M/s. TV Today Network Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 2977/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5401 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income; Bad and doubtful debts; Revenue expenditure; Capital expenditure; Rule 8D
• Section: 14A; 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.2977& 2978/DEL/2015 ASSESSMENT YEARS: 2005-06 & 2007-08 M/S. T. V. TODAY NETWORK LIMITED F-26, CONNAUGHT PLACE, NEW DELHI PAN NO. AABCT0424B VS ADDL. CIT RANGE- 16 NEW DELHI (APPELLANT) (RESPONDENT) ITA NO.3933 & 3934/DEL/2015 ASSESSMENT YEARS: 2005-06 & 2007-08 DCIT CIRCLE 25 (2), C. R. BUILDING, I. P. ESTATE, NEW DELHI VS M/S. T. V. TODAY NETWORK LIMITED F-26, CONNAUGHT PLACE, NEW DELHI PAN NO. AABCT0424B (APPELLANT) (RESPONDENT) APPELLANT BY SH. SALIL AGGARWAL, ADVOCATE SH. SHAILESH GUPTA, ADVOCATE RESPONDENT BY SH. N. K. BANSAL, SR. DR DATE OF HEARING: 08/08/2019 DATE OF PRONOUNCEMENT: 16/08/2019 2 ORDER PER N. K. BILLAIYA, AM: ITA NO.2977/DEL/2015 AND 3933/DEL/2015 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE PREFERRED A GAINST THE ORDER OF THE CIT(A) -17, NEW DELHI DATED 19.03.2015 PERTAINING TO A. Y.2005-06. 2. ITA NO.2978/DEL/2015 AND 3934/DEL/2015 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE PREFERRED A GAINST THE ORDER OF THE CIT(A)-17, NEW DELHI DATED 19.03.2015 PERTAINING TO A. Y.2007-08. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS THEY WERE HEARD TOGETHER AND ARE DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. WE WILL FIRST TAKE UP REVENUES APPEAL FOR THE CAPTIONED ASSESSMENT YEARS. THE COMMON GRIEVANCE RELATES TO THE DELETION OF THE DISALLOWANCE MADE BY ASSESSING OFFICER ON AC COUNT OF ACCRUED INCENTIVE TO STAFF THOUGH THE QUANTUM MAY D IFFER IN THE CAPTIONED ASSESSMENT YEARS. 4. AT THE VERY OUTSET THE COUNSEL FOR THE ASSESSEE STATED THAT THE DISPUTED ISSUE HAS BEEN SETTLED BY THE TRIBUNAL IN SUBSEQUENT ASSESSMENT YEARS IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. 5. THE DR FAIRLY CONCEDED. 3 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. WE FIND THAT SIMILAR ISSUE WAS CONSIDERED BY THE TRIBU NAL IN ASSESSEES OWN CASE IN ITA NO.2452/DEL/2013 AND OTH ERS. THE RELEVANT FINDINGS OF THE COORDINATE BENCH READ AS U NDER :- 6. THE 1 ST DISALLOWANCE CONTESTED BY THE ASSESSEE IS WITH RES PECT TO THE DISALLOWANCE OF RS. 20569764/- ON ACCOUNT OF ACCRUE D INCENTIVE. THE ASSESSEE EXPLAINED THAT THESE EXPENSES HAVE BEEN INCURRED IN RESPECT OF THE PAYMENTS TO BE MADE TO THE EMPLOYEES FOR ENCOURAGING THEM TO PROMO TE BUSINESS OF THE ASSESSEE. ASSESSEE ALSO SUBMITTED THAT THE INCENTIVE IS MEANT FOR THE EMPLOYEES WHICH IS PERTAINING TO THE FINANCIAL YEAR 2003-04. IT IS BAS ED ON THE PERFORMANCE OF THE EMPLOYEES AND IT HAS BECOME DUE AND PAYABLE TO THEM BASED ON CERTAIN CRITERIA SUCH A COLLECTION OF SALES, DETERMINATION OF