K. Sreejith, CHENNAI V. DCIT, CHENNAI

ITA 2926/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7355 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-10-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Business expenditure
• Section: 143(3); 142(1); 14A; 37(1)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 926 /MDS/2016 / ASSESSMENT YEAR :20 12 - 13 SHRI K. SREEJITH, FLAT NO. 14, HARRINGTON APARTMENTS, NO. 98, HARRINGTON ROAD, CHETPET, CHENNAI 600 031. [PAN: CJFPS3376F ] VS. THE DEPUTY COMMISSIONER OF INCO ME TAX , NON - CORPORATE CIRCLE 2 , 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.S. SRIRAMAN , ADVOCATE / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 0 2 . 0 1 .201 7 / DATE OF P RONOUNCEMENT : 30 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 2 , C HENNAI DATED 29 . 0 7 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 13 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1.0 THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 DATED 29 - 7 - 2016 RECEIVED ON 19 - 8 - 2016 IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.0 THE COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE DISALLOWANCE OF R S .73,14,000 / - UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF I.T.A. NO . 2 9 2 6 / M/ 1 6 2 THE INCOME TAX ACT, 1961 SHALL APPLY EVEN IF T HE EXPENSES HAVE BEEN PAID IN FULL DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR AND NO PART OF IT IS OUTSTANDING OR PAYABLE AT THE END OF THE FINANCIAL YEAR. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO FOLLOW THE BINDING DECISION S OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF DCS SPO (P) LTD VS. ACIT IN ITA NO. 3114 (MDS) OF 2014 AND THEEKATHIR PRESS DESPITE THE FACT THAT THE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE TRANSACTIONS UNDER CONSIDERATION SQUARELY FA LLS UNDER THE SCOPE OF THESE DECISIONS. 3.0 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF A SUM OF RS.31,00,000/ - PAID TO G. SRINIVASAN AS ADVANCE FOR PURCHASE OF LAND IN MAMBAKKAM VILLAGE MADE IN THE ORDINARY COURSE OF BUSINESS WHICH COULD NOT BE RECOVERED OR ADJUSTED AS THE APPELLANT COULD NOT COMPLETE THE PURCHASE TRANSACTION DUE TO BUSINESS EXIGENCIES AND HENCE THIS IRRECOVERABLE AMOUNT OF RS.31,00,000/ - WAS WRITTEN OFF IN THE BOOKS OF ACCOUNT WHICH WAS DISALLOWED U/S. 14A OF THE INCOME TAX ACT, 1961. 3.1 THE DISALLOWANCE OF THE PAYMENT OF RS.31 ,00,0001 - MADE TO G.SRINIVASAN WAS MADE ON THE MISTAKEN BELIEF THAT MATCHING CONCEPT BETWEEN THE INCOME AND EXPENDITURE WOULD GET LOST AND HENCE ON THIS GROUND TOO THE DISALLOWANCE IS LIABLE TO BE DELETED. 