LOTUS ENERGY INDIA P.LTD, MUMBAI V. ITO 8(2)(2), MUMBAI

ITA 3632/MUM/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6821 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 12-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Keywords: Depreciation; Business expenditure; Proportionate interest; Bad and doubtful debts; TDS
• Section: 143(3); 40(a)(ia); 37(1); 194C; 37; 28

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENC H MUMBAI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3632/MUM/2015 (ASSESSMENT YEAR 2010-11) M/S. LOTUS ENERGY INDIA PVT LTD, 409, LAXMI INDUSTRIAL ESTATE, ANDHERI (WEST), MUMBAI- 400053. P AN: AABCL0119K VS. ITO-8(2) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 APPELLANT RESPONDENT APPELLANT BY : SHRI SANJAY PARIKH (AR) RESPONDENT BY : SHRI H.N. SINGH CIT-DR & SH. AIRIJU JAIKARAN SR. DR DATE OF HEARING : 11.01.2019 DATE OF PRONOUNCEMEN T : 28.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-15, MUMBAI (TH E LD. CIT(A) DATED 09.03.2015, WHICH IN TURN ARISES FROM THE ASS ESSMENT ORDER PASSED UNDER SECTION 143(3) ON 25.03.2013. THE ASSESSEE HA S RAISED FOLLOWING GROUND OF APPEAL: 1) DISALLOWANCE U/S. 40(A)(IA): (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) - 17, MUMBAI ['THE LD. CIT(A)'] ERRED IN FACTS AND LAW IN SUSTAINING T HE DISALLOWANCE TO THE EXTENT OF RS. 28,49,485/- UNDER SECTION 40(A)(IA) O F THE ACT MADE BY THE LEARNED INCOME TAX OFFICER - 8(2)(2), MUMBAI ['THE ID. ASSESSING OFFICER] ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 2 WITHOUT APPRECIATING THE MATERIAL PLACED ON RECORD SUBSTANTIATING THE FACT OF REIMBURSEMENT OF EXPENSES. (B) THE ID. CIT(A) ERRED IN FACTS AND LAW IN SUSTAI NING THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT DESPITE THE FACT THAT ADEQUATE MATERIAL EVIDENCING THE PAYMENT OF TAX MADE BY THE PAYEE IN ITS RETURN OF INCOME ON THE INCOME EARNED FROM ASSESSEE WAS PLACED ON RECOR D. (C) WITHOUT PREJUDICE TO LEA) AND 1 (B) ABOVE, THE LD. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE DISALLOWANCE OF RS. 28,49 ,485/- UNDER SECTION 40(A)(IA) OF THE ACT WITHOUT APPRECIATING THAT OUT OF THE SAID AMOUNT, THE ASSESSEE HAS ALREADY PAID RS. 16,94,403/- IN THE YE AR UNDER CONSIDERATION AND THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE EXPENDITURE PAYABLE AT THE END OF THE YEAR. 2) DISALLOWANCE OF INTEREST: (A) THE LD. CIT(A) ERRED IN FACTS AND LAW IN SUSTAI NING THE DISALLOWANCE OF INTEREST OF RS. 7,42,500/- BY ADOPTING THE RATE OF 16.50% FOR THE WHOLE YEAR ON THE SUM ADVANCED FOR BOOKING OFFICE PREMISES WIT HOUT RESTRICTING IT TO THE EXTENT OF INTEREST CLAIMED BY DEBITING IN THE PROFI T AND LOSS ACCOUNT AT THE RATE OF 16% P.A. ON PRO-RATA BASIS AND ALLOWING THE CONSEQUENTIAL DEPRECIATION THEREON. (B) WITHOUT PREJUDICE TO ABOVE, THE LD. ASSESSING O FFICER SHALL BE DIRECTED TO CAPITALIZE THE INTEREST ON PURCHASE OF OFFICE PR EMISES AND ACCORDINGLY CONSEQUENTIAL DEPRECIATION BE GRANTED. 3) DISALLOWANCE OF SUNDRY BALANCES WRITTEN OFF: THE LD. CIT(A) ERRED IN FACTS AND LAW IN SUSTAINING THE DISALLOWANCE OF SUNDRY BALANCES WRITTEN OFF AMOUNTING TO RS. 23,86, 242/- WITHOUT APPRECIATING THAT THE SAME ARE ALLOWABLE AS BUSINES S LOSS UNDER THE PROVISIONS OF THE ACT. 4) ALL THE ABOVE REFERRED GROUNDS BE CONSIDERED AS INDEPENDENT OF EACH OTHER. 5) YOUR APPELLANT PRAYS THAT - (A) THE DISALLOWANCE MADE U/S. 40(A)(IA) AMOUNTING TO RS. 28,49,485/- BE DELETED; (B) DISALLOWANCE OF INTEREST OF RS. 7,42,500/- BE D ELETED AND RESTRICTED ON PRORATE BASIS @ 16% P.A. AND CONSEQUENTIAL DEPRECIA TION BE GRANTED; ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 3 (C) WITHOUT PREJUDICE TO 5(B) ABOVE, INTEREST ELEME NT BE CAPITALIZED AND CONSEQUENTIAL DEPRECIATION BE GRANTED; (D) THE CLAIM OF SUNDRY BALANCES WRITTEN OFF AMOUNT ING TO RS. 23,86,242/- BE ALLOWED. (E) SUCH OTHER RELIEF AS MAY BE DEEMED FIT BE GRANT ED. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS EN GAGED IN THE BUSINESS OF MANUFACTURER TRADING OF LAM COKE AND TRADING IN ALU MINUM STRUCTURE, COMPOSITE PANEL AND SCRAPE ETC., FILED ITS RETURN O F INCOME FOR ASSESSMENT YEAR 2010-11 DECLARING TAXABLE INCOME AT RS. NIL AF TER SETTING OFF BROUGHT FORWARD BUSINESS LOSSES OF RS. 90,89,583/-. THE RET URN OF INCOME WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 25 MARCH 2013. THE ASSESSING OFFICER WHILE PASSI NG THE ASSESSMENT ORDER BESIDES THE OTHER ADDITIONS AND DISALLOWANCES , DISALLOWED RS. 1,21,71,665/- UNDER SECTION 40(A)(IA), DISALLOWED I NTEREST EXPENSES OF RS. 7,42,500/- UNDER SECTION 36(1)(III) AND DISALLOWED SUNDRY BALANCES ARE WRITTEN OFF OF RS. 23,86,242/- UNDER SECTION 36(1)( VII). ON APPEAL BEFORE COMMISSIONER (APPEALS) THE DISALLOWANCE UNDER SECTI ON 40(A)(IA) WAS RESTRICTED TO RS. 28,49,485/- AND OTHER DISALLOWANC ES UNDER SECTION 36(1)(III) AND SUNDRY BALANCES WRITTEN OFF WAS CON FIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER (APP EALS) THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LEARNED AR OF THE A SSESSEE AND THE LEARNED DR FOR THE REVENUE. THE LEARNED AR OF THE A SSESSEE SUBMITS THAT ASSESSEE HAD PAID CLEARING AND FORWARDING EXPENSES OF RS. 1,21,71,665/- ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 4 TO M/S ESSKAY SHIPPING PRIVATE LIMITED (ESPL) IN CO NNECTION WITH IMPORTS. THE EXPENDITURE INCLUDED VARIOUS EXPENSES SUCH AS WHARFAGE CHARGES, STEVEDORING CHARGES, PORT CHARGES, DETENTI ON CHARGES, CUSTOM DUTY ETC. DURING THE ASSESSMENT PROCEEDING THE ASSE SSEE WAS ASKED TO FILE DETAIL OF THE EXPENSES INCURRED AND THE TDS MADE TH EREON. WITH REGARD TO THE PAYMENT TO ESPL THE ASSESSEE SUBMITTED THAT THE Y HAD DEDUCTED TDS FROM PAYMENTS IN THE NATURE OF STEVEDORING CHARGES, FREIGHT CHARGES AND DETENTION CHARGES. HOWEVER, NO TDS WAS DEDUCTED ON REIMBURSEMENT OF THE EXPENSES AMOUNTING TO RS. 28,49,485/- ONLY. THE ASSESSING OFFICER TOOK THE VIEW THAT ASSESSEE COULD NOT PICK AND CHOO SE THE NATURE OF EXPENSES ON WHICH TDS WAS REQUIRED TO BE DEDUCTED. THE ASSESSING OFFICER WAS FURTHER OF THE VIEW THAT IF SOME AMOUNT WAS NOT LIABLE TO TAX, THE RECEIVER SHOULD HAVE OBTAINED TDS CERTIFICATE F OR NON-DEDUCTION OF TDS UNDER SECTION 197, THEREFORE, THE ASSESSING OFF ICER DISALLOWED THE ENTIRE PAYMENT MADE TO ESPL OF RS. 1,21,71,665/-. 4. BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE FURNISHED THE BREAKUP OF PAYMENTS MADE TO ESPL, AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE LD COMMISSIONER (APPEALS) RESTRICTED D ISALLOWANCE TO THE EXTENT OF RS. 28,49,485/-. THE SAID AMOUNT OF RS. 2 8,49,485/- RELATES TO REIMBURSEMENT OF EXPENSES PAID TO ESPL. THE LEARNED AR FOR THE ASSESSEE FURTHER SUBMITS THAT THERE IS NO INCOME IN CASE OF REIMBURSEMENT OF EXPENSES, NO TAXES REQUIRED TO BE DEDUCTED AT SO URCE. IN SUPPORT OF HIS ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 5 SUBMISSION THE LEARNED AR OF THE ASSESSEE RELIED UP ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS SIEMENS AKTIONG ESELLSCHAFT (2009) 310 ITR 320 (BOM) AND IN CIT VERSUS KARMA E NERGY LTD ( 57 TAXMANN.COM 235) (BOMBAY). 5. IN ALTERNATIVE AND WITHOUT PREJUDICE SUBMISSIONS TH E LEARNED AR SUBMITS THAT AS ESPL HAS PAID TAXES ON ITS INCOME, THEREFOR E, NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA). IN SUPPORT OF HIS SUBMISSION THE LEARNED AR RELIED UPON THE DECISION OF KOLKATA TRIBUNAL IN RANJANA ROY VERSUS ITO IN ITA NO. 558/KOL/2013, ITO VS OPERA GLOBAL PVT LTD. (2011) 30 CCH 712 (DELHI TRIB) AND BRIDGEGOPAL MADHUSUDHAN BH ATTAD VS ITO (2015) TAXMANN.COM 266(NAGPUR TRI). 