PROFIT S AFTER AUDIT OF ANNUAL ACCOUNT ETC. THE LEARNED ASSESSING OFFICER NOTED THAT ASSESSEE H AS FAILED TO DISCHARGE THE ONUS CAST UPON HIM TO PROVE THAT THESE EXPENSES WHICH HA VE BEEN CLAIMED UNDER SECTION 37 OF THE INCOME TAX ACT BY FURNISHING RELE VANT SPECIFIC DETAILS AS WELL AS THE NAME OF EMPLOYEES. HE ALSO NOTED THAT ASSESSEE HAS FAILED TO PROVE THAT THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY RELIE F FOR THE PURPOSES OF BUSINESS. THE LEARNED AO FURTHER NOTED THAT ASSESSEE ALSO COU LD NOT PROVE THAT THE ALLEGED PAYEES HAVE INCLUDED RESPECTIVE AMOUNT INTO THEIR C ORRESPONDING INCOME IN ADDITION TO THE SALARY. THE LEARNED ASSESSING OFFIC ER THEREFORE NOTED THAT THESE EXPENSES ARE NEITHER ASCERTAINED DURING THE PREVIOU S YEAR AND NOT INCURRED DURING THE FINANCIAL EAR. THEREFORE, HE DISALLOWED THE ABO VE SUM. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LEARNED CIT - A WHO CONFIRMED THE DISALLOWANCE FOR THE REASON THAT THE ASSESSEE COULD NOT PROVE BEFORE HIM THAT THE PROVISION HAS BEEN MADE ON SCIENTIFIC BASIS. THEREFORE THE SAME HAS BEEN CHALLENGED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE. HE SUBMITTED THAT ABOVE SUM IS INCE NTIVE MEANT FOR EMPLOYEES 4 WHICH IS PERTAINING FOR THE FINANCIAL YEAR 2003 - 0 4. HE FURTHER STATED THAT INCENTIVES WHICH ARE BASED ON THE PERFORMANCE OF THE EMPLOYEES BECOME DUE AND PAYABLE TO THEM BASED ON CERTAIN CRITERIA SUCH AS COLLECTION O N SALES, DETERMINATION OF PROFITS AFTER AUDIT OF THE ANNUAL ACCOUNT. HE FURTHER STATE D THAT THE TAX COULD HAVE BEEN DEDUCTED AT SOURCE ONLY AT THE TIME OF PAYMENT AS T HE ABOVE AMOUNT IS CHARGEABLE TO TAX UNDER THE HEAD SALARIES IN THE HANDS OF THE EMPLOYEES. HE THEREFORE SUBMITTED THAT ABOVE AMOUNT OF EXPENDITURE IS ASCER TAINED AND ACCRUED DURING THE YEAR THEREFORE SAME SHOULD HAVE BEEN ALLOWED. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT WHEN ASSES SEE COULD NOT FURNISH DETAILS OF THE EXPENDITURE BEFORE THE LOWER AUTHORITIES AND AL SO COULD NOT SHOW THAT HOW ABOVE EXPENDITURE HAS BEEN INCURRED BY ASSESSEE DURING TH E YEAR, THEREFORE SAME HAS BEEN CORRECTLY DISALLOWED. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND FIND THAT THE ASSESSEE HAS MADE A PROVISION FOR THE PERFORMANCE B ASED INCENTIVE OF THE EMPLOYEES. THE ASSESSEE HAS GIVEN A COMPLETE DETAIL OF THESE EXPENDITURE OF THE PROVISIONS MADE FOR THE YEAR. THE ASSESSEE HAS ALSO STATED THAT NO TAX IS REQUIRED TO BE DEDUCTED U/S 192 OF THE INCOME TAX ACT UNLESS TH E SALARIES ARE PAID TO THOSE EMPLOYEES. THE ASSESSEE HAS ALSO STATED THAT THE PE RFORMANCE IS WITH RESPECT TO THE SALES, COLLECTION OF SALES ETC. ON PERUSAL OF PAGE NOS. 1 TO 7 OF THE DETAILS FURNISHED BY ASSESSEE BEFORE THE LEARNED CIT(A) WHICH SHOWS T HAT THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAIL OF THE EMPLOYEE WISE ACCRUED IN CENTIVE AS WELL AS THE CLOSING