3.2 THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN PARAGRAPH 5.4.3 OF THE ORDER WHEREIN SHE HAD DRAWN PARALLEL TO ANOTHER ISSUE OF RS.12,95,00,000/ - PAID AS ADVANCE FOR PURCHASE OF LAND TO S&S FOUNDATIONS, FAILING TO TAKE NOTE THAT THE SAID AMOUNT WAS RECOVERED IN FULL IN THE SUBSEQUENT YEARS AND HENCE THIS GROUND WAS WITHDRAWN WHEREAS WITH RESPECT TO THE ISSUE IN QUESTION THE AMOUNT REMAINS IRRECOVERABLE EVE N AS ON THIS DATE. 4.0 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 5.0 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED OR SUPPLEMENTED AT THE TIME OF HEARING, IT IS PRAYED THAT THE UNJUST DISALLOWANCES MAY BE DELETED AND JUSTICE THEREBY RENDERED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LAND AGGREGATION IN WHICH TOP INDUSTRIAL HOUSES AND REALTORS I.T.A. NO . 2 9 2 6 / M/ 1 6 3 DEVELOPING MEGA PROJECTS ARE BEING CATERED . HE FILED HIS RETURN OF INCOME ADMITTING TAXABLE INCOME OF .6,75,17,620/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 02.09.2014 WAS ISSUED. SUBSEQUENTLY, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED CALLING FOR COPIES OF FINAL ACCOUNTS, STATEM ENT OF COMPUTATION OF INCOME, AUDIT REPORTS, ETC. IN RESPONSE THERETO, THE ASSESSEE FURNISHED ALL DETAILS AND AFTER VERIFICATION OF THE SAME AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY AS SESSING TOTAL INCOME OF THE ASSESSEE AT .25,26,17,623/ - AFTER MAKING VARIOUS ADDITIONS. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE APPEAL WAS PARTLY ALLOWED. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. WITH REGARD TO THE FIRST ISSUE OF CONFIRMATION OF DISALLOWANCE OF .73,14,000/ - , THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PAYMENTS HAVE BEEN MADE IN FULL DURING THE RELEVANT FINANCIAL YEAR AND NO PART OF IT IS OUTSTANDING OR PAYABLE AT THE END OF THE FINANCIAL YEAR AND T HEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAS NO APPLICATION . FURTHER, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT TH IS ISSUE IS SQUARELY COVERED BY VARIOUS DECISIONS OF THE COORDINATE BENCH OF THE TRIBUNAL INCLUDING THE DECISION IN THE CASE OF SHRI N. PALANIVELU V. ITO IN [2015] 40 ITR (TRIB) 325 (CHENNAI) I.T.A. NO . 2 9 2 6 / M/ 1 6 4 AND THE SAME SHOULD BE FOLLOWED IN THE PRESENT CASE ALSO AND PLEADED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. ON THE OTHER HAND, THE LD. DR STRONGLY S UPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS INCURRED EXPENDITURE OF .73,14,000/ - TOWARDS BROKERAGE AND COMMISSION AN D THE SAME WAS DISALLOWED BY THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME DUE TO NON - COMPLIANCE OF TDS PROVISIONS. HOWEVER, IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED LETTER DATED 10.03.2015 REQUESTED FOR ALLOWABILITY OF THE SA ME BY RELYING ON THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT 16 ITR (TRIB.) 1 (SB) AND IN THE CASE OF THEEKATHIR PRESS (MADURAI) IN ITA NO. 2076/MDS/2012 DATED 18.09.2013 ON THE GROUND THAT THE AMOUNTS ARE ALREADY PAID AND THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE INAPPLICABLE. SINCE THE ABOVE CASE LAW RELIED ON BY THE ASSESSEE IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT (SUPRA) HAS NOT ATTAINED ACCEPTABLE LEVEL OF FINALITY AND DISPUTED AT HIGHER LEGAL FO RUMS, HE REJECTED THE CLAIM OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS OBSERVED THAT THE ABOVE CASE LAW IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT (SUPRA) HAS BEEN STAYED BY THE HON BLE HIGH COURT OF ANDHRA PRADESH AND THEREFORE, CONFIRMED T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY FOLLOWING THE DECISIONS IN THE I.T.A. NO . 2 9 2 6 / M/ 1 6 5 CASE OF CIT V. CRESENT EXPORT SYNDICATE [216 TAXMAN 258 (CAL)] AND CIT V. SIKANDARKHAN N. TUNVAR [2013] 357 ITR 312 (GUJ). 5.1 T HE CASE OF THE ASSESSEE IS THAT HE HAS ALREADY PAID ALL THE AMOUNTS AND NO AMOUNT IS PENDING. ONCE AMOUNTS ARE ALREADY PAID, THEN THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL.CIT (SUPRA) SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. AGAINST THE DECI SION OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES P. LTD. 357 ITR 642(ALL), WHEREIN, THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL.CIT (SUPRA) HAS BEEN CONSIDERED AND DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE, THE DEPARTMENT HAS PREFERRED SLP BEFORE THE HON BLE SUPREME COURT AND THE HON BLE SUPREME COURT HAS DISMISSED THE SLP IN CC NO. 8068/2014 VIDE ORDER DATED 02.07.2014. IN VIEW OF THE DISMISSAL OF THE SLP FILED BY THE DEPARTMENT, THE ORDER PA SSED BY THE HON BLE ALLAHABAD HIGH COURT HAS BECOME FINAL. THEREFORE, IT CAN BE SAFELY CONCLUDED THAT THE ISSUE IS IN FAVOUR OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD THE DETAILS OF AMOUNTS PAID OR OUTSTANDING ANY AMOUNT PAYABLE AS ON THE END OF THE FINANCIAL YEAR OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, WE REMIT THE ISSUE BACK TO THE FILE OF THE I.T.A. NO . 2 9 2 6 / M/ 1 6 6 ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. FURTHER, WE MAKE IT CLEA R THAT IF THE IMPUGNED AMOUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSMENT YEAR IN RESPECT OF THE EXPENSES EITHER AS OUTSTANDING EXPENSES OR AS SUNDRY CREDITORS, THE SAID AMOUNT CANNOT BE DISALLOWED. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF A DDITION OF WRITE OFF OF ADVANCES PERTAINING TO MAMBAKKAM LAND OF . 31,00,000/ - U NDER SECTION 14A OF THE ACT. 6.1 DURING TH E PREVIOUS YEAR, THE ASSESSEE HAS DEBITED 'COST OF BEING ADVANCES OF LAND' . 31 LAKHS, WITH REFERENCE TO PURCHASE OF LAND AT MAMBAKKAM. IN FACT, THE DETAILS FURNISHED BY THE ASSESSEE SHOW THAT PAYMENT TO THE TUNE OF . 21 LAKHS WERE MADE TO THE VENDOR SHR I G. SRINIVASAN IN THE FINANCIAL YEAR 2010 - 11 AND PAYMENT OF . 10 LAKHS WAS MADE ON 18.5.2011 I.E. DURING FY 2011 - 12, TO THE SAID VENDOR. THE ASSESSING OFFICER OBSERVED THAT THE REVENUE REPORTED FOR THE YEAR, ALTHOUGH IT INCLUDES SALE PROCEEDS OF LAND LOC ATED IN OTHER VILLAGES, SUCH AS JALLADIANPET, PONPADI & SALAMANGALAM DOES NOT RELATE TO SALE PROCEEDS RELATING TO MAMBAKKAM LAND. PLACING RELIANCE ON THE 'MATCHING CONCEPT' OF MATCHING EXPENSES TO REVENUES, THE ASSESSING OFFICER HELD THAT THIS COST OF I.T.A. NO . 