Savarinayagi, CHENNAI V. ITO, CHENNAI

ITA 323/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81178 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: T VASUDEVAN
• Keywords: Bad and doubtful debts
• Section: 28

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHE NNAI . , . ! ! ! ! , ' ' ' ' # # # # $ $$ $ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.386/MDS/2013 ' ! %! / ASSESSMENT YEAR :2009-10 THE INCOME TAX OFFICER, BUSINESS WARD, XIV (4), 6 TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. SMT. SAVARINAYAGI, NO.7, POLICE OFFICERS COLONY, O BLOCK, ANNA NAGAR EAST, CHENNAI 600 102. [PAN : ANZPS2226A] ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) ./ I.T.A.NO.323/MDS/2013 ' ! %! / ASSESSMENT YEAR :2009-10 SMT. SAVARINAYAGI, NO.7, POLICE OFFICERS COLONY, O BLOCK, ANNA NAGAR EAST, CHENNAI 600 102. VS. THE INCOME TAX OFFICER, BUSINESS WARD, XIV (4), 6 TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) DEPARTMENT BY : DR. S. MOHARANA, CIT ASSESSEE BY : SHRI T. VASUDEVAN, ADVOCATE * + / DATE OF HEARING : 21.08.2014 ,% * + /DATE OF PRONOUNCEMENT : 12.09.2014 - - - - / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSE SSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) XII, CHENNAI, DATED 22.11.2012 RELEVANT TO THE ASSESSMEN T YEAR 2009-10. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S CONTRACTOR FOR BOOKING THE ADVERTISEMENTS ON THE BUS BODIES OF THE GOVT. T RANSPORT CORPORATION IN CHENNAI AND SALEM. FOR THIS PURPOSE, THE ASSESSEE H AS BEEN COLLECTING THE ADVERTISEMENT CHARGES FROM VARIOUS CLIENTS (FOR DIS PLAYING THEIR ADVERTISEMENTS ON THE BUS BODIES) AND AFTER RETAINI NG HER MARGIN, REMITTING THE AMOUNTS TO THE GOVT. TRANSPORT CORPORATIONS AS PER THE TERMS AND CONDITIONS OF THE AGREEMENTS. THE ASSESSING OFFICER , IN HIS ORDER, OBSERVED THAT WHILE MAKING THE PAYMENTS TO THE GOVERNMENT TR ANSPORT CORPORATIONS, THE ASSESSEE FAILED TO DEDUCT NECESSARY TDS. THEREF ORE, THE ASSESSING OFFICER DISALLOWED .97,73,116/- BY INVOKING SECTION 40(A)(IA) OF THE I NCOME TAX ACT. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) ALLOWED THE CLAI M OF THE ASSESSEE BY REVERSING THE ORDER PASSED BY THE ASSESSING OFFICER AND RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSIONS CAREFULLY . AS CLAIMED BY THE ASSESSEE THE ABOVE EXPENSES OF .97,73,116/- HAVE ALREADY BEEN PAID AS ON 31.03.2009 NOTHING WAS PAYABLE AND OUTSTANDIN G AS ON 31.03.2009. THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT, ARE: SEC.40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION',- (A) IN THE CASE OF ANY ASSESSEE- (I) I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 3 (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139: THE LANGUAGE USED IN THIS PROVISION IS 'PAYABLE'. T HUS, THE PROVISIONS OF SEC. 40(A)(IA) ARE APPLICABLE ONLY WH EN THE SAID AMOUNTS ARE PAYABLE. IF THE AMOUNTS ARE ALREADY PAI D AS ON 31ST MARCH OF THE RELEVANT FINANCIAL YEAR, THE PROVISION S OF SEC. 40(A)(IA) CANNOT BE INVOKED AS HELD BY THE ITAT SPE CIAL BENCH OF VIZAG IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (20 TAXMAN.COM 244)(VIZAG SB). THEREFORE, IN THE CA SES WHERE THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE ON OR BEFOR