TaxTMI 
TaxTMI 
2026 (1) TMI 1407
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....failed to furnish basic and verifiable details such as PAN, address, and identity of the debtors, which are essential to establish the genuineness of the debt and compliance with the conditions laid down under section 36(2) of the Act?" 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that mere write-off in the books of accounts is sufficient to allow bad debts under section 36(1)(vii), without considering that the assessee failed to discharge the initial burden of proving that the debt was previously taken into account as income and that recovery steps were undertaken, thereby rendering the claim unverified and non-genuine?" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of 4,16,89,000/- made by the Assessing Officer on account of advances written off by the assessee to its subsidiary company, treating the same as business loss/expenditure, without appreciating that such advances were in the nature of capital investment and not revenue expenditure?" 4. "Whether on the facts and in the circumstances of the case and in law, t....
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....on, assessee had approx. 9,000 local operators, operating under CATV and HITS services and through these cable operators it was providing services to approx. 40,00,000 subscribers as direct customers. Summarily, assessee is in the business of media and communication which is a company in which public are substantially interested. During the year under consideration, assessee underwent a restructuring by way of a demerger scheme dated 21.08.2020, approved by the ld. NCLT on 21.08.2020. Assessee demerged its business of Media & Communication into NXT Digital Ltd. w.e.f. 01.10.2019. The demerger being fully compliant u/s.2(19AA) of the Act, it filed its return of income considering the provisions of section 72A(4). 4. As against the returned income, assessment was completed u/s. 143(3) at total income of Rs. 54,81,31,033/- by making the following additions/disallowances tabulated below: Sr. No. Particulars Amount (Rs.) 1 Bad debts 34,04,27,023 2 Advance Written Off 4,16,89,000 3 Transponder charges 12,94,00,000 4 Total 51,15,16,023 5. In ground nos. 1 and 2, revenue is contesting on the relief granted by the ld. CIT(A) towards claim o....
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....facie evidence of its irrecoverability unless Assessing Officer demonstrates, with valid reasons, that the write-off is not bona fide. Assessee placed reliance on the decision of Hon'ble Supreme Court in T.R.F. Limited v. CIT [2010] 323 ITR 397 (SC) which had categorically held that an assessee is not required to establish that the debt has become irrecoverable; the mere act of writing off the debt in the books is sufficient to claim a deduction. This position was reiterated by the Hon'ble jurisdictional High Court Bombay in CIT v. Star Chemicals (Bombay) P. Ltd. [2009] 313 ITR 126 (Bom) which referred to CBDT Circular No. 551 dated 23.1.1990, clarifying that bad debt claims shall be allowed in the year in which they are written off as irrecoverable in the accounts of the assessee. Also, assessee placed reliance on another judgment of the Hon'ble jurisdictional High Court in Hinduja Ventures Ltd. v. DCIT, (a sister concern of the assessee) in Income tax Appeal no. 270 of 2008, dated 02.08.2018 which followed the same legal principles as mentioned in case of TRF Ltd. and Star Chemicals (Bombay) Pvt Ltd (supra). Assessee also contended that, in the alternative, the amounts wr....
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....l precedents, we do not find any reason to interfere with the findings arrived at by ld. CIT(A). Accordingly, ground no. 1 and 2 raised by the revenue are dismissed. 7. Ground No. 3 relates to relief granted by ld. CIT(A) towards disallowance of Rs. 4,16,89,000/- on account of advances written off by the assessee given to its subsidiary company, treating it as business loss/expenditure. Before us, ld. Counsel for the assessee pointed out that on the query raised by the ld. AO on this issue, detailed submissions were made which are reproduced in the impugned assessment order. However, ld. AO inadvertently missed to give his conclusive finding on its treatment except for making an addition while computing the assessed total income. There is no whisper about the acceptance or rejection of the claim of the assessee vis-à-vis submissions made by it, even though reproduced in the assessment order. Thus, there is no substantive evaluation of facts, legal provisions or judicial precedents on this issue by the ld. AO. Ld. CIT(A) by exercising his co-terminus powers, responsibly took up this task of examining the claim of the assessee towards writing of advances by making a substan....
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....ss purposes and the write off is a prudent commercial decision necessitated by deterioration of financial health of the subsidiary. It is well settled position that business decisions taken on commercial consideration must be evaluated from the perspective of the assessee and not substituted with the subjective views of the authority. Claim of the assessee for the write off as an allowable business loss u/s. 28 or an expenditure u/s. 37 is rightfully justified, since conditions for allowance under the said section stand satisfied. We find force from the decision Hon'ble Jurisdictional High Court of Bombay in the case of CIT vs. Colgate Palmolive (India) Limited [2015[ 370 ITR 728 (Bom), wherein it held that investment made by the assessee in its subsidiary is nothing but measure of commercial expediency to further business objective and primarily related to the business operation of the assessee. At no point of time, the investment in subsidiary was made with an intention to realize any enhancement value thereof or to earn dividend income. Thus, the loss was on business loss in the hands of the assessee. Similar view was taken by the Hon'ble High Court of Karnataka in the case of A....
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....use any industrial, commercial, or scientific equipment. The OECD specifically states that such payments are in the nature of payments for services and should be taxed under Article 7 as business income, provided the service provider does not have a Permanent Establishment (PE) in the recipient country. Assessee relied on the decision of Hon'ble High Court of Delhi in New Skies Satellite BV & Shin Satellite Public Co. Ltd. 328 ITR 114 (Del) which held that payments for transponder services do not amount to "royalty" and should be assessed as business income. Additionally, the Hon'ble jurisdictional High Court of Bombay in CIT v. Reliance Infocom Ltd. (IT Appeal No. 1395 of 2016, dated 05.02.2019), reaffirmed this principle. Coordinate Bench of ITAT Mumbai in Disney Broadcasting (India) Ltd. (ITA No. 262, 263, 265, 267, 268 & 271/Mum/2017) followed the said view, holding that transponder charges do not fall within the ambit of "royalty" under the tax treaties. 8.4. From the impugned assessment order, we note that ld. AO has observed that assessee is in default as transponder charges paid by it were taxable as royalty u/s. 9(1)(vi) of the Act, as well as corresponding prov....