6. ON THE OTHER HAND THE LEARNED AR FOR THE REVENUE SU PPORTED THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON THE CASE LAW RELIED BY LOWER AUTHORITIES AND THE LEARNE D AR OF THE ASSESSEE DURING SUBMISSION BEFORE US. DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBIT ED EXPENSES OF RS.28,49,485 /- ON ACCOUNT OF WHARFAGE CHARGES, STE VEDORING CHARGES, PORT CHARGES, DETENTION CHARGES. ON THE SAID PAYMEN T THE ASSESSEE HAS NOT DEDUCTED TAX FROM THE HIRE CHARGES, LIGHTERAGE CHAR GES, WHARFAGE CHARGES PORT CHARGES AND ON RENT. THE ASSESSEES DEDUCTED TH E TAX FROM SOME OF THE ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 6 SELECTED ITEMS AND EXCLUDE THE REMAINING IN ITS COM PATIBLE WITH THE EXISTING PROVISION OF THE LAW. THE ASSESSING OFFICE R WAS OF THE VIEW THAT THE ENTIRE PAYMENT TO ESPL WAS LIABLE FOR TAX DEDUC TION AS PER THE PROVISIONS OF SECTION 194C, THUS THE ENTIRE PAYMENT S MADE TO ESPL WAS DISALLOWED, CONSISTING THE IMPUGNED DISALLOWANCES. BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE CONTENDED THAT ESPL HAVE RAISED SEPARATE DEBIT NOTE FOR ALL THE REIMBURSEMENT AND T HE ASSESSEE HAD SATISFIED ITSELF ABOUT THE REIMBURSEMENT OF THE ACT UAL EXPENSES AS ALL THE DEBIT NOTES ARE SUPPORTED BY INVOICES OF THE SERVIC E PROVIDED. THERE IS NO MARKUP ON ANY OF THE REIMBURSEMENT; THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON SUCH REIMBURSEM ENT. THE ASSESSEE ALSO CONTENDED THAT THE RECIPIENT WAS ACTING ONLY AS A C ONDUIT FOR RECEIVING THE PAYMENT AND AS PER SECTION 194I; THE DEDUCTION IS T O BE MADE BY THE PAYEE ON SUCH INCOME WHICH INCOME ASSESSABLE AS REN T IN TERM OF THE SAID SECTION. EVEN SO FAR AS SECTION 194C IS CONCERNED, THE RESPONSIBILITY OF THE PERSON PAYING ANY SUM TO THE CONTACTOR AND WHE N THE AMOUNT WAS REIMBURSED BY THE ASSESSEE IT WAS NOT PAID TO THE C ONTRACTOR BUT TO THE PARTY WHO HAD TO MAKE THE PAYMENT TO THE CONTRACTOR . 8. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERIN G THE CONTENTION OF ASSESSEE NOTED THAT ESPL IS A CLEARING AND FORWARDI NG AGENTS AND WAS REIMBURSED ALL THE EXPENSES PAID ON BEHALF OF THE A SSESSEE. THE ASSESSEE AGAINST THE COPY OF DEBIT NOTES ISSUED BY ESPL, WHI CH INDICATE THAT THE ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 7 AMOUNT PAID TO ESPL, WAS REIMBURSEMENT OF EXPENSES. FURTHER THE CLAIM OF THE ASSESSEE THAT REIMBURSEMENT IS WITHOUT ANY M ARKUP IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD. NO SUCH CONTRA CT WAS PRODUCED BEFORE THE LEARNED COMMISSIONER (APPEALS) AND IN AB SENCE OF ANY CONTRACT, THE LEARNED COMMISSIONER (APPEALS) CONCLU DED THAT IT WAS DIFFICULT TO ASCERTAIN WHETHER THE REIMBURSEMENT OF EXPENSES CONTAIN ANY MARKUP OR THERE IS ANY PROFIT ELEMENT EMBEDDED IN S UCH REIMBURSEMENT. IT WAS ALSO CONCLUDED THAT THE INCOME TAX RETURN OF ESPL FILED BY ASSESSEE DOES NOT INDICATE WHETHER ESPL HAD INCLUDE D THE SAID INCOME IN ITS RETURN OF INCOME AS CONTENDED BY THE ASSESSEE. IN ABSENCE OF ANY EVIDENCE TO SUBSTANTIATE THAT THERE IS CONTACT BETW EEN THE ASSESSEE AND ESPL, THE CLAIM OF ASSESSEE THAT THE EXPENSES WAS P AID ON ACCOUNT OF REIMBURSEMENT WAS NOT ACCEPTED. 9. WE HAVE NOTED THAT THE CLAIM OF ASSESSEE WAS NOT AC CEPTED IN ABSENCE OF ANY EVIDENCE IN THE FORM OF CONTRACT ABOUT THE REIM BURSEMENT OF EXPENSES. BEFORE US THE LD AR FOR THE ASSESSEE HAS MADE TWO FOLD SUBMISSIONS THAT (I) THE EXPENSES WAS PAID ON ACCOU NT OF REIMBURSEMENT, THEREFORE, NO TDS WAS REQUIRE TO BE MADE AND (II) T HAT THE RECEIPT HAS INCLUDED THE SAID PAYMENT IN ITS RETURN AND HAS PAI D THE TAX ON SUCH INCOME. THEREFORE, CONSIDERING THE SECOND CONTENTIO N OF THE ASSESSEE IN VIEW OF THE DECISION OF TRIBUNAL IN RANJANA ROY VER SUS ITO (SUPRA), IN ITO VS OPERA GLOBAL PVT LTD. (SUPRA) AND IN BRID GEGOPAL ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 8 MADHUSUDHAN BHATTAD VS ITO (SUPRA) THAT WHEN THE RE CIPIENT HAS PAID TAX ON THE INCOME NO DISALLOWANCE CAN BE MADE IN TH E HAND OF PAYER. HENCE, THIS ISSUE IS RESTORED TO THE FILE OF ASSESS ING OFFICER TO VERIFY THE FACTS IF THE RECIPIENT HAS INCLUDED THAT PAYMENT IN ITS INCOME AND PAID THE TAX AND PASS THE ORDER IN ACCORDANCE WITH LAW. NEED LESS TO ORDER THAT BEFORE PASSING THE ORDER THE ASSESSING OFFICER SHAL L GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE AND TO FURNISH NECESSARY EV IDENCES. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PU RPOSE. 10. GROUND NO. 2 RELATES TO DISALLOWANCE OF INTEREST EX PENSES OF RS. 7,42,500/-. THE LEARNED AR OF THE ASSESSEE SUBMITS THAT ASSESSEE DEBITED INTEREST AND FINANCIAL CHARGES OF RS. 81,21,205/- T OWARDS THE INTEREST PAID TO BANK AND ON UNSECURED LOANS. DURING THE ASSESSME NT THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD GIVEN LOAN AND ADVA NCES OF RS.4,74,11,238/- THE ASSESSING OFFICER TOOK THE VIE W THAT INTEREST-BEARING FUNDS WERE DIVERTED TO NON-INTEREST BEARING LOANS A ND ADVANCES. THE ASSESSEE BEFORE THE ASSESSING OFFICER HAS SPECIFICA LLY CONTENDED THAT ALL THE LOANS AND ADVANCES WERE MADE FOR THE PURPOSE OF ITS BUSINESS. WITH REGARD TO THE LOANS TO M/S LOTUS GRHINIRMAN PRIVATE LTD IT WAS SUBMITTED THAT THE SAME WAS FOR BOOKING PROPERTY AND COPY OF ALLOTMENT LETTER WAS FILED BEFORE ASSESSING OFFICER. BEFORE THE ASSESSIN G OFFICER THE ASSESSEE VIDE ITS LETTER DATED 18 FEBRUARY 2013 AND 21 MARCH 2013 CONTENDED THAT THE ADVANCE TO LOTUS GRHINIRMAN PRIVATE LTD WAS OU T OF REFUND RECEIVED ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 9 FROM LOTUS VENTURE PRIVATE LTD AND NOT OF BORROWED FUNDS. THE ASSESSING OFFICER DISALLOWED THE INTEREST EXPENSES OF RS. 28, 70,901/- WITH REGARD TO THE ENTIRE LOAN AND ADVANCES. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS. 7,42,500/- BEING THE INTEREST ON ADVANCES GIVEN TO S LOTUS GRH INIRMAN PRIVATE LTD. THE LEARNED AR OF THE ASSESSEE SUBMITS THAT ASSESSE E HAS OWN FUNDS OF RS. 5,68,63,512/- AS RECORDED BY LEARNED COMMISSION ER (APPEALS) IN ITS ORDER. SINCE THE FUNDS WERE MORE THAN ADVANCE WAS G IVEN TO LOTUS GRHINIRMAN PRIVATE LTD, IT CAN SAFELY BE PRESUMED T HAT ADVANCES WAS OUT OF OWN FUNDS. 11. THE LD. AR FOR THE ASSESSEE WITHOUT PREJUDICE TO HI S RIGHT CONTENDED THAT ASSESSEE HAD SUFFICIENT OWN FUNDS TO INVEST IN LOT US GRHINIRMAN PRIVATE LTD AND HENCE NO DISALLOWANCE OF INTEREST WAS CALLE D FOR. IN SUPPORT OF HIS SUBMISSION THE LEARNED AR OF THE ASSESSEE RELIED UP ON THE DECISION OF BOMBAY HIGH COURT IN CASE OF CIT VS RELIANCE UTILIT IES AND POWER LTD 313 ITR 340 (BOMBAY). THE LEARNED AR OF THE ASSESSE E PRAYED FOR DELETING THE ENTIRE DISALLOWANCES. 12. ON THE OTHER HAND THE LEARNED AR FOR THE REVENUE RE LIED UPON THE ORDER OF LOWER AUTHORITIES. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON THE VARIOUS CASE LAWS RELIED BY LOWER AUTHORITIES. DURI NG THE ASSESSMENT THE ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 10 ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBIT ED INTEREST AND FINANCIAL CHARGES OF RS. 81,21,205/- BEING INTEREST PAID ON B ANK AND UNSECURED LOANS. THE BALANCE-SHEET OF THE ASSESSEE SHOWS THE SUBSTANTIAL AMOUNT OF THIS INTEREST-BEARING CAPITAL WAS INVESTED LOAN AND ADVANCES OF RS.4,74,11,238/-. THE ASSESSING OFFICER TOOK THE VI EW THAT ASSESSEE IS USING INTEREST-BEARING ADVANCES FOR THE PURPOSE OF ADVANCING INTEREST FREE LOANS. THEREFORE, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE WHY THE PROPORTIONATE INTEREST SHOULD NOT BE DISALLOWED UND ER SECTION 36(1)(III). THE ASSESSEE FILED ITS REPLY DATED 18.02.2013 AND C ONTENDED THAT SUCH LOAN ADVOCATE ADVANCES INCLUDE ADVANCES GIVEN TO S LOTUS GRHINIRMAN PRIVATE LTD, A SISTER CONCERN FOR BOOKING A OFFICE PREMISES AND CONTENDED THAT NO DISALLOWANCE OF INTEREST IS WARRANTED. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT NO EVIDENCE OF BOOKING OF OFFICE WAS BROUGHT ON RECORD. THE ASSESS ING OFFICER ALSO CONCLUDED THAT IF THE CONTENTION OF ASSESSEE ACCEPT ED THAT SUCH ADVANCES WERE GENUINELY GIVEN FOR PURCHASING THE OFFICE PREM ISES, TILL SUCH BUSINESS ASSET IS ACTUALLY PURCHASED AND USED FOR T HE PURPOSE OF BUSINESS, THIS INTEREST COMPONENT ON THE BORROWED CAPITAL USE D FOR THE PURPOSE OF FIXED ASSET NEEDS TO BE CAPITALIZED. THE ASSESSING OFFICER ON THE CONTENTION OF ASSESSEE THAT ASSESSEE CLAIMED TO HAV E RECEIVED INTEREST AT THE RATE OF 10% ON LOAN OF RS. 3.0 CRORE PAID TO M/ S TIRUPATI DEVELOPERS. THE INTEREST FREE LOAN AND ADVANCES OF RS. 1.73 CRO RE THE ASSESSEE ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 11 CONTENDED THAT THE RATE OF INTEREST ON SUCH BANK LO ANS WERE RANGING FROM 15 TO 18%, THE MEAN RATE OF INTEREST WAS CALCULATED BY ASSESSING OFFICER AT THE RATE OF 16.5% AND ACCORDINGLY ASSESSING OFFI CER DISALLOWED INTEREST OF RS. 28,70,901/-. THE LEARNED COMMISSIONER (APPEA LS) RESTRICTED THE DISALLOWANCE ONLY ON THE AMOUNT OF RS. 45 LAKHS WHI CH WAS GIVEN AS AN ADVANCE TO S LOTUS GRHINIRMAN PRIVATE LTD. WE HAVE NOTED THAT THE ASSESSEE HAS SHOWN HIS OWN FUNDS OF RS. 5.68 CRORE, THIS FACT HAS BEEN DULY RECORDED AND ACCEPTED BY LEARNED COMMISSIONER (APPEALS) IN PARA 4.2 OF ITS ORDER. THE ASSESSEE HAS MADE A BOOKING O F OFFICE PREMISES WITH LOTUS GRHINIRMAN PRIVATE LTD. WE HAVE NOTED THAT TH E FUND ADVANCED BY ASSESSEE IS OF RS. 45 LACKS ON ACCOUNT OF BOOKING O F OFFICE PREMISES. THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS IN THE FORM OF RESERVE AND SURPLUS AND SHARE CAPITAL OF RS. 5.68 CRORE. THEREF ORE, KEEPING IN VIEW, THE RATIO OF THE DECISION OF HONBLE BOMBAY HIGH CO URT IN CIT VS RELIANCE UTILITY AND POWERS LTD (SUPRA), NO INTERES T DISALLOWANCE IS WARRANTED, WHEN THE INTEREST FREE FUNDS AVAILABLE W ITH THE ASSESSEE IS FAR MORE THAN THE INVESTMENT MADE BY THE ASSESSEE. THER EFORE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT , WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF RS. 7,42,500/-. IN THE RESULT, GROUND NO.2 IS ALLOWED. 14. GROUND NO.3 RELATES TO DISALLOWANCE SUNDRY BALANCE WRITTEN OFF. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE WRITTE N OFF SUNDRY BALANCES ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 12 OF RS. 25,86,229/-. THE ASSESSING OFFICER DISALLOWE D THE ENTIRE CLAIM HOLDING THAT THE ASSESSEE HAS NOT FURNISHED DETAILE D FOR JUSTIFYING THE DECISION OF WRITE OFF, THE ASSESSING OFFICER ALSO N OTED THAT CERTAIN WRITE OFF WERE PERTAINING TO CENVAT DUTY, EDUCATION CESS ETC. BEFORE THE LD. COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED COMP LETE DETAILS OF WRITE OFF. FOR WRITE OFF OF CENVAT DUTY, IT WAS SUBMITTED THAT SAME WAS EXCESS CREDIT NOT UTILIZED PERTAINING TO ALUMINUM BUSINESS . THE ALUMINUM BUSINESS WAS NOT DOING WELL, OPERATION REDUCED CONS IDERABLY AND ULTIMATELY IT WAS CLOSED. SUCH WRITE OFF WAS ALLOWA BLE IN VIEW OF RULE 11 OF CENVAT CREDIT RULES, 2004. THE LD. COMMISSIONER (APPEALS)ALLOWED BAD DEBTS OF RS. 3.99 LAKHS ONLY. THE LD. COMMISSIO NER (APPEALS) WHILE CONFIRMING THE ACTION OF ASSESSING OFFICER TO THE E XTENT OF RS. 25,86,229/- CONCLUDED THAT ASSESSEE NOT FURNISH THE RELEVANT RULES. THE LD. AR FURTHER SUBMITS THAT THE ASSESSEE SUFFERED LOSS IN THE COURSE OF BUSINESS AND WAS ACCORDINGLY THE CLAIM OF WRITTEN O FF IS ALLOWABLE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR RELIED UPON T HE DECISION OF HONBLE SUPREME COURT IN BADRIDAS DAGA V. CIT [1958] 34 ITR 10 (SC). FOR CENVAT CREDIT WHICH CANNOT BE UTILIZED AND WAS CLAI MED AS BUSINESS LOSS, THE LD. AR RELIED UPON THE DECISION OF TRIBUNAL IN GIRDHAR FIBRES PVT. LTD. V. ACIT [ITA NO. 2027/AHD/2009], M/S. MOHAN SPINNIN G MILLS V. ACIT [ITA NO. 1212/CHD/2011] & NCS DISTILLERIES P. LTD. V. ITO [ITA NO. 699/HYD/2012. ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 13 15. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIE D UPON THE ORDER OF LOWER AUTHORITIES. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DEBITED S UNDRY WRITTEN OFF OF RS. 25,86,229/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS. THE ASSESSEE FILED ITS REPLY AND CONTENDED THAT ASSESSE E FULFILL THE CONDITION PRESCRIBED UNDER SECTION 36(1)(VII) AND SECTION 36( 2). NO EVIDENCE WAS FURNISHED BY ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WRITE OFF OF CONSIST CENVAT DUTY OF RS. 12,82,353/-, EDUC ATION CESS, EXCISE DUTY ETC. REQUIRED SPECIFIC EXPLANATION HOW THE SAM E CAN BE CLAIMED AS DEBTS. NO DETAILS WERE FURNISHED BY ASSESSING OFFIC ER, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE WRITTEN OFF OF SUN DRY BALANCES. BEFORE THE LD. COMMISSIONER (APPEALS), THE ASSESSEE CONTEN DED THAT WRITTEN OFF BALANCES OF RS. 25,86,229/- CONSIST OF CENVAT DUTY, EDUCATION CESS, EXCISE DUTY ETC. OF RS. 13,74,030/- AND SUNDRY DEBT OR WRITTEN OF IS RS. 12,12,199/-. THE DETAILS WERE ALSO FURNISHED ALONG WITH THE LEDGER COPIES OF SUCH PARTIES REFLECTING WRITE OFF MADE IN THE BO OKS OF ACCOUNT AND LEDGER REFLECTING ACCOUNTING OF INCOME IN EARLIER Y EARS AND EXPLAINING THE FACT AS TO WHY THE BALANCE WRITTEN OF BE ALLOWED. T HE DETAILS OF SUNDRY BALANCE WRITTEN OF IS RECORDED BY LD. COMMISSIONER (APPEALS) IN PARA 5.2 OF ITS ORDER IN THE FOLLOWING MANNER: ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 14 SR. NO. PARTICULARS AMOUNT (RS.) REMARKS 1 MOHD. MUSTAQ ALI 1,00,000 ADVANCE WAS GIVEN FOR PURCHASING STEAM COAL. HOWEVER, THE SAME COULD NOT BE RECOVERED DESPITE BEST EFFORTS AND HENCE CLAIMED AS BUSINESS LOSS U/S. 28 OR SEC. 37 OF THE ACT. 2 M.S. INTER - TRADE COMPANY 3,99,987 ON PERUSAL OF T HE LEDGER OF THE SAID PARTY, YOUR HONOUR WOULD FIND THAT CONSISTENTLY, THE APPELLANT HAS BEEN SHOWING SALES TO THIS PARTY AND HAS EVEN OFFERED THE SAME TO TAX. HENCE, THE CONDITIONS PRESCRIBED IN SECTION 36(2) IS COMPLIED AND SO THE CLAIM OF BAD DEBTS BE ALLOWED. 3 MANGLAM CERAMIC P. LTD. 4,70,192 ADVANCE WAS GIVEN FOR PURCHASING STORES CONSUMABLE. HOWEVER, THE SAME COULD NOT BE RECOVERED DESPITE BEST EFFORTS AND HENCE CLAIMED AS BUSINESS LOSS U/S. 28 OR SEC. 37 OF THE ACT. 4 N.R. INTERNATIONAL LTD. 2,42,020 ADVANCE WAS GIVEN FOR PURCHASING LAM COKE. HOWEVER, THE SAME COULD NOT BE RECOVERED DESPITE BEST EFFORTS AND HENCE CLAIMED AS BUSINESS LOSS U/S. 28 OR SEC. 37 OF THE ACT. 5 CENVAT DUTY (FY 07-08) 12,82,35 3 SINCE EXCESS CREDIT WAS AVAILABLE THEN THE EXCISE DUTY PAYABLE, THE SAID CREDIT COULD NOT BE UTILIZED FURTHER IN VIEW OF THE DECLINE IN TURNOVER OF ALUMINIUM BUSINESS WHICH FINALLY GOT DISCONTINUED IN FY 10-11. IN VIEW OF THE SCHEME OF RULE 11 OF CENVAT CREDIT RULES (TRANSITIONAL PROVISIONS), THE APPELLANT WAS DEPRIVED OF ANY CREDIT AND HENCE, THE SAME WAS WRITTEN OFF. ACCORDINGLY, THE SAID WRITE OFF BE ALLOWED AS BUSINESS LOSS U/S. 28 OR SECTION 37 OF THE ACT. PLEASE REFER PAGE NO. 260 OF PAPER BOOK FOR RULE 11 6 EDU. CESS 2% (RM) (1199-FY 09-10 AND BALANCE FOR AY 07-08. 16,500 7 EDU. CESS 2% (S.TAX) OF FY 07-08. 60 8 EXCISE DUTY 8% FY 09 - 10) 53,468 9 HIGHER EDUCATION CESS 1% ON SALES (FY 09-10) 5,213 10 HIGHER EDUCATION CESS 1% (RM) (8864 OF FY 09-10 AND BALANCE OF FY 07-08 16,433 ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 15 TOTAL 25,86,229 17. ALTERNATIVELY, THE ASSESSEE ALSO SUBMITTED THAT WR ITE OFF OF CENVAT DUTY WAS ALLOWABLE AS BUSINESS LOSS UNDER SECTION 28 OR 37 OF THE ACT. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY LD. COMM ISSIONER (APPEALS) EXCEPT IN CASE OF M/S INTER TRADE FOR RS. 3,99,987/ - HOLDING THAT THE CONDITION PRESCRIBED UNDER SECTION 36(1)(VII) R.W.S . 36(2) ARE FULFILLED TO THAT CLAIM ONLY. FOR REMAINING CLAIM, THE LD. COMMI SSIONER (APPEALS) CONCLUDED THAT THE ASSESSEE GIVEN ADVANCES TO THE V ARIOUS PARTIES FOR PURCHASING RAW-MATERIAL AND SUPPLY COULD NOT BE PRO CURED. THE ASSESSEE WAS NOT ABLE TO PRODUCE EVIDENCE TO SHOW HOW THE AD VANCES GIVEN TO VARIOUS SUPPLIERS HAVE BECOME BAD OR IRRECOVERABLE. THE ASSESSEE FAILED TO ADDUCE EVIDENCE THAT ADVANCES WERE GIVEN IN NORM AL BUSINESS AND HAVE BECOME IRRECOVERABLE DESPITE EFFORTS. FOR CENVAT CR EDIT, THE LD. COMMISSIONER (APPEALS) CONCLUDED THAT THE ASSESSEE FAILED TO PROVIDE RELEVANT RULES AND DEPRIVED FROM CLAIMING CENVAT CR EDIT. 18. WE HAVE NOTED THAT THE CO-ORDINATE BENCH OF HYDERAB AD TRIBUNAL IN NCS DISTILLERIES P. LTD. VS. ITO (SUPRA) ON SIMILAR ISS UES RELATED WITH THE WRITE OFF OF CENVAT CREDIT, WHILE REFERRING THE DECISION OF MOHAN SPINNING MILLS (SUPRA) AND THE GIRDHAR FIBRES PVT. LTD. (SUP RA) PASSED THE FOLLOWING ORDER: 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND CONSIDERING THE FACTS OF THE CASE AS NARRATED BEFORE THE AUTHORITIES, IT WAS OBSERVED THAT THE AFORESAID AMOUNT OF THE EXCISE DUTY CREDIT (CENVAT CREDIT) WR ITTEN OFF WAS ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 16 ALLOWABLE AS DEDUCTION. ON THIS ISSUE, COORDINATE B ENCH AT CHANDIGARH IN THE CASE OF M/S.MOHAN SPINNING MILLS (SUPRA) HAS OPINED AS UNDER :- '7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF THE DEDUCTION CLAIMED ON ACCOUNT OF CENVAT AMOUNTING TO RS.35,94,577. THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF YARN AND FIBRE. THE YARN MANUFACTURED BY THE ASSESSEE WAS AN EXCISA BLE ITEM. THE ASSESSEE WAS PAYING EXCISE DUTY ON THE RAW MATERIAL PURCHASED I.E. ACRYLIC YARN/FIBRE AND POLYESTER YARN/FIBRE. IN TURN, ASSES SEE WAS LIABLE TO PAY DUTY ON ITS MANUFACTURED ITEMS. THE RATE OF EXCISE DUTY PAYABLE ON THE RAW MATERIAL WAS HIGHER AND THE ASSESSEE WAS DEPOSITING THE EXCISE DUTY IN PLA ACCOUNT WHICH IN TURN WAS ADJUSTABLE AGAINST TH E EXCISE DUTY PAYABLE ON THE FINISHED PRODUCTS. THE EXCISE DUTY PAYABLE O N THE FINISHED PRODUCTS WAS ON THE LOWER SIDE AND CONSEQUENTLY OVER THE PER IOD OF YEARS THE ASSESSEE HAD CREDIT OF EXCISE DUTY RESULTING IN ACC UMULATION OF CENVAT.' '10. VARIOUS TESTS HAVE BEEN LAID DOWN BY VARIOUS H IGH COURTS AND THE APEX COURT IN RELATION TO THE ALLOWABILITY OF EXPEN DITURE UNDER SECTION 37(1) OF THE ACT WHILE COMPUTING THE INCOME FROM PR OFITS AND GAINS OF BUSINESS OR PROFESSION. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD PAID CENVAT ON PURCHASE OF RAW MATERIAL WHICH WAS D EPOSITED IN ITS PLA ACCOUNT FOR CLAIMING THE BENEFIT OF SET OFF AGA INST THE EXCISE DUTY PAYABLE ON THE MANUFACTURED ITEMS I.E. BRANDED YEAR N. THE ASSESSEE WAS PAYING HIGHER RATE OF EXCISE DUTY ON THE RAW MATERI AL PURCHASED BY IT AS AGAINST THE RATE OF EXCISE DUTY APPLICABLE ON THE M ANUFACTURED ITEMS, CONSEQUENTLY CREDIT OF EXCISE DUTY WAS AVAILABLE WI TH THE ASSESSEE. THE SAID EXCISE DUTY PAID FROM YEAR TO YEAR WAS NOT CLA IMED AS AN EXPENDITURE BUT WAS CARRIED FORWARD FROM YEAR TO YEAR TO BE ADJ USTED AGAINST THE EXCISE DUTY PAYABLE BY THE ASSESSEE ON ITS MANUFACTURED IT EMS. HOWEVER, DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CLOSED DO WN ITS MANUFACTURING UNIT AND CONSEQUENTLY THE BENEFIT OF THE CENVAT CRE DIT REMAINED UN- ADJUSTED. ONCE THE MANUFACTURING UNIT OF THE ASSESS EE IS CLOSED DOWN, ADMITTEDLY THE BENEFIT OF CENVAT CREDIT NOT AVAILED OF AGAINST THE EXCISE DUTY PAYABLE ON MANUFACTURED ITEMS, CANNOT BE UTILI ZED BY THE ASSESSEE AND THE SAID WRITE OFF OF CENVAT CREDIT, IS ALLOWAB LE AS EXPENDITURE IN THE YEAR UNDER CONSIDERATION ON THE CLOSURE OF THE BUSINESS. THE WRITE OFF OF CENVAT CREDIT BY THE ASSESSEE IN ITS BOOKS OF AC COUNT IS THUS ALLOWABLE AS BUSINESS EXPENDITURE UNDER THE PROVISI ONS OF SECTION 37(1) OF THE ACT RELATABLE TO THE YEAR, IN WHICH THE MANUFAC TURING ACTIVITIES ARE CLOSED DOWN BY THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE IN RESPECT OF WR ITE OFF OF CENVAT CREDIT OF RS.35,94,577/-. GROUND NO.1 RAISED BY THE ASSESSEE IS THUS ALLOWED.' 