BALANCE AS ON 31-3-2004, AMOUNT DEBITED DURING THE YEAR AND ACTUAL PAYMENT MADE BY THE ASSESSEE IN THE SUBSEQUENT YEAR. THE AB OVE PROVISION HAS BEEN MADE BY THE ASSESSEE ON YEAR-TO-YEAR BASIS ON THE BASIS OF THE PERFORMANCE OF THE EMPLOYEES. THE EXCESS PROVISION IS ALWAYS WRITTEN B ACK TO THE PROFIT AND LOSS ACCOUNT IN THE SUBSEQUENT YEAR, IF IT IS FOUND TO B E SHORT, FURTHER PROVISION IS MADE. THIS ACCOUNTING PRACTICE IS CARRIED ON BY THE ASSES SEE CONSISTENTLY. AS THE EXPENDITURE HAS BEEN INCURRED FOR THE INCENTIVE OF THE EMPLOYEES OF THE COMPANY RAISED ON THEIR PERFORMANCE FOR THE SAME YEAR FOR W HICH THE ACTUAL SERVICES HAVE 5 BEEN RENDERED BY THE EMPLOYEES, ABOVE EXPENDITURE H AS BEEN INCURRED BY THE ASSESSEE DURING THE YEAR ONLY AND EXCLUSIVELY FOR T HE PURPOSES OF THE BUSINESS. AS THE ABOVE EXPENDITURE HAS BEEN MADE ON THE BASIS OF THE PERFORMANCE OF THE EMPLOYEES AND ALLOCATED TO EACH OF THE EMPLOYEES IT IS AN ASCERTAINED PROVISION. ACCORDING TO US IT IS A DEFINITE AND ACCRUED LIABIL ITY OF THE ASSESSEE FOR THE YEAR FOR WHICH THE SERVICES HAVE BEEN RENDERED BY THE EMPLOY EES. IT IS NOTHING BUT ADDITIONAL VARIABLE SALARIES PAYABLE TO THE EMPLOYE ES. SAME PARTAKES CHARACTER OF SALARY. ACCORDINGLY WE REVERSE THE FINDING OF THE LOWER AUT HORITIES AND ALLOW THE GROUND NUMBER 2 OF THE APPEAL OF THE ASSESSEE DIRECTING TH E LEARNED ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 20569764/- ON ACCOUN T OF ACCRUED INCENTIVE OF THE STAFF. ACCORDINGLY, GROUND NO. 2 OF THE APPEAL OF T HE ASSESSEE IS ALLOWED. 7. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE FINDINGS OF THE COORDINA TE BENCH. THE APPEALS BY THE REVENUE FOR BOTH THE ASSESSMENT YEAR S ARE DISMISSED. 8. COMING TO THE APPEALS OF THE ASSESSEE THE COMMON GRIEVANCE RELATES TO THE ADDITION MADE U/S.14A OF T HE ACT THOUGH THE AMOUNT OF DISALLOWANCE MAY DIFFER IN THE IMPUGN ED ASSESSMENT YEARS. 9. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME AND CLAIMED THE SAME AS EXEMPT FROM TAX. THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE OF EXPENDITURE INCURRED F OR EARNING 6 THE EXEMPT INCOME, HE INVOKED THE PROVISIONS OF SEC TION 14A AND ASSUMED THAT THE 15% OF THE EXEMPT INCOME AS EXPEND ITURE TOWARDS EARNING THE INTEREST FREE INCOME. RS.16493 67/- WAS DISALLOWED IN A. Y. 2005-06. 10. HOWEVER, IN A.Y.2007-08 THE ASSESSING OFFICER C OMPUTED THE DISALLOWANCE BY INVOKING RULE 8D AND COMPUTED THE D ISALLOWANCE U/S. 14A AT RS.23,75,000/-. 11. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT( A) BUT WITHOUT ANY SUCCESS. 