E 31ST MARCH OF THE RELEVANT FINANCIAL YEAR, THE PROVISIONS OF S ECTION 40(A)(IA) HAVE NO APPLICATION. IN THE INSTANT CASE, IT IS CLAIMED THAT THE AMOUNTS HAVE ALREADY BEEN PAID AS ON 31 ST MARCH, 2009 AND NOTHING WAS OUTSTANDING. THIS FACT IS EVIDENT FROM THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2009, WHERE NO OUTSTANDING EXP ENSES ARE SHOWN. HENCE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE ABOVE AMOUNTS OF RS.97,73,116/- AS EXPENDITURE AS THE SAI D EXPENSES HAVE ALREADY BEEN PAID TO THE RESPECTIVE PARTIES ON OR B EFORE 31.03.2009 AND THE PROVISIONS OF SECTION 40(A)(IA) WILL HAVE N O APPLICATION IN SUCH CASES, IN VIEW OF THE DECISION OF THE ITAT SPE CIAL BENCH OF VIZAG IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (20 TAXMAN.COM 244) (VIZAG SB). THE DISALLOWANCE OF THE ASSESSING OFFICER IS DELETED. THE ASSESSEE SUCCEEDS IN HER APPEALS IN THIS GROUND. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED B Y THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN I.T.A. NO.2076( MDS)/2012 IN THE CASE OF ITO V. M/S. THEEKATHIR PRESS FOR THE ASSESSMENT YEAR 2009-10 VIDE ORDER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 4 DATED 18.09.2013 AND HE ALSO SUBMITTED THAT THE DEC ISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. M/S. VEC TOR SHIPPING SERVICES (P) LTD., WHEREIN THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD. V. ADDL. CIT [1 36 ITD 23)(SB) WAS CHALLENGED BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE DEPARTMENT . THUS, THE ORDER PASSED BY THE SPECIAL BENCH OF THE TRIBUNAL BECOMES FINAL. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CA SE, THE ASSESSEE IS A CONTRACTOR AND CARRYING ADVERTISEMENT ON THE BUS BO DIES OF THE GOVT. TRANSPORT CORPORATIONS AND AFTER RETAINING HER MARG IN, REMITTING THE AMOUNTS TO THE GOVT. TRANSPORT CORPORATIONS AS PER THE TERM S OF AGREEMENTS. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HA S FAILED TO DEDUCT TDS, BUT THE FACT IS THAT THE ASSESSEE HAS ALREADY BEEN PAID THE AMOUNTS TO THE GOVT. TRANSPORT CORPORATIONS. THIS IS NOT DISPUTED BY THE DEPARTMENT. IN THIS CONTEXT, BY FOLLOWING DECISION OF THE DECISION OF T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSP ORT LTD. V. ADDL. CIT (SUPRA), ALLOWED THE CLAIM OF THE ASSESSEE. THE COO RDINATE BENCH OF THE TRIBUNAL HAS CONSIDERED SIMILAR ISSUE IN THE CASE O F ITO V. M/S. THEEKATHIR I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 5 PRESS (SUPRA) AND DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE AND THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : 3. THE INCOME-TAX APPELLATE TRIBUNAL, VISAKHAPATN AM- SPECIAL BENCH, HAD HELD IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ADDL. CIT, 16 ITR (TRIB) 1, THAT THE PROVISIONS OF SECTION 40(A)(IA) DO APPLY ONLY TO THOSE AMOUNTS REMAINED PAYABLE BY THE END OF THE PREVIOUS YEAR AND THE SAID PROVISIONS DO NOT APPLY TO THE AM OUNTS ALREADY PAID BY THE ASSESSEE BEFORE THE CLOSE OF THE RELEVANT PREVI OUS YEAR. IN THAT WAY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) IN THE PRESENT CASE IS CONDUCIVE TO THE DECISION OF THE SPECIAL BE NCH. THE VERY SAME VIEW HAS BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES(P) LTD. TH E HONBLE ALLAHABAD HIGH COURT, THROUGH THEIR JUDGMENT DATED 9-7-2013 I N ITA NO.122 OF 2013, HAS HELD THAT THE DECISION OF THE SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ADD L. CIT IS GOOD LAW. IN THAT WAY, THE PRESENT APPEAL FILED BY THE REVENU E IS LIABLE TO BE DISMISSED. 