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Income Tax Appellate Tribunal, DELHI BENCH “SMC-3”, NEW DELHI
Before: SHRI H.S. SIDHU
Assessee has filed this Appeal against the Order dated 22.1.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-VI, New Delhi pertaining to assessment year 2010-11 on the following grounds:-
That under the facts and circumstances of the case, both
the lower authorities have grossly erred in making and sustaining the addition by disallowing the amount of “Advance Written off” amounting to Rs. 10,00,000/- during the year.
2. That under the facts and circumstances of the case, both
the lower authorities have grossly erred in making and sustaining the addition by disallowing the amount of Rs.
20,400/- u/s. 40(a)(ia) of the I.T. Act for not deducting the tax at source.
3. That the appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing
with the permission of the Hon’ble ITAT, Delhi Bench.
The brief facts of the case are that the assessee has filed its return on 13.10.2010 declaring net taxable income of Rs. 22,90,934/- and claiming a refund of Rs. 43,400/-. The assessment order dated 19.12.2012 on income of Rs. 33,11,334/- was passed u/s. 143(3) of the I.T. Act, 1961. While completing the assessment the AO has made the following additions/disallowances as under:-
- Disallowance of advance written off – Rs. 10,00,000/- - Disallowance of expense u/s. 40(a(ia)-Rs. 20,400/- Total disallowance Rs. 10,20,400/-
Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 19.12.2012 has dismissed the appeal of the assessee.
Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
The present Appeal came up for hearing before the Bench on 16.6.2016. Ld. DR filed an Application for adjournment, but Ld. Counsel of the assessee raised objection that the issue involved in the present appeal is squarely covered by the various decisions of the ITAT and the Hon’ble High Court, therefore, the matter may be heard. Keeping in view of the facts and circumstances of the present case and the issue involved in the present appeal as well as the order passed by the revenue authority, in the interest of justice the case was adjourned for 17.6.2016 being part heard. Both the parties were duly informed about the next date of hearing i.e. 17.6.2016. Again on 17.6.2016, the DR filed an application for adjournment for 20.6.2016 and the case was adjourned for 20.6.2016, as the case was partly heard, Ld. Counsel of the assessee again objected for adjournment. The DR has also taken note of the next date of hearing i.e. 20.6.2016, but when the case came up for hearing before the Bench on 20.6.2016 no one appeared on behalf of the Department till the conclusion of the Bench, nor filed any Application for adjournment. In view of the above facts and circumstances, I am of the considered opinion that no useful purpose would be served to adjourn the case again and again, hence, the Revenue’s appeal is decided exparte qua DR, after hearing the Ld. Counsel of the assessee and perusing the records.
During the course of hearing Ld. Counsel of the assessee draw my attention towards the order of the AO as well as Ld. CIT(A) and stated that the authorities below has wrongly made the addition in dispute in spite of the fact that the amount in dispute has been written off during the year under consideration. He further stated that this advance has not been recovered from the parties. Hence, the addition of Rs. 10 lacs is unwarranted and needs to be deleted.
Secondly, with regard to disallowance of Rs. 20,400/- u/s. 40(a)(ia) of the Act, Ld. Counsel of the assessee has submitted that lower authorities were erred in disallowing the payment of professional charges of YP Singh Rana & Associates u/s. 40a(ia) of the Act, because this amount represent payment of two bills of Rs. 11,300/- and Rs. 9100/- being professional fees paid for rendering services to the assessee and requested that the same may deleted.
I have heard Ld. Counsel of the Assessee and perused the records especially the orders of the Revenue authorities. With regard to disallowance of Rs. 10 lacs on account of Advance Written Off is concerned, I find that since no income in respect of advances written off have been recognized, the same cannot be allowed as an expense. This amount was paid to M/s Karan Associates in the year 2000 for development of product to be manufactured and sold by the assessee. The said M/s Karan Associates neither developed the product nor refunded the amount, despite various efforts, hence, the same was written off as unrecoverable in the P&L account. The expenses was claimed u/s. 37 of the I.T. Act, 1961 and the same were neither personal in nature nor capital. I note that it is a settled law that even in case of embezzlement/ theft, such loss is an allowable expenditure and is incidental to business. In view of the above, I delete the addition of Rs. 10 lacs and decide this ground in favor of the assessee.
With regard to disallowance of Rs. 20,400/- made u/s. 40(a)(ia) of the Act, I find that the assessee had made the payment of professional charges to YP Singh Rana & Associates which represent payment of two bills of Rs. 11,300/- and Rs. 9100/- being professional fees paid for rendering services to the assessee and the amount of each of the Bill is less than Rs. 20,000/-, hence, I delete the addition of Rs. 20,400/- and decide the issue in dispute in favour of the assessee.
In the result, the Appeal filed by the Assessee stand allowed.
Order pronounced in the Open Court on 01/07/2016.