TaxTMI 
TaxTMI 
2025 (6) TMI 64
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.... adjudication. 3. Ground No. 2; The same arises out of the disallowance on account of unclaimed balances written off. During the FY 2012-13, relevant to the impugned assessment year, the Appellant had written off Rs. 4,03,865/- in its books of accounts, under the three heads of accounts: Sl. No. Particulars Amount 1. Unclaimed balances written off 56,182/- 2. Miscellaneous balances written off 1,13,927/- 3. Bad debts 2,24,588/- 3.1 The case of assessee is that copies of ledger accounts of the above accounting heads were submitted with the Ld. AO vide submission dated 18/19.02.2016 and are placed at pages 201-205/PB. The amounts, written off under the first two heads of accounts, were on account of certain advances made to a some suppliers and an employee which had become unrecoverable whereas the amount written off under the head Bad Debts is on account of sales made in earlier years for which proceeds became unrecoverable. As with regard to the Unclaimed balances written off. The assessee claims that ledger account of Unclaimed Balances Written off, shows that out of total expenditure of Rs. 56,182, the substantial amount of Rs. 38,648/- is a written off on account o....
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....e amount of Rs. 4,03,865/- written off as bad debts was actually offered to tax in any of the preceding years. No material has been brought on record to controvert the finding of the AO. As both the conditions envisaged u/s 36(1)(vii) and 36(2) have not been fulfilled, the said amount of Rs. 4,03,865/- cannot be allowed. Hence, this ground of appeal is Dismissed." 3.3 The ld. AR has relied the extract of audited financial statements for the year ending 31.03.2012 reflecting the amount of Rs. 38,648 due from J B Bhutala and Ledger account of Vinod Tomar. Ld. Tax authorities have made disallowance for reason of failure of assessee to show that that the amount involved had actually been offered for taxation and there is no dispute with regard to the fact that the said amount had actually been written off in the books of account. In case of the sales made to Vinod Tomar had been recorded in income of the Appellant and offered to tax in an earlier year and the amount recoverable had been actually written off as bad debts. Ld. AR sufficiently establishes that that the amount, which has been written off as bad debts in the impugned year, was standing in the debit of the ledger account un....
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....duction and it was a pity that all the authorities had to expend so much time and energy only to determine the year of taxability of the amount. Therefore, the Tribunal was not correct, in law, in disallowing sales incentive claimed by the assessee." 4.2 Similar is the proposition of law as settled by the Hon'ble Jurisdictional Delhi High Court in the case of Commissioner of Income Tax Vs. M/s Vishnu Industrial Gases P. Ltd. [ITR No. 229/1988], where it held as follows; "Where the department had not disputed that the expenditure was deductible in principle but was only disputing the year in which the deduction could be allowed HELD, castigating the department, that as the tax rates were the same in both years, the department should not fritter away its energies in raising questions as to the year of deductibility/taxability." 4.3 In light of the above submissions and the judicial pronouncements, the disallowance of Rs. 132,957 deserves to be deleted. The ground is allowed. 5. Ground No. 4. The ground arises out of the addition made on account of advance received on sale of land. The Ld. AO had added back Rs. 6,50,000 on account of advance received for sale of land. As for the ....
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.... provisions of section 2(22) (e) were not applicable. It is noticed from the share holding pattern of the assessee company filed vide letter dated 07,03.2016 that Ms. Shruti Dhawan and Ms. Sonai Dhawan were holding less than 41% shares of the assessee company as on 01.04.2012 and as on 31.03.2013, Hence, the provisions of section 2(22)(e) of the Act are considered to be not applicable in respect of the advances given to these two share holders. Further, the assessee has received substantial advances during the year from M/s Sara Industrial Estate Ltd. and shareholding pattern of M/s Sara Industrial Estate Ltd. (SIEL) has also been filed vide letter dated 07.03.2016 which shows that the assessee company was holding 40% of shares of the said company as on 01.04.2012 as well as on 31.03.2013. It is also noticed from the share holding pattern that M/s Sara Industrial Estate Ltd. is not a company in which the public are substantial interested. In view of these facts, provisions of section 2(22)(e) of the Act, in respect of the advances received by the assessee company from M/s SIEL. Still the assessee has not offered any specific explanation as to why amount of advances received by th....
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....of express provision under the Act, I am in agreement with the AO that the provision of section 2(22)(e) is clearly applicable in the case of appellant. 10.5 In view of the aforesaid discussion I do not find any infirmity in the order of the AO. The addition of Rs. 25,00,000/- u/s 2(22)(e) is confirmed. Hence this ground of the appellant is Dismissed. 6.1 The case of Appellant is that a lessee of SIEL and has a running account with the said company. It has to pay lease rentals and maintenance charges to SIEL. Besides it has advanced sums in the past as well as current financial year to SIEL for business purposes since it owns substantial equity in SIEL. The said sums are returned by SIEL to the Appellant on periodic basis. A copy of the ledger account of SIEL in the books of Appellant is also filed before the authorities below and copy of same is made available at pages 122-126/PB. The same establish that the Appellant has a running account with SIEL and Rs. 570,228 was payable by Appellant to SIEL on account of rent and services. That the Appellant paid Rs. 28,43,356 to SIEL on account of rent and services plus short term advances in ordinary course of business for the day to d....
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....finding of the Ld. AO. The case of assessee is that during the impugned year, it had completed construction of its new building, Building C-4, constructed a factory shed for a building 'Shot Blast Facility'. During the impugned year only, the Appellant has conducted repairs and maintenance of its administrative office situated at 5, Pritam Road, Dehradun. The total cost which was incurred by the Appellant for the construction of building, factory shed and the repairs and maintenance of the administrative office, was booked by it under a common ledger, namely 'Building Construction' (ledger account placed is placed at at pages 111-115/PB). At the beginning of the year, when the construction of building C-4 was completed, the amount attributable to its construction i.e. Rs. 1,04,55,959 was capitalized and transferred to Building account and the balance amount of Rs. 41,10,938, which was expended for repairs of the administrative office, was transferred to repairs account. The same is evident from the ledger account of repairs and maintenance and Building C-4, placed at pages 133-134/PB & 117/PB respectively. Further, copies of bills pertaining to repairs and maintenance expenditure a....
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....AO for making disallowance. The proportionate disallowance of interest of Rs. 16,46,219/- made by the AO is confirmed. Ground No. 9 is dismissed" 8.1 The case of assessee is that during the impugned year, it had sufficient own funds for making the advance of Rs. 3,10,39,031 to PHL. Further that Appellant holds 47.06 of the equity in PHL and has substantial stake in the said company. PHL had been making consistent losses in the past and even in financial year 2012-13 has made a loss of Rs. 2.5 crores. Thus the advance was made for purely " for the purpose of business". There was no necessity for the Appellant to divert any part of its borrowings for the aforesaid purpose. The owned funds comprised of not only share capital and free reserves available with the Appellant at the beginning of the year, but also the interest free borrowings made by the Appellant during the year from its related parties and thirdly the profits made by the Appellant during the impugned year. As would be evident from the following, the latter two by themselves were more than Rs. 3,10,39,031 advanced by the Appellant to PHL. Share Capital = Rs. 2,25,63,000 Accumulated Profits = Rs. 12,57,81,054 Owned f....