2 9 2 6 / M/ 1 6 7 . 3 1 LAKHS TOWARDS PURCHASE OF LAND AT MAMBAKKAM CAN BE ALLOWED AS A DEBIT ONLY WHEN THE CORRESPONDING CREDIT TO THE PROFIT & LOSS ACCOUNT IS IN THE FORM OF INCREASED VALUE OF CLOSING STOCK BY . 31 LAKHS. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SUM O F . 31 LAKHS U NDER SECTION 14A OF THE ACT AND ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. BEFORE THE LD. CIT(A) THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AS UNDER: 'IN CONTINUATION TO OUR WRITTEN SUBMISSIONS DATED 27 - 07 - 2016, WE SUBMIT BELOW THE FACTS OF THE ISSUE PERTAINING TO; THE ADDITION OF RS. 31,00,000/ - PAID TO G. SRINIVASAN TOWARDS PURCHASE OF LAND AT MAMBAKKAM AS SOUGHT FOR BY YOUR GOODSELF: - THE APPELLANT IS IN THE BUSINESS OF AGGREGATION OF LAND FROM VARIOUS VENDORS WITH A VIEW TO SELL TO I TS CUSTOMER/PRINCIPAL COMPANY IN LINE WITH THEIR REQUIREMENT. THE APPELLANT HEREIN HAD ENTERED INTO A MEMORANDUM OF UNDERSTANDING DATED 1 ST JUNE 2010 WITH M/S MADAN FOUNDATIONS PVT. LTD. TO ACQUIRE AND SELL 15 ACRES OF LAND SITUATED AT VILLAGE NO 39, MAM BAKKAM VILLAGE, SRIPERUMBADUR TALUQ, KENCHEEPUREM DISTRICT AT A PRE - DETERMINED PRICE OF RS. 65,00,000/ - PER ACRE. COPY ENCLOSED AS ANNEXURE - 1. ON THE STRENGTH OF THIS MOU AND BASED ON THE FIELD WORK ALREADY DONE BY THE APPELLANT, AN AGREEMENT OF SALE IS ENTERED INTO WITH ONE G SRINIVASAN ON 1ST JUNE. 2010 TO ACQUIRE 3 ACRES AND 3 CENTS SITUATED AT VILLAGE NO. 39, MAMBAKKAM VILLAGE FOR A TOTAL CONSIDERATION OF RS.1,27,26,000/ - AND HAD PAID AN ADVANCE OF RS.7,00,000/ - VIDE CHEQUE NO. 047044 DATED 1 - 6 - 2010 DRAWN ON AXIS BANK, T. NAGAR BRANCH WITH AN AGREEMENT TO PAY THE BALANCE CONSIDERATION AT THE TIME OF REGISTRATION OF THE PROPERTY WHICH SHALL BE WITHIN 120 DAYS FROM THE DATE OF AGREEMENT. COPY ENCLOSED AS ANNEXURE - 2. THE APPELLANT IN THE MEAN TIME SCO UTS FOR THE - BALANCE OF ABOUT 12 ACRES OF CONTIGUOUS CLEAR TITLE LANDS BUT COULD ONLY IDENTIFY CERTAIN POCKETS OF LAND FOR SALE WHICH ARE NOT CONTIGUOUS. LANDS WHICH ARE CONTIGUOUS ARE EITHER NOT AVAILABLE FOR SALE OR THE OWNERS WERE DEMANDING EXORBITANT P RICES TO THE EXTENT IT WAS MORE THAN THE SELLING I.T.A. NO . 2 9 2 6 / M/ 1 6 8 PRICE AGREED TO WITH THE, PRINCIPAL COMPANY. SO THE PROCESS WAS GETTING INORDINATELY DELAYED. IN THE MEANTIME, THE APPELLANT HAD MADE FURTHER PAYMENTS TO G. SRINIVASAN ON VARIOUS DATES BY CHEQUE SO AS TO KE EP THE TRANSACTION ALIVE EVEN PAST THE DUE DATE OF 120 DAYS. THUS, IN ALL, APPELLANT HAD PAID RS.31,00,000/ - DURING THE PERIOD FROM 1 - 6 - 2010 TO 18 - 5 - 2011. COPY OF THE LEDGER ACCOUNT OF G. SRINVIASAN IS ENCLOSED HEREWITH AS ANNEXURE - 3. AS THE PROJECT WAS GETTING DELAYED, THE PRINCIPAL COMPANY OPTED TO CANCEL THE MOU ON THE PRE - TEXT THEY HAVE IDENTIFIED