6.1. WE HAVE ALSO NOTED THAT THE COORDINATE BENCH ' A' AHMEDABAD IN THE CASE OF GIRDHAR FIBRES PVT. LTD. (SUPRA) HAS ALSO O PINED AS UNDER:- '9. WE HEARD BOTH THE SIDES. BEFORE US, FORM E.R.1, I.E. RETURN OF EXCISABLE GOODS AND AVAILMENT OF CENVAT CREDIT HAS BEEN PLACED. THE EXPLANATION OF THE ASSESSEE WAS THAT THE IMPUGNED T WO AMOUNTS WERE PART OF THE DUTY WHICH WAS PAID BY THE ASSESSEE AT THE T IME OF PURCHASE OF RAW- ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 17 MATERIAL, HOWEVER, THE ASSESSEE HAD MAINTAINED EXCL USIVE SYSTEM OF ACCOUNTING, THEREFORE THE DUTY PAID WAS NOT DEBITED AS A PART OF THE PURCHASES BUT A SEPARATE ACCOUNT WAS MAINTAINED AND CARRIED TO THE BALANCE-SHEET. THE AED AND NCCD WERE APPLICABLE ON POY, I.E. RAW- MATERIAL. WHEN THE FINISHED GOODS, I.E. TEXTURISED YARN IS MANUFACTURED, THE EXCISE IS LEVIED IN THE FORM OF BASIC DUTY. THE ASS ESSEE HAS ADOPTED EXCLUSIVE METHOD OF ACCOUNTING, THEREFORE DEBITED T HE NET PURCHASES AND THOSE WERE SEPARATELY RECORDED IN THE BOOKS OF ACCO UNTS. WE FIND FORCE IN THIS ARGUMENT OF THE ASSESSEE BECAUSE WHILE MAINTAI NING THE EXCLUSIVE METHOD OF ACCOUNTING THE ASSESSEE HAD A CHOICE TO I NCREASE THE VALUE OF THE PURCHASES IN RESPECT OF THE DUTY PAID IN THE FORM O F AED & NCCD. IN OTHER WORDS, EXPENDITURE WAS INCURRED BUT THAT EXPE NDITURE COULD NOT BE ADJUSTED AGAINST THE CENVAT RULES BECAUSE ON THE FI NISHED GOODS, I.E. TEXTURISED YARN ONLY THE BASIC DUTY IS LEVIABLE. WE , THEREFORE, HOLD THAT THE AMOUNT WHICH IS NOW WRITTEN OFF BEING PART OF THE B USINESS EXPENDITURE, HENCE ALLOWABLE UNDER THE PROVISIONS OF THE ACT. IN THE RESULT, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND A LLOW THE GROUND RAISED BY THE ASSESSEE.' 7. SIMILAR VIEW WAS ALSO TAKEN IN THE CASE OF ACIT VS. RANGOLI INDUSTRIES P. LTD., ITA.NO.1936/AHD /2010 DATED 11.01.2013. IN TH E LIGHT OF THE ABOVE DECISIONS ON IDENTICAL FACTS, SINCE A VIEW HAS ALRE ADY BEEN TAKEN IN FAVOUR OF THE ASSESSEE ON THIS ISSUE, RESPECTFULLY FOLLOWING THAT, WE HEREBY HOLD THAT AO AND LD.CIT(A) WAS NOT RIGHT IN DISALLOWING THE CLAI M. AO IS DIRECTED TO ALLOW THE AMOUNT AS CLAIMED, SUBJECT TO ASSESSEE FURNISHI NG THE DETAILS OF CREDIT YEAR WISE AND OTHER EXCISE REGISTERS/FORMS TO ESTABLISH THAT CENVAT CREDIT WAS AVAILABLE TO IT, BEFORE WRITING OFF THE SAME. ACCOR DINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 19. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF T RIBUNAL HELD THAT THE WRITE OFF OF CENVAT CREDIT BY THE ASSESSEE IN ITS B OOKS OF ACCOUNT IS THUS ALLOWABLE AS BUSINESS EXPENDITURE UNDER THE PROVISI ONS OF SECTION 37(1) OF THE ACT RELATABLE TO THE YEAR, IN WHICH THE MANUFAC TURING ACTIVITIES ARE CLOSED DOWN BY THE ASSESSEE . THE CLAIM OF THE ASSESSEE IS THAT THEY HAVE CLOSED DOWN THE BUSINESS PERTAINING TO THE ALUMINUM BUSINESS AND THE EXCESS CREDIT OF CENVAT WAS NOT UTILIZED PERTAINING TO THAT BUSINESS. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO VERIF Y THE FACT ABOUT THE AVAILABILITY OF CENVAT CREDIT TO THE ASSESSEE AT TH E END OF RELEVANT ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 18 FINANCIAL YEAR AND ALLOW WRITE OFF OF CENVAT CREDIT BY FOLLOWING THE DECISIONS OF TRIBUNAL, WHICH WE HAVE REFERRED IN PA RA 17 OF THIS ORDER. 20. SO FAR AS CLAIM OF SUNDRY BALANCE WRITTEN OFF IS CO NCERN. WE HAVE NOTED THAT THE ASSESSEE HAS GIVEN ADVANCES FOR PURCHASING VARIOUS MATERIALS LIKE STEAM COAL, LAM COKE AND OTHER STORE CONSUMABLE. DE TAILS OF WHICH ARE REFERRED AT PAGE NO. 134 OF PAPER BOOK. THE HONBLE APEX COURT IN T.R.F. LTD. VS. CIT [2010] 190 TAXMAN 391 (SC) HELD AFTER 1 ST APRIL 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTAB LISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD D EBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. CONS IDERING THE LAW LAID DOWN BY HONBLE APEX COURT, THE SUNDRY BALANCES WHI CH HAS BEEN WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IS SUFFICIENT TO CLAIM THE BAD DEBT. IN THE RESULT, THIS PART OF GROUND OF APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 28.02.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) ITA NO. 3632/MUM/2015 LOTUS ENERGY INDIA P VT LTD 19 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI