act." 3. The order u/s 263 passed by the ld. PCIT is as under: "During the assessment proceedings for A.Y. 2014-15, the Assessing Officer had asked the explanation for die amount written off vide order sheet entry dated 16/05/2016 and assesses had filed the following reply: "It is submitted that the assessee company during the previous assessment year had paid an amount w M/s. Philips Commodities India (P) Ltd. for doing business with NSEL in the normal course of business. Since the exchange started making defaults in making payments to its clients ultimately it went burst during the month of July, 2013, as widely reported in the Media, The exchange lost all its money....
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.... of the assessee cannot be concluded in AY 2014-15, till the final deficiency amount is arrived at. Since recovery shall take longer time and hence any claim earlier to that shall be prima facie, considered as premature claim liable for rejection. In view of above facts, it is evident that assessee's claim of bad debt has been allowed by the Assessing Officer without verification as the said debt is premature to be written off. Therefore the order u/s 143(3) of the Act as passed by the Assessing Officer on 19.05. 2016 in the ease of M/s Flair Exports Pvt. Ltd. is erroneous and prejudicial to the interests of revenue. In view of the above facts and reasons proceedings u/s 263 of Income Tax Act, 1961 were initiated against the assessee for revision of assessment order for the A. Y. 2014-15 and the assessee was required to show reasons as to why should its claim for bad debts of Rs. 56,97,379/- be not rejected / disallowed. In response to the notices Mr. Deepak Malik, Advocate appeared who filed reply Dated 02/03/2017 and discussed the case. The Assessee has mainly claimed that the position is well settled from 01/04/1989, it is not necessary for the assessee to establish that the....
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....s Pvt. Ltd. Vs DCIT in ITA No. 2818/Ahd/2017 order dated 16.10. 2018 and the ad judication thereof. 6. The para no. 11 of the order is as under: "11. We find ourselves in agreement with this pivotal contention on behalf of the assessee that it is not necessary for the tax payer to establish that the debt has become irrecoverable for allowance of deduction. It is an admitted position that the debt has arisen in course of commodity trade and such debt or a part thereof has been taken into account while computing the chargeable income of the assessee. The amount outstanding from the respective brokers has been shown to be duly written off in the books of accounts. Therefore, there is a good deal of force in the point of view expressed on behalf of assessee that the claim of bad debt becomes allowable as per the scheme of the Act having regard to the decision of the Hon'ble Supreme Court in TRF Ltd. allowed by and CBDT Circular (supra)." 7. Further, the Co-ordinate Bench in that particular case has gone to examine the issue of delivery of the stocks and remanded the matter to the AO to determine whether the business transactions of the assessee falls within the purview of Section ....
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.... taken into account while calculating the income in the previous year, the deduction u/s 36(2) is not allowable. 14. Before the ld. CIT (A), the assessee has taken two fold arguments, one that the amount is allowable u/s 36(2)(ii), the other being the amount is allowable u/s 28 of the Income Tax Act, 1961. The ld. CIT (A) held that since the amount has not been offered to tax hither to, it cannot be considered for application of provision u/s 36(2)(ii). The judgment of the Hon'ble Supreme Court in the case of TRF Ltd. 323 ITR 397 found to be inapplicable by the ld. CIT (A). The ld. CIT (A) has also not allowed the loss as capital loss on the grounds that there has not been any existence of a capital asset. 15. During the hearing before us, the ld. AR argued mainly that if the amount is not allowable u/s 36(2)(ii), the same is still allowable u/s 28 of the Act as the amount has been invested and lost in the same year. 16. The ld. DR argued that the primary intention of the assessee is investment and hence at the most it can be allowed as capital loss. 17. Heard the arguments of both the parties and perused the material available on record. 18. The issue involves deduc....