LAND ELSEWHERE. AFTER MUTUAL DISCUSSION, IN THE INTEREST OF BUSINESS RELATIONSHIP, BOTH PARTIES I.E. THE APPELLANT AND MADAN FOUNDATIONS PVT. LTD. AGREED TO TERMINATE THE MOU ON 5TH JUNE, 2011 WITH NO OBLIGATION AND COST. POST THIS TERMINATION, THE ADVANCE OF RS. 31,00,000/ - PAID TO G. SRINIVASAN COULD NOT BE RECOVERED BY THE APPELLANT AS IT WAS THE APPELLANT WHO COMMITTED BREACH BY NOT COMPLETING THE PUR CHASE TRANSACTION AND THERE WAS NO FAULT ON THE PART OF G. SRINIVASAN. THE APPELLANT IS FOLLOWING CASH SYSTEM OF ACCOUNTING. MOU WITH MADAN FOUNDATIONS WAS TERMINATED DURING THE FINANCIAL YEAR RELEVANT TO THE ASST. YEAR 2012 - 13. THE APPELLANT HAD TAKEN A BUSINESS DECISION NOT TO PAY THE BALANCE AMOUNT OF RS.96,26,000/ - TO G. SRINIVASAN AND REGISTER THE PROPERTY AS THERE WAS NO BUYER AND IT WOULD ONLY RESULT IN GOOD MONEY AFTER BAD MONEY. SO THE AMOUNTS PAID TO G. SRINIVASAN WERE TREATED AS BUSINESS EXPENDI TURE BY DEBIT TO THE PROFIT AND LOSS ACCOUNT AS IT WAS INCURRED IN THE ORDINARY COURSE OF BUSINESS DURING THE ASST YEAR 2012 - 13. THE SAME IS ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT. THE APPELLANT ON THE SAME ASST YEAR HAD COMPLETED AND SOLD LANDS IN VII /AGES AT JALLADIANPET, PONPADI AND SALAMANGALAM TO OTHER PRINCIPAL BUYERS. IT WAS ONLY IN MAMBAKKAM THE PROJECT COULD NOT BE COMPLETED AS DESIRED. IF THIS AMOUNT CANNOT BE WRITTEN OFF IN THIS ASST YEAR, THE YEAR IN WHICH THE MOU WAS CANCELLED, IT IS NOT K NOWN AS TO WHEN THIS AMOUNT CAN BE WRITTEN OFF. THE APPELLANT HAS NOT RECOVERED ANY MONEY FROM G. SRINIVASAN EVEN AS ON THIS DATE I.E., AFTER A LAPSE OF 5 YEARS. I.T.A. NO . 2 9 2 6 / M/ 1 6 9 NO USEFUL PURPOSE WOULD BE SERVED BY CARRYING FORWARD THIS ADVANCE IN THE BOOKS OF ACCOUNT. TH E APPELLANT UNDERTAKES TO OFFER INCOME IF HE IS ABLE TO RECOVER ANY MONIES FROM G. SRINIVASAN IN FUTURE IN THE YEAR OF RECEIPT. ON THE FOREGOING, IT IS PRAYED THAT THIS AMOUNT OF RS. 31,00,000/ - PAID TO G SRINIVASAN BE ALLOWED AS EXPENDITURE IN THIS ASST YEAR. 6.2 BY RELYING VARIOUS CASE LAW AND IN VIEW OF THE ABOVE DETAILED WRITTEN SUBMISSIONS, THE ASSESSEE HAS PLEADED BEFORE THE LD. CIT(A) TO DELETE THE ADDITION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AND HELD AS UNDER: ON A CAREFUL ANALYSIS OF THE FACTS OF THE CASE, IT IS SEEN THAT THE ISSUE OF WRITE - OFF OF ADVANCE OF RS. 31,00,000/ - W.R.T. LAND AT MAMBAKKAM, IS IDENTICAL TO THE ISSUE OF WRITE - OFF OF ADVANCES OF RS. 12,95,00,000/ - MADE BY THE ASSESSEE TO M/S. S&S FOUNDATIONS. AS MENTIONED IN PARA 5.2.