12. BEFORE US THE COUNSEL FOR THE ASSESSEE VEHEMENT LY STATED THAT IN BOTH THE ASSESSMENT YEARS THE ASSESSING OFF ICER HAS NOT RECORDED ANY SATISFACTION AND WITHOUT RECORDING ANY SATISFACTION THE ASSESSING OFFICER MADE DISALLOWANCE U/S. 14A OF THE ACT. THE COUNSEL FURTHER STATED THAT IN A. Y.2007-08 THE ASS ESSING OFFICER HAS ERRONEOUSLY INVOKED RULE 8D WHICH IS NOT APPLIC ABLE FOR THE RELEVANT ASSESSMENT YEAR. 13. PER CONTRA THE DR STRONGLY SUPPORTED THE FINDIN GS OF THE ASSESSING OFFICER. IT IS THE SAY OF THE DR THAT EV EN IF RULE 8D IS NOT APPLICABLE SOME REASONABLE DISALLOWANCE HAS TO BE MADE FOR THE EXPENDITURE INCURRED FOR EARNING THE EXEMPT INC OME. 14. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. THE PERUSAL OF THE BALANCESHEET OF THE ASSE SSEE AS AT 7 31.03.05 SHOWS THAT INVESTMENT OF RS.309045238/- WA S MADE DURING THE YEAR ITSELF. IT IS TRUE THAT THE ASSESS ING OFFICER HAS NOT RECORDED ANY SATISFACTION AS REGARDS TO THE ACCOUNT S OF THE ASSESSEE. IT IS EQUALLY TRUE THAT THE ASSESSEE HAS ALSO NOT DISALLOWED ANY EXPENDITURE FOR EARNING THE EXEMPT I NCOME. THOUGH THE ENTIRE INVESTMENT AS PER SCHEDULE OF THE BALANCE SHEET IS TOWARDS MUTUAL FUNDS OF VARIOUS COMPANIES BUT IN OUR CONSIDERED OPINION THE ASSESSEE MUST HAVE INCURRED SOME EXPENDITURE IN MAKING THESE INVESTMENTS. SOME EMPL OYEES MUST HAVE BEEN ENGAGED FOR SELECTING THE MUTUAL FUNDS FO R MAKING THE INVESTMENTS. IN OUR CONSIDERED VIEW SOME ELEMENT O F EXPENDITURE CANNOT BE RULED OUT. WE ARE OF THE CONSIDERED VIEW THAT A DISALLOWANCE OF RS.1,00,000/- SHOULD MEET THE ENDS OF JUSTICE. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO REST RICT THE DISALLOWANCE TO RS.1,00,000/- IN A.Y.2005-06. 15. IT IS NOW WELL SETTLED THAT RULE 8D IS APPLICAB LE FROM A.Y.2008-09 AND, THEREFORE, THE ASSESSING OFFICER H AS GROSSLY ERRED IN APPLYING RULE 8D IN A. Y.2007-08. A PERUSA L OF THE BALANCESHEET AS AT 31.03.07 SHOW THAT THE INVESTMEN TS HAVE INCREASED DURING THE YEAR FROM THE IMMEDIATELY PREC EDING FINANCIAL YEAR. 16. AS DISCUSSED HERE IN ABOVE SOME ELEMENT OF EXPE NDITURE CANNOT BE RULED OUT FOR THIS YEAR ALSO. WE ACCORDI NGLY DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF R S.1,00,000/- FOR 8 THIS YEAR ALSO. WE DIRECT ACCORDINGLY. IN THE RES ULT THE COMMON GRIEVANCE OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.2977/DEL/2015 17. THE OTHER GRIEVANCE RELATES TO THE DISALLOWANCE OF RS.24084750/- ON ACCOUNT OF EXPENDITURE INCURRED FO R THE PURPOSE OF GIVING NEW LOOK TO THE CHANNEL AAJ TAK. 18. FACTS ON RECORD SHOW THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT AN EXPENSE OF RS.2.66 CRORES HAS BEEN INCURRED BY THE ASSESSEE FOR GIVING NEW LOOK TO AAJ TAK. THE ASSESSING OFFICER WAS OF THE FIRM BELIEF THAT SUCH EXPENDITURE GAVE ENDURING BENEFIT TO THE ASSESSEE AND CANNOT BE ALLOWED AS REVENUE EXPENDITURE. 19. THE ASSESSING OFFICER ACCORDINGLY TREATED THE E XPENDITURE AS CAPITAL EXPENDITURE AND AFTER ALLOWING DEPRECATION @15%, RS.24084750/- WAS DISALLOWED. 20. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT( A) BUT WITHOUT ANY SUCCESS. 