4. BUT, AT THE SAME TIME, THE LEARNED JOINT COMMIS SIONER OF INCOME- TAX APPEARING FOR THE REVENUE HAS RELIED ON THREE O THER JUDGMENTS RENDERED BY THE HONBLE CALCUTTA HIGH COURT AND GUJ ARAT HIGH COURT, IN WHICH THEIR LORDSHIPS HAVE HELD THAT THE LAW STA TED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS VS. ADDL.CIT WAS NOT ACCEPTABLE. THE HONBLE CALCUTTA H IGH COURT, THROUGH THEIR JUDGMENT DELIVERED ON 3RD APRIL, 2013 IN ITA NO.20 OF 2013 IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICA TES, HAS HELD THAT THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL.CIT IS NOT ACCEPTABL E. THE SAME VIEW HAS AGAIN BEEN REPEATED BY THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. MD. JAKIR HOSSAIN MONDAL, THROUGH THEIR JUDGMENT DELIVERED ON 4TH APRIL, 2013 IN ITA NO.31 OF 2013. 5. WE FIND THAT THE JUDGMENT OF THE HONBLE ALLAHA BAD HIGH COURT IS IN FAVOUR OF THE ASSESSEE. AT THE SAME TIME, WE FIN D THAT THE ORDERS OF THE CALCUTTA HIGH COURT AND THE GUJARAT HIGH COURT ARE AGAINST THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE RULE OF JUDICIAL PRECEDE NCE DEMANDS THAT THE VIEW FAVOURABLE TO THE ASSESSEE MUST BE ADOPTED, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. VEGETABLE PRODU CTS LTD., 88 ITR 192. FOLLOWING THE ABOVE FUNDAMENTAL RULE DECLARED BY TH E HONBLE SUPREME COURT, WE HAVE TO FOLLOW THE JUDGMENT OF THE HONBL E ALLAHABAD HIGH COURT, WHICH IS IN FAVOUR OF THE ASSESSEE. ACCORDIN GLY, WE HOLD THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) APPLIES ONLY T O THOSE AMOUNTS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 6 PAYABLE AND NOT TO THOSE AMOUNTS PAID. ACCORDIN GLY, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) I N THE PRESENT CASE. THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DIS MISSED. 8. RECENTLY, THE HONBLE SUPREME COURT HAS CONSIDE RED SAME ISSUE IN THE CASE OF CIT V. M/S. VECTOR SHIPPING SERVICES (P ) LTD. IN CC NO. 8068/2014 VIDE ORDER DATED 02.07.2014 AND DISMISSED THE SLP FILED BY THE DEPARTMENT. IN VIEW OF THE ABOVE, RESPECTFULLY FOLL OWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AND ALSO IN VIEW O F THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. M/S. VECTOR SHIPPING SERVICES (P) LTD. (SUPRA), THE GROUND RAISED IN THE APPEAL OF THE REVENUE IS DISMISSED. 9. SO FAR AS ASSESSEES APPEAL IN I.T.A. NO. 323/M DS/2013 IS CONCERNED, THE ONLY GROUND RAISED BY THE ASSESSEE IS WITH REGA RD TO CLAIM OF BAD DEBT. THE ASSESSEE OWNS TWO PROPRIETARY CONCERNS. M/S. NA VEEN INFOTECH IS ONE OF HER PROPRIETARY CONCERNS, WHICH IS CARRYING COMP UTER TRAINING COURSE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBS ERVED THAT AS PER BALANCE SHEET OF M/S. NAVEEN INFOTECH, ANOTHER PROP RIETARY CONCERN OF THE ASSESSEE, FOR THE PERIOD ENDED 31.03.2008, A SUM OF .5,00,000/- WAS SHOWN AS DEPOSIT MADE WITH KASHYAP RADIANT. THE SAM E WAS CLAIMED AS BAD DEBT DURING THE ASSESSMENT YEAR 2009-10. WHEN