Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “A” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner (Appeals) – 20, Mumbai and arises out of the order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).
The grounds of appeal filed by the assessee read as under:-
i. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the action of the assessing officer making disallowance of the claim of write off of advances / deposit to the extent of Rs. 19,11,212/- while passing the assessment order. ii. Commissioner of Income Tax (Appeals) further failed to appreciate that these advances / deposits are given in normal course of business and are written off as irrecoverable and are deductible in computing the business income. iii. The appellant therefore prays that the direction may be given to Revenue Authorities to give deduction of the write off of an amount of Rs. 19,11,212/- being the advance / deposits written off in the normal course of business.
Briefly stated, the facts are that the assessee had written off advances / deposits of Rs. 19,11,212/- and claimed the same as expenditure in the Profit & Loss Account. In response to a query raised by Assessing Officer (AO), the assessee filed the following the details of advances / deposits written off:
Sr. Name of the party Amount Nature of No payments 1 Siporex India Ltd. 22,964/- Advance against goods 2 Marshal 23,500/- Advance against Enterprise goods 3 Evernova 1,05,469/- Advance against Enterprise Pvt. goods Ltd. 4 Schindler India P 2,50,500/- Advance against Ltd. goods 5 BSES Ltd. 5,84,329/ Deposit 6 BMC 2,42,086/ Deposit 7 MSEB/BSES 81,821/- Deposit 8 Versova Project 1,43,714/- Advance to parties to versova project 9 Dwarkadhisji 4,56,830/ Advance to parties Temple Trust of Dwarkadhisji Temple project 3.1 The A.O. noted that (i) the assessee failed to file the address of the parties to whom advances had been given, (ii) no supporting evidence like bills / vouchers were brought on record by the assessee. The AO also found it strange that deposits kept with government authorities like BSES Ltd., BMC, MSEB/BSES were written off without taking into account the fact that they are permanent entities who do not seize to exist. Therefore, the AO disallowed the claim of advances / deposits written off amounting to Rs. 19,11,212/-.
The assessee preferred an appeal against the order of the AO before the learned CIT(A). We find that the learned CIT(A) has observed that it is the responsibility of the assessee to prove that such expenditures were incurred during the course of business activity relating to verifiable parties. The learned CIT(A) agreed with the reasons recorded by the AO and dismissed the appeal filed by the assessee.
Before us, the learned counsel of the assessee files (i) tax audit report and assessment order for A.Y. 2009-10, (ii) accounts, tax audit report and computation of income for A.Y. 2010-11, (iii) submission dated 19.12.2012 and 26.12.2012 made before the AO and (iv) ledger extracts regarding advances and deposits written off. Also reliance was placed by him on the decision in the case of Smita Conductors Ltd. vs. DCIT (2015) 152 ITD 417 (Mum-Trib).
On the other hand, the learned DR supports the order of the learned CIT(A) confirming the disallowance of Rs. 19,11,212/- made by the AO.
We have heard the rival submissions and perused the relevant material on record. In the case of Smita Conductors Ltd. (supra) it has been held that the deposits / advances given in connection with business could not be allowed as bad debt but had to be considered as business loss. The fact remains that in the instant case the assessee failed to file address of the parties to whom the advances were given. Also the assessee failed to file before the AO the supporting evidence like bills / vouchers. Therefore, the AO could not verify whether (i) the loss was notional or fictitious, (ii) whether the loss was on revenue account, (iii) whether the loss had actually arisen and (iv) whether it was incidental to the carrying on of the business. In view of the above, the order of the learned CIT(A) confirming the disallowance of Rs. 19,11,212/- made by the AO is confirmed.
In the result, the appeal is dismissed.
Order pronounced in the open court on 29/03/2017