(SUPRA), THE APPELLANT HAS WITHDRAWN THE APPEAL WITH RESPECT TO THE ADDITION MADE BY DISALLOWING THE SUM OF RS. 12.95 CRORES. SINCE THE TWO ISSUES ARE IDENTICAL AND THE ASSESSING OFFICER HAS MADE BOTH THE ADDITIO NS FOLLOWING THE MATCHING PRINCIPLE AND INVOKING SECTION 14A OF THE ACT, THE APPELLANT CANNOT TAKE TWO DIFFERENT STANDS WITH RESPECT TO THESE TWO ISSUES, I.E. WITHDRAWING THE APPEAL W.R.T. ONE AND STRONGLY CONTENDING THE ADDITION W.R.T. THE OTHER. THE FA CT REMAINS THAT THE APPELLANT WOULD CERTAINLY BE IN THE PROCESS OF PURSUING WITH SHRI G. SRINIVASAN, FOR RECOVERY OF THE SUM OF RS. 31 LAKHS AND THE POSSIBILITY OF RETRIEVING THE ENTIRE SUM OR ATLEAST A PART OF THE SAME, IN FUTURE, CANNOT BE RULED OUT. THI S BEING THE CASE, THE ADVANCE PAID CAN BE CLAIMED AS A DEDUCTION ONLY IN THE YEAR IN WHICH THE RECOVERED SUMS ARE REFLECTED AS INCOME IN THE P&L ACCOUNT OF THE APPELLANT, FOLLOWING THE MATCHING PRINCIPLE. TO CONCLUDE, THE ACTION OF THE ASSESSING OFFICER, IN DISALLOWING WRITE - OFF OF ADVANCES TO THE TUNE OF RS.31,00,000/ - , IS UPHELD. 6.3 BY REITERATING THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE ASSESSEE HIMSELF I.T.A. NO . 2 9 2 6 / M/ 1 6 10 TERMINATED THE AGREEMENT FO R PURCHASE OF LAND AND THE ADVANCE PAID BY HIM COULD NOT BE RECOVERED EVEN AFTER LAPSE OF FIVE YEARS AND THERE IS NO CHANCE TO RECOVER THE ABOVE ADVANCE OF .31.00 LAKHS PAID BY THE ASSESSEE SINCE THE ASSESSEE WAS RESPONSIBLE FOR THE TERMINATION OF AGREEMENT. THEREFORE, THE ASSESSEE HAS WRITTEN OFF THE SAID ADVANCE AMOUNT IN HIS ACCOUNT, WHICH SHOULD BE TREATED AS BUSINESS EXPENDITURE BY DEBITING TO THE PROFI T AND LOSS ACCOUNT AS IT WAS INCURRED IN THE ORDINARY COURSE OF BUSINESS DURING THE ASSESSMENT YEAR 2012 - 13 AND THE SAME IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THUS, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ADDITION MADE UNDER SECTION 14A OF THE ACT SHOULD BE DELETED. 6.4 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6.5 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSIN G OFFICER HAS DISALLOWED THE CLAIM OF LAND ADVANCES WRITTEN OFF AMOUNTING TO .12.95 CRORES PAID TO M/S. S&S FOUNDATIONS PVT. LTD. AND A SUM OF .31.00 LAKHS PAID TO SHRI G. SRINIVASAN BY ALLEGING THAT THEY DO NOT RELATE TO THE SALE PROCEEDS OF LAND CREDIT ED TO THE PROFIT AND LOSS ACCOUNT AS PER MATCHING CONCEPT IN TERMS OF SECTION 14A OF THE ACT. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH M/S. S&S FOUNDATIONS (P) LTD. ON 09.03.2011 AGREEING TO BY 7 ACRES AND 49 CENTS F OR A TOTAL I.T.A. NO . 2 9 2 6 / M/ 1 6 11 CONSIDERATION OF .14.48 CRORES, OF WHICH ADVANCES AGGREGATING TO .14.15 CRORES HAVE BEEN PAID ON DIFFERENT DATES. WHEN THE ASSESSEE COULD NOT PURCHASE THE SAID LAND FOR ITS PRINCIPAL LAKISHA REAL ESTATE LIMITED FOR LACK OF CONTIGUITY AND THE PROJECT WITH LAKISHA WAS CONC LUDED WITHOUT THE SAID LAND IN THE YEAR IN QUESTION, THE ASSESSEE CALLED FOR REFUND OF THE ENTIRE ADVANCE PAID. HOWEVER, M/S. S&S FOUNDATIONS HAD REPAID ONLY TO THE EXTENT OF .1.20 CRORES BEFORE THE CLOSE OF THE FINANCIAL YEAR AND THE BALANCE SUM OF .12 .95 CRORES REMAINED UNRECOVERED AS ON 31.03.2012. THE ASSESSEE HAD CLAIMED THE SAID AMOUNT OF .12.95 CRORES AS EXPENSES/WRITE OFF. BY APPLYING MATCHING CONCEPT UNDER SECTION 14A OF THE ACT, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. BY FO LLOWING SAME CRITERIA, WITH REGARD TO THE UNRECOVERED ADVANCE PAID TO SHRI G. SRINIVASAN TOWARDS PURCHASE OF LAND AT MAMBAKKAM, SIMILAR DISALLOWANCE WAS ALSO MADE BY THE ASSESSING OFFICER WITHOUT VERIFYING THE COMPLETE DETAILS FILED BY THE ASSESSEE. 6.6 AGAINST BOTH THE DISALLOWANCES, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND DURING THE COURSE OF APPELLATE PROCEEDINGS, BY FILING A LETTER DATED 09.06.2016 , THE ASSESSEE PREFERRED A PETITION SEEKING PERMISSION FOR WITHDRAWAL OF THE GROUND RELAT ING TO DISALLOWANCE OF .12.95 CRORES SINCE THE ASSESSEE COULD RECOVER THE ENTIRE AMOUNT IN THE FINANCIAL YEAR 2012 - 13 , WHICH WAS AGREED UPON. BY PRESUMING THAT BOTH THE I.T.A. NO . 2 9 2 6 / M/ 1 6 12 ADVANCES OF .31.00 LAKHS WITH RESPECT TO LAND AT MAMBAKKAM AND .12.95 CRORES MADE TO M/S. S&S FOUNDATIONS, THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSEE WOULD BE IN THE PROCESS OF PURSUING WITH SHRI G. SRINIVASAN FOR RECOVERY OF THE SUM OF .31 LAKHS AND HELD THAT THE POSSIBILITY OF RETRIEVING THE ENTIRE SUM OR ATLEAST A PART OF THE SAME IN FUTURE CANNOT BE RULED OUT AND THEREFORE, HE UPHELD THE DISALLOWANCE OF WRITE OFF OF ADVANCES TO THE TUNE OF .31.00 LAKHS. IT WAS THE CLAIM OF THE ASSESSEE THAT THE ADVANCE WAS PAID FROM 01.06.2010 TO 18.05.2011 AND THE MOU ENTERED INTO BETWEEN T HE ASSESSEE AND MADAN FOUNDATIONS PVT. LTD. WAS TERMINATED ON 05.06.2011. NATURALLY, WHEN THERE WAS NO FAULT ON THE SIDE OF THE SELLER OF THE LAND, IT CANNOT BE SAID THAT DEFINITELY THE SELLER WILL PAY BACK THE ADVANCES TAKEN TO SELL THE LAND. SINCE THE AS SESSEE COULD NOT RECOVER THE ADVANCE PAID BY HIM EVEN AFTER LAPSE OF FIVE YEARS, AND CARRYING FORWARD THIS ADVANCE IN THE BOOKS OF ACCOUNT WILL NOT SERVE ANY PURPOSE AND THEREFORE, HE HAS WRITTEN OFF THE SAID ADVANCE IN HIS BOOKS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LD. CIT(A), IN THE ABSENCE OF DETAILS IN THE ASSESSMENT ORDER, WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE WAS IN BREACH OF NOT COMPLETING THE P URCHASE TRANSACTION AND TERMINATED THE AGREEMENT, THERE COULD BE ANY POSSIBILITY OF RECOVERY OF ADVANCE PAID FOR THE PURCHASE OF LAND AT MAMBAKKAM , WHICH WAS TREATED AS BAD AND IRRECOVERABLE DEBT AND WRITTEN OFF IN THE BOOKS OF ACCOUNTS . UNDER THE ABOVE FA CTS AND CIRCUMSTANCES, WE I.T.A. NO . 2 9 2 6 / M/ 1 6 13 DIRECT THE ASSESSING OFFICER TO VERIFY THE ACCOUNTS, AGREEMENT AS MAY BE FILED BY THE ASSESSEE AND AFTER MAKING DETAILED ENQUIRY, DECIDE THE ISSUE AFRESH AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF HEARING TO THE ASSESSEE. THUS, TH E GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 30 TH MARCH , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT M EMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 3 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.