T HE ASSESSEE WAS ASKED ABOUT THE BAD DEBT, IT WAS SUBMITTED THAT THE AMOUNT OF .5,00,000/- WAS PAID AS DEPOSIT DURING THE FINANCIAL YEAR 2000- 01 AND SUBSEQUENTLY, KASHYAP RADIANT, TO WHOM THE ADVANCE WAS PAID HAS N OT SUPPLIED THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 7 COMPUTER TRAINING MATERIAL. THE DEPOSIT WAS MADE FO R THE PURPOSE OF BUSINESS AND IT WAS A TRADING DEBT. HENCE, IT IS CL AIMED AS A BAD DEBT AND THE SAME HAS TO BE ALLOWED. THE ASSESSING OFFICER, AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, DISALLOWED THE CLAIM O F THE ASSESSEE ON THE GROUND THAT THE CLAIM OF THE ASSESSEE IS NOT ELIGIB LE UNDER SECTION 36(VII) OF THE ACT AND THE SAME WAS ADDED BACK TO THE INCOME O F THE ASSESSEE. 10. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT THE ASSESSEE HAS ADVANCED .5,00,000/- TO KASHYAP RADIANT TO SUPPLY STUDY MATERIAL. HOWEVER, THE ASSESSEE HAS NOT RECEIVED ANY MATERIAL FROM KASHYAP RADIANT. THEREFO RE, IT WAS WRITTEN OFF IT AS BAD DEBT AND IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 36(1)(VII) OF THE ACT. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, HAS HELD THAT THE AMOUNTS WRITTEN OFF AS BAD DEBT IS CERTAINLY NOT A TRADE DEBT. IT WAS NOT INCLUDED IN COMPUTING THE TOTAL IN COME OF THE ASSESSEE IN ANY OF THE EARLIER YEARS. FURTHER, THE ASSESSEE IS NOT ENGAGED IN THE MONEY LENDING BUSINESS AND THEREFORE, THE ADVANCE MADE BY THE ASSESSEE [M/S. NAVEEN INFOTECH] TO KASHYAP RADIANT IS NOT AN AMOUN T PRESCRIBED UNDER SECTION 36(2)(I) OF THE ACT. HENCE, THE WRITTEN OFF THE AMOUNT ADVANCED TO KASHYAP RADIANT WAS NOT QUALIFIED FOR DEDUCTION UND ER SECTION 36(1)(VII) OF THE ACT AS A BAD DEBT. IN NORMAL COURSE, THE LOANS OR ADVANCES MADE IN THE ORDINARY COURSE OF THE BUSINESS (OTHER THAN THOSE W HO ARE ENGAGED IN MONEY LENDING/BANKING) ARE ELIGIBLE FOR DEDUCTION A S BAD DEBTS WRITTEN OFF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 8 UNDER SECTION 28 OF THE ACT. HOWEVER, HERE THE PRIM ARY REQUIREMENT IS THAT THE LOANS/ADVANCES MUST HAVE BEEN ADVANCED DURING T HE ORDINARY COURSE OF THE BUSINESS. WHEREAS, IN THE PRESENT CASE, IT IS C LEARLY NOTED BY THE ASSESSING OFFICER THAT M/S. NAVEEN INFOTECH NEVER S TARTED ANY BUSINESS AND HENCE THE QUESTION OF ADVANCING LOANS IN THE ORDINA RY COURSE OF THE BUSINESS DOES NOT ARISE. THEREFORE, THESE LOANS ADVANCED TO KASHYAP RADIANT ARE NOT ELIGIBLE FOR DEDUCTION EVEN UNDER SECTION 28 OF THE ACT, IF THEY ARE WRITTEN OFF. WITH THE ABOVE OBSERVATIONS, THE LD. CIT(APPEALS) C ONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE AMOUNTS ADVANCED BY THE ASSESSEE WAS FOR THE PURPOS E OF THE BUSINESS I.E., FOR SUPPLY OF STUDY MATERIAL AND KASHYAP RADIANT HA S NOT SUPPLIED THE MATERIAL. SO THE AMOUNTS ADVANCED FOR THE PURPOSE O F BUSINESS AND THEREFORE, THE SAME HAS TO BE ALLOWED. BY REFERRING PAPER BOOK PAGE NO. 8, THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT TH AT THE ASSESSEE HAS CARRIED BUSINESS ACTIVITY TO SHOW SHE HAS FILED INC OME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.03.2002. THEREFORE, T HE LD. CIT(APPEALS) WAS WRONG IN HOLDING THAT THE ASSESSEE HAS NOT CARRIED ANY BUSINESS. 12. ON THE OTHER HAND, THE LD. DR HAS RELIED ON TH E ORDERS OF AUTHORITIES BELOW. 13. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE CASE O F THE ASSESSEE IS THAT THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 9 ASSESSEE IS RUNNING COMPUTER TRAINING CENTRE IN THE NAME OF NAVEEN INFOTECH. FOR THE PURPOSE OF STUDY MATERIALS, IT HA S ADVANCED AN AMOUNT OF .5,00,000/-. ACCORDING TO THE ASSESSEE, THE AMOUNT OF .5,00,000/- BECOME BAD DEBT AND IT HAS TO BE ALLOWED UNDER SECTION 36( VII) OF THE ACT. ALTERNATIVELY, SHE HAS SUBMITTED THAT IT IS A BUSIN ESS LOSS AND IT HAS TO BE ALLOWED UNDER SECTION 28 OF THE ACT. SO FAR AS ALLO WABILITY UNDER SECTION 36(VII) OF THE ACT IS CONCERNED, THE AMOUNT CLAIMED BY THE ASSESSEE AS A BAD DEBT, IT WAS NOT INCLUDED IN COMPUTING TOTAL IN COME OF THE ASSESSEE IN ANY OF THE EARLIER ASSESSMENT YEARS. THIS IS ONE OF THE CONDITIONS LAID DOWN TO CLAIM DEDUCTION OF BAD DEBT UNDER SECTION 36(VII ) OF THE ACT. THEREFORE, THE ASSESSING OFFICER AND THE LD. CIT(APPEALS) HAVE COR RECTLY DENIED THE CLAIM OF THE ASSESSEE. 14. IN SO FAR AS CLAIM UNDER SECTION 28 OF THE ACT IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED DURING THE C OURSE OF HEARING THAT THE ASSESSEE HAS CARRIED THE BUSINESS FOR THE FINAN CIAL YEAR 2001-02 AND THEREFORE, THE CLAIM OF THE ASSESSEE HAS TO BE ALLO WED AS BUSINESS LOSS UNDER SECTION 28 OF THE INCOME TAX ACT AND FOR THAT HE RELIED ON PAPER BOOK PAGE NO. 8, WHERE INCOME AND EXPENDITURE ACCOUNT FO R THE YEAR ENDED 31.03.2002 HAS BEEN FILED. WHEN THE ASSESSEE HAS CA RRIED BUSINESS FOR THE FINANCIAL YEAR 2001-02, THERE IS NOTHING ON RECORD AS WHAT IS THE POSITION OF THE ASSESSEE [NAVEEN INFOTECH] AFTER 31.03.2002. T HE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACTION. HE WAS ONLY SAYS THAT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 10 THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE UNDER SE CTION 36(VII) OF THE ACT. WE ALSO FIND THAT THE CLAIM OF THE ASSESSEE IS BONA FIDE, BUT THE AMOUNTS WERE ADVANCED IN THE FINANCIAL YEAR 2000-01 AND CLA IMED AS BAD DEBT IN THE ASSESSMENT YEAR 2008-09 ALTERNATIVELY AS A BUSINESS LOSS. SO FAR AS BAD DEBT IS CONCERNED, THE ASSESSEE HAS FAILED TO SATIS FY THE CONDITIONS AS LAID DOWN UNDER SECTION 36(VII) OF THE ACT. SO FAR AS BU SINESS LOSS IS CONCERNED, WHEN THE ASSESSEE HAS NOT ABLE TO PRODUCE ANY EVIDE NCE THAT THE ASSESSEE IS CARRYING THE BUSINESS IN THE ASSESSMENT YEAR 200 8-09, THE PAYMENTS MADE BY THE ASSESSEE IN THE ASSESSMENT YEAR 2001-02 CANNOT BE ALLOWED UNDER SECTION 28 OF THE INCOME TAX ACT. THEREFORE, WE ARE OF THE OPINION THAT UNDER SECTION 28 OF THE ACT ALSO THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION. IN VIEW OF THE ABOVE, WE FIND NO INFIRMI TY IN THE ORDER PASSED BY THE LD. CIT(APPEALS AND THE APPEAL FILED BY THE ASS ESSEE IS DISMISSED. 15. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AS WELL AS ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 12 TH OF SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 12.09.2014 VM/- I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .386 & 323 386 & 323 386 & 323 386 & 323/M/ /M/ /M/ /M/13 1313 13 11 - * ('+./ 0/%+ /COPY TO: 1. &' / APPELLANT, 2. ()&' / RESPONDENT, 3. 1 ( ) /CIT(A), 4. 1 /CIT, 5. /2 ('+' /DR & 6. 3! 4 /GF.