| The Tax Publishers2020 TaxPub(DT) 3876 (Del-Trib) INCOME TAX ACT, 1961
Section 28 Section 37(1)
Since assessments in the past were completed under section 143(3) and concerned advances were being shown in balance sheet, therefore, AO should not have doubted genuineness of advances, especially when there was no evidence on record that amounts paid by assessee through banking channels had, at any point of time, come back to assessee. Under these circumstances, when assessee consciously decided to write off such advances as irrecoverable by passing a resolution for writing off such advances, the same was to be allowed as business loss under section 28/37(1).
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Business loss - Allowability - Write-off treated as not genuine -
AO disallowed Rs. 1.45 crores claimed under the head 'write-off/bad debt on the ground that assessee could not explain genuineness of the transaction and nature of advances was not clear. CIT(A) confirmed disallowance on the ground that assessee did not fulfill conditions laid down in section 36(1)(vii). Held: Since assessments in the past were completed under section 143(3) and concerned advances were being shown in balance sheet, therefore, AO should not have doubted genuineness of advances, especially when there was no evidence on record that amounts paid by assessee through banking channels had, at any point of time, come back to assessee. Under these circumstances, when assessee consciously decided to write off such advances as irrecoverable by passing a resolution for writing-off such advances, the same was to be allowed as business loss under section 28/37(1).
Relied:Jackie Shroff (2019) 101 taxmann.com 455 (Mum-Trib) : 2019 TaxPub(DT) 441 (Mum-Trib), Kalpataru Power Transmission Ltd. (2017) 82 taxmann.com 340 (Ahd-Trib) : 2016 TaxPub(DT) 4091 (Ahd-Trib), Hiravati Marine Products (P) Ltd. (2019) 104 taxmann.com 271 (Rkt-Trib) : 2019 TaxPub(DT) 2487 (Rkt-Trib) Dr. T.A. Qureshi, vide Civil Appeal No. 5635 of 2006, Order, dated 6-12-2006 : 2006 TaxPub(DT) 1873 (SC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2008-09
IN THE ITAT, DELHI 'D' NEW DELHI BENCH
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