21. BEFORE US THE COUNSEL FOR THE ASSESSEE STATED T HAT THE EXPENDITURE IS A ROUTINE EXPENDITURE TO UPLIFT THE PRESENTATION OF AAJ TAK CHANNEL AND, THEREFORE, THE EXPENDITURE CAN NOT BE TREATED AS CAPITAL EXPENDITURE. 9 22. PER CONTRA THE DR STRONGLY RELIED UPON THE FIND INGS OF THE CIT(A). IT IS THE SAY OF THE DR THAT THE CIT(A) WH ILE DISMISSING THE APPEAL OF THE ASSESSEE HAS CONSIDERED VARIOUS JUDGM ENTS OF THE HONBLE HIGH COURT AND HONBLE SUPREME COURT AND CA ME TO THE CONCLUSION THAT THE EXPENSES INCURRED FOR NEW LOOK OF THE TV CHANNEL ARE NOT ROUTINE EXPENSES AND, THEREFORE, CA NNOT BE TREATED AS REVENUE EXPENDITURE. 23. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. THE AAJ TAK CHANNEL WHICH S TARTED FROM 1999 WITH A LOGO NEEDED FRESH LOOK BECAUSE OF THE P ASSAGE OF TIME AND CUT THROAT COMPETITION AND FOR IMPROVING THE VI EWERSHIP THE LOGO WAS GIVEN A FRESH LOOK FOR WHICH THE ASSESSEE HAD INCURRED IMPUGNED EXPENDITURE. IN OUR CONSIDERED OPINION TH E AAJ TAK LOGO WAS ALREADY THERE AND BY INCURRING THE IMPUGNE D EXPENDITURE THE ASSESSEE HAS ONLY ENHANCED ITS LOOK BY GIVING FRESH AND IMPROVED TECHNICAL FACE. 24. WE ARE OF THE CONSIDERED VIEW THAT SUCH EXPENDI TURE IS A ROUTINE EXPENDITURE. NO DOUBT SOME ENDURING BENEFI T WILL ACCRUE TO THE ASSESSEE BUT GIVING A FRESH LOOK TO THE EXIS TING LOGO, NO NEW ASSET WAS CREATED AND THERE WAS NO ADDITION TO OR E XPANSION OF THE PROFIT MAKING APPARATUS OF THE ASSESSEE. THE HO NBLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD 12 4 ITR 1 HAS HELD AS UNDER :- 10 (II) THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INCURRED FOR OBTAINING AN ADVANTAGE OF ENDURING BENEFIT, MAY, NONE THE LESS, BE ON REVENUE HE TEST OF ENDURING BENEFIT MAY BREAK DOWN. IT IS NOT EVERY AD VANTAGE NATURE ACQUIRED BY AN ASSESSEE THAT BRINGS THE CASE WITHIN THE PRINCIPLE LAID DOWN IN THIS TEST. WHAT IS MATERIAL TO CONSIDER IS THE NATURE OF THE ADVANTAGE IN A COMMERCIAL SENSE AND IT IS ONLY WHERE THE ADVANTAGE IS II FIELD THAT THE EXPEN DITURE WOULD BE DISALLOWABLE ON AN APPLICATION IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE ASSESSEES TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND C ONDUCT OF THE ASSESSEES BUSINESS ON MORE EFFICIENTLY OR MORE PROFITABLY WHI LE LEAVING THE FIXED CAP: FT THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUG H THE AD ENDURE FOR AN INDEFINITE FUTURE. THE TEST OF ENDURING BENEFIT IS, . A CERTAIN OR CONCLUSIVE TEST AND IT CANNOT BE APPLIED BLINDLY AND WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF A GIVEN CASE. (III) WHAT IS AN OUTGOING OF CAPITAL AND WHAT IS AN OUTGOING ON ACCOUNT OF REVENUE DEPENDS ON WHAT THE EXPENDITURE IS CALCULAT ED TO EFFECT FROM A PARTICAL AND BUSINESS POINT OF VIEW RATHER THAN UPON THE JUR ISTIC CLASSIFICATION OF THE LEGAL RIGHTS, IF ANY, SECURED EMPLOYED OR EXHAUSTED IN TH E PROCESS. THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS NECESSI TY OR EXPENDIENCY 25. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE RATIO LAID DOWN BY HONBLE SUPREME COURT (SUPRA) WE DIRECT THE ASSESSING OFFICER TO TREAT THE IMPUGNED EXPENDITURE AS A REVE NUE EXPENDITURE AND ALLOW THE SAME AFTER WITHDRAWING TH E DEPRECIATION. THE SECOND GRIEVANCE IN A.Y.2005-06 IS ALLOWED. 26. THE SECOND GRIEVANCE IN A. Y.2007-08 RELATES TO THE DISALLOWANCE OF RS.109210/- ON ACCOUNT OF BAD DEBT AND ADVANCES WRITTEN OFF. 27. FACTS ON RECORD SHOW THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS WRITTEN OFF ADVANCES OF RS.109210/-. THE ASSESSEE WAS ASKED TO 11 EXPLAIN AS TO WHY THE QUANTUM OF THESE ADVANCES WRI TTEN OFF SHOULD NOT BE DISALLOWED. 28. THE ASSESSEE FILED THE RELEVANT DETAILS AND FUR THER RELIED UPON CERTAIN JUDICIAL DECISIONS. THE ASSESSING OFF ICER WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND WAS OF THE FIRM BELIEF THAT WRITE OFF OF ADVANCES CANNOT BE TREATED AS BAD DEBTS AND MADE ADDITION OF RS.109210/-. 29. THE ASSESSEE AGITATED THE MATTER BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. 30. BEFORE US THE COUNSEL FOR THE ASSESSEE STATED T HAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS IN THEIR TRUE PERSPECTIVE. IT IS THE SAY OF THE COUNSEL THAT BOT H THE LOWER AUTHORITIES HAVE CONSIDERED THE WRITE OFF OF THE AD VANCE AS CLAIM OF BAD DEBTS THOUGH THE ADVANCES WERE GIVEN IN THE ORDINARY COURSE OF BUSINESS AND SINCE THE ASSESSEE COULD NOT RECOVER THE ADVANCES OR THE SERVICES FOR WHICH THE ADVANCES WER E GIVEN, THE ADVANCES WERE WRITE OFF AND CLAIMED AS BUSINESS LOS S. 31. PER CONTRA THE DR STRONGLY SUPPORTED THE FINDIN GS OF THE ASSESSING OFFICER. 32. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE WRITE OFF OF ADVANCES D O NOT FULFILL THE CONDITIONS LAID DOWN FOR CLAIMING THE BAD DEBTS BUT IT IS EQUALLY 12 TRUE THAT THE SAID WRITE OFF SHOULD NOT BE CONSIDER ED AS BAD DEBTS BUT HAS TO BE CONSIDERED AS BUSINESS LOSS. CONSIDE RING THE FACTS OF THE CASE IN THEIR TRUE PERSPECTIVE WE ARE OF THE CONSIDERED VIEW THAT THE WRITE OFF SHOULD BE ALLOWED AS BUSINESS LO SS U/S. 28 OF THE ACT. WE ACCORDINGLY DIRECT THE ASSESSING OFFIC ER TO DELETE THE ADDITION MADE. 33. THE GROUND NO.2 IN A. Y.2007-08 IS ALLOWED. 34. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND THOSE OF REVENUES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.08.2019. SD/- SD/- (SUDHANSHU SRIVASTAVA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNT ANT MEMBER *NEHA* DATE:- 16.08.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI 13 DATE OF DICTATION 09.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 16.08.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 16.08.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 16.08.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 16.08.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 16.08.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER