Appeal Details
Counselvise Citation
[2015] 134 COUNSELVISE.COM (IT) 0769 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 8 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-12-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
03-09-2015
Assessment Year
2009-2010
Appeal Filed On
06-03-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 608 /PN/201 3 / ASSESSMENT YEAR : 200 9 - 10 RINDER INDIA PVT. LTD., PLOT NO.74, 74A, F BLOCK , MIDC, PIMPRI, PUNE 4 11018 . / APPELLANT PAN: AAAC H4211R VS. THE A DDL . COMMISSIONER OF INCOME TAX RANGE 1 0 , PUNE . / RESPONDENT / APPELLANT BY : SHRI SHARAD SHAH / RESPOND ENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 03 .0 9 .2015 / DATE OF PRONOUNCEMENT: 01 . 1 2 .2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF C IT (A) - V , PUNE, DATED 1 5 . 0 1 .201 3 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 PASSED AGAINST ORDER U NDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHO RT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1.1) THE LEARNED A.O. ERRED IN (AND LEARNED CIT - A ERRED IN CONFIRMING) DISALLOWANCE OF THE LOSS ON ACCOUNT OF UNRECOVERABLE ADVANCE GIVEN IN THE COURSE OF BUSINESS. ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 2 1.2) THE LEA RNED A.O. ERRED IN (AND LEARNED CIT - A ERRED IN CONFIRMING) APPLYING THE PROVISIONS OF S.36 WHEN THE ASSESSEE HAD ALREADY POINTED OUT THAT THE DEDUCTION IS NOT U/S 36. 1.3) THE LEARNED A.O. ERRED IN (AND LEARNED CIT - A ERRED IN CONFIRMING) NOT ALLOWING THE LOSS ON ACCOUNT OF UNRECOVERABLE ADVANCE GIVEN IN THE COURSE OF BUSINESS U/S.28, 29 AND SEC 37. 1.4) THE LEARNED CIT(A) ERRED IN DISALLOWING THE LOSS ON ACCOUNT OF UNRECOVERABLE ADVANCE ON THE BASIS OF AN ERRONEOUS CONCLUSION THAT IT IS AN ASSESSEE'S FA ULT WHEN FIRST ADVANCE IS OUTSTANDING (WHICH WAS GIVEN FOR AGAINST FIRST ORDER) AND STILL IT GAVE FURTHER ORDER AND ALSO PAID ADVANCE AGAINST SUCH ORDER. 2.1) THE LEARNED CIT - A ERRED IN HOLDING THAT REVISED RETURN WAS FILED WHEN THERE WAS NO OMISSION OR WRING STATEMENT IN THE ORIGINAL RETURN OF INCOME. 2.2) THE LEARNED CIT - A ERRED IN CONCLUDING THAT NON - CLAIMING OF A LOSS IN ORIGINAL RETURN OF INCOME IS NOT AN OMISSION OR WRONG STATEMENT WHICH ENTITLES AN ASSESSEE TO FILE A REVISED RETURN OF INCOME. 3) THE LEARNED A.O. (AND LEARNED CIT - A ERRED IN CONFIRMING) ERRED IN NO T ACCEPTING THE INCOME AS PER THE REVISED RETURN OF INCOME THE ASSESSEE. 4) THE APPELLANT CRAVES ITS RIGHT TO ADD TO OR ALTER THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE COURS E OF HEARING OF THE CASE. 3. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST THE DISALLOWANCE OF LOSS ON ACCOUNT OF UNRECOVERABLE ADVANCE TOTALING RS. 43.35 LAKHS. THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.2 IS AGGRIEVED BY THE ORDER OF CIT(A) ASSESSEE BY WAY OF GROUND OF APPEAL NO.2 IS AGGRIEVED BY THE ORDER OF CIT(A) IN H OLDING THAT THE REVISED RETURN OF INCOME WAS FILED WHEN THERE WAS NO OMISSION OR WRONG STATEMENT IN THE REVISED RETURN OF INCOME. THE ISSUE VIDE GROUND OF APPEAL NO.3 IS AGAINST THE ORDER OF AUTHORITIES BELOW IN NOT ACCEPTING THE INCOME AS PER REVISED RET URN OF INCOME FILED BY THE ASSESSEE. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS A COMPANY ENGAGED IN THE MANUFACTURING OF AUTO LIGHTING SYSTEM INCLUDING SIGNALING LIGHTS . FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED OR IGINAL RETURN OF INCOME DECLARING TOTAL INCOME OF RS.16,41,26,880/ - ON 27.09.2009. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME DECLARING NET INCOME OF RS.15,97,92,940/ - ON 09.06.2010 . THE REDUCTION IN THE INCOME WAS ON ACCOUNT OF CLAIM OF DED UCTION IN RESPECT OF UNRECOVERABLE ADVANCE FOR PURCHASE OF MACHINERY. THE ASSESSEE HAD PAID AN ADVANCE OF EURO 238,400 ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 3 EQUIVALENT TO RS. 1,44,48,798/ - TO M/S. GALILEO VACUUM SYSTEMS, A COMPANY IN ITALY, FOR PURCHASE OF MACHINERY. THE SAID SUM WAS ADVANCED BY WAY OF TWO ORDERS I.E. FIRST ORDER DATED 12.08.2006, AGAINST WHICH ADVANCE OF EURO 158,400 EQUIVALENT TO RS.90.50 LAKHS, WAS MADE. THE ASSESSEE FURTHER PLACED AN ORDER FOR PURCHASE OF EQUIPMENT VIDE ORDER DATED 16.06.2008 AND ADVANCE OF EURO 80,000 EQ UIVALENT TO RS.55.50 LAKHS WAS ADVANCED. THE ASSESSEE THEREAFTER, CAME TO KNOW THAT THE SAID ITALIAN COMPANY HAD FILED INSOLVENCY PETITION AND THERE WAS NO POSSIBILITY OF GETTING THE MACHINERY FROM THE SAID COMPANY. THE ASSESSEE WAS ALSO NOT SURE OF RECO VERY OF THE ADVANCE PAYMENT MADE BY IT. THEREFORE, PROVISION OF RS.43,34,640/ - TOWARDS NON - RECOVERY OF THE SAID AMOUNT BEING 30% OF THE ENTIRE AMOUNT, WAS MADE IN THE BOOKS OF ACCOUNT. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE SA ID AMOUNT WAS NOT A BAD DEBT AS REFERRED TO IN SECTION 36 OF THE ACT, SINCE THE SAME WAS NOT IN RESPECT OF DEBTORS FOR SALES OF GOODS OR SERVICES. HOWEVER, THE LOSS WAS IN THE COURSE OF CARRYING ON OF THE BUSINESS AND HENCE, WAS ELIGIBLE UNDER SECTIONS 28 , 29 AND / OR 37 OF THE ACT. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE RAJASTHAN HIGH COURT IN CIT VS. ANJANI KUMAR CO. LTD. (2003) 259 ITR 114 (RAJ) . THE ASSESSING OFFICER IN THIS REGARD ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE STATING T HAT THE SAID EXPENDITURE WAS NOT DEDUCTIBLE AS BAD DEBT UNDER SECTION 36(1)(VII) OF THE ACT AND / OR ALSO WAS NOT COVERED UNDER SECTIONS 28, 29 AND/OR 37 OF THE ACT. THE ASSESSEE, IN TURN EXPLAINED THE FACTUAL ASPECT AND POINTED OUT THAT THE DEDUCTION CLA IMED WAS NOT BAD DEBT REFERRED TO IN SECTION 36 OF THE ACT, BUT WAS LOSS INCURRED IN THE COURSE OF CARRYING ON OF THE BUSINESS AND THE SAME SHOULD BE ALLOWED AS DEDUCTION, UNLESS THERE WAS PRO HIBITION FOR THE SAID ALLOWANCE. RELIANCE WAS PLACED ON SERIES OF DECISIONS OF HONBLE SUPREME COURT IN THIS REGARD, WHICH ARE PART OF REPLY GIVEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, WHICH IN TURN, ARE INCORPORATED AT PAGES 3 TO 5 OF THE ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 4 ASSESSMENT ORDER. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF HON BLE HIGH COURT OF RAJASTHAN IN CIT VS. ANJANI KUMAR CO. LTD. (SUPRA) AND PIK PEN PRIVATE LIMITED VS. ITO IN ITA NO.684 7 /MUM/2008, ORDER DATED 28.01.2010. THE ASSESSING OFFICER THEREAFTER, INDIVIDUALLY CONSIDERED THE RELIANCE PLACED UPON BY THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE ON VARIOUS DECISIONS AND WAS OF THE VIEW THAT IN VIEW OF THE RATIO LAID DOWN BY THE APEX COURT IN HASIMARA INDUSTRIES LTD. VS. CIT (1998) 231 ITR 842 (SC), THE LOSS SUFFERED HAD TO BE TREATED AS CAPITA LOSS. CONSEQU ENTLY, THE CLAIM OF THE ASSESSEE VIS - - VIS DEDUCTION OF RS.43,34,640/ - WAS TREATED AS CAPITAL LOSS AND ADDED TO THE INCOME OF THE ASSESSEE. 5. THE CIT(A) WAS OF THE VIEW THAT WHERE THE FIRST MACHINERY FOR WHICH ADVANCE WAS GIVEN BY THE ASSESSEE WAS NOT DE LIVERED, THEN THE SAID ADVANCE SHOULD HAVE BEEN ADJUSTED AGAINST ADVANCE FOR SECOND MACHINERY AND NO NEED OF SEPARATE PAYMENT. THE CIT(A) FURTHER WAS OF THE VIEW THAT THE CLAIM OF THE ASSESSEE REGARDING BUSINESS LOSS REPRESENT PROVISION FOR CAPITAL LOSS A S OF THE ASSESSEE REGARDING BUSINESS LOSS REPRESENT PROVISION FOR CAPITAL LOSS A S INSOLVENCY PETITION WAS STILL PENDING. AS PER THE CIT(A), THE ASSESSEE HAD CREATED PROVISION @ 30% OF THE TOTAL AMOUNT OUTSTANDING ON ADHOC BASIS. FURTHER, THE SAID LOSS BEING CAPITAL LOSS, WAS STILL AN UNASCERTAINED LOSS. REFERENCE WAS MADE TO THE RA TIO LAID DOWN BY THE HONBLE SUPREME COURT IN SUTLEJ COTTON MILLS LTD. VS. CIT (1979) 116 ITR 1 (SC) THAT THE LOSS MUST BE A TRADING LOSS. HENCE, THERE WAS NO QUESTION OF ALLOWING THE SAME UNDER SECTIONS 28 AND 29 OF THE ACT. WITH REGARD TO THE ADMISSIBI LITY OF THE SAID CLAIM OF EXPENDITURE UNDER SECTION 37 OF THE ACT, RELIANCE WAS PLACED ON THE DECISION OF CIT VS. INDIAN MOLASES CO. (P) LTD. (1970) 78 ITR 474 (SC) AND OTHER DECISIONS. THE CIT(A) WAS OF THE VIEW THAT THE CAPITAL EXPENDITURE IS NOT ALLOWA BLE UNDER SECTION 3 7 (1) OF THE ACT. FURTHER, THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN TURN, RELYING ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN HASIMARA INDUSTRIES LTD. VS. CIT (SUPRA) AND FURTHER ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 5 OBSERVED THAT SINCE THE HONBLE HIGH COURT OF RA JASTHAN IN CIT VS. ANJANI KUMAR CO. LTD. (SUPRA) HAD NOT CONSIDERED THE RATIO LAID DOWN BY THE APEX COURT, THEN THE SAME WAS NOT APPLICABLE. THE ORDER OF THE ASSESSING OFFICER IN THIS REGARD WAS CONFIRMED. FURTHER, THE CIT(A) OBSERVED THAT TH E ASSESSING OFFICER HAD DECIDED THE ISSUE REGARDING THE CLAIM OF ASSESSEE UNDER SECTIONS 28, 29 AND / OR 37 OF THE ACT AND IT COULD NOT BE SAID THAT THE ISSUE WAS DECIDED UNDER SECTION 36 OF THE ACT AS CLAIMED BY THE ASSESSEE. WITH REGARD TO THE ISSUE OF ASSESSING OFFICER IN NOT ACCEPTING THE REVISED RETURN OF INCOME, THE CIT(A) HELD THAT SINCE THE ISSUE HAS BEEN DECIDED ON MERITS, THERE WAS NO NEED TO REPEAT THE ISSUE AGAIN. FURTHER, IT WAS HELD THAT THE REVISED RETURN OF INCOME COULD BE FILED UNDER CIRC UMSTANCES, WHERE THE ASSESSEE DISCOVERED ANY OMISSION OR WHEN THE ASSESSEE DISCOVERS ANY WRONG STATEMENT. HOWEVER, THE REVISED CLAIM ON THE BASIS OF PROVISION FOR 30% OF THE AMOUNT ADVANCED FOR PURCHASE OF MACHINERY BEING NOT WRITTEN OFF ORIGINALLY AND BE ING CLAIMED IN THE REVISED RETURN, COULD NEITHER BE CONSIDER ED OMISSION OR WRONG STATEMENT. AS PER THE CIT(A), THE CONDITIONS UNDER SECTION 139(5) OF THE ACT WERE NOT SATISFIED AND THE SAID GROUND OF APPEAL WAS REJECTED. 6. THE ASSESSEE IS IN APPEAL AG AINST BOTH THE FINDINGS OF CIT(A) . 7. AFTER TAKING US THROUGH THE FACTUAL ASPECTS OF THE CASE, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PROVISION FOR WRITING OFF OF THE SAID ADVANCE TO THE EXTENT OF 30% WAS MADE IN THE O RIGINAL RETURN OF INCOME, BUT NO DEDUCTION WAS CLAIMED ON ACCOUNT OF SAID PROVISION. HOWEVER, ON A LATER DATE, THE ASSESSEE FURNISHED REVISED RETURN OF INCOME AFTER RECOGNIZING OMISSION MADE IN THE ORIGINAL RETURN OF INCOME AND WROTE OFF SUM OF RS. 43,34,6 40/ - , WHICH WAS DULY ALLOWABLE IN THE HANDS OF THE ASSESSEE. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER WHILE COMPUTING THE INCOME IN THE HANDS OF ASSESSEE, HAD COMPUTED THE SAME ON THE BASIS OF ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 6 REVISED RETURN OF INCOME. HOWEVER, THE CIT(A) REJECT ED THE SAME. THE CASE OF THE ASSESSEE BEFORE US WAS THAT OMISSION OF NOT CLAIMING THE SAID CLAIM IN THE ORIGINAL RETURN OF INCOME WAS A BONAFIDE INTERPRETATION OF LAW, WHICH WAS CORRECTED IN THE REVISED RETURN OF INCOME AND HENCE, MERITS TO BE ACCEPTED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT ADMITTEDLY, THE ADVANCE WAS GIVEN FOR BUYING THE MACHINERY, WHICH WAS A CAPITAL ASSET. HOWEVER, BECAUSE THE COMPANY TO WHOM THE SAID ADVANCE HAD BEEN GIVEN HAD FILED A PETITIO N FOR BANKRUPTCY, THE ASSESSEE CLAIMED THE SAME AS DEDUCTION BEING BUSINESS LOSS UNDER SECTIONS 28, 29 AND / OR 37 OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN IN CIT VS. ANJANI KUMAR CO. LTD. (SUPRA) , PIK PEN PRIVATE LIMITED VS. ITO (SUPRA) , DCIT VS. EDELWEISS CAPITAL LTD. IN ITA NO.3971/MUM/2009, ORDER DATED 15.02.2011 AND NIMBUS COMMUNICATION LTD. VS. ACIT (2010) 132 TTJ (MUMBAI) 351 . REFERRING TO THE RATIO LAID DOWN BY THE APEX COURT IN HASIMARA INDUSTRIES LTD. VS. CIT (SUPRA) RELIED UPON BY THE AUTHORITIES BELOW, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE FACTS WERE DIFFERENT, WHERE THE AMOUNT WAS ADVANCED AS LOAN FOR COTTON MILL AND SINCE THE ASSESSEE WAS NOT IN THAT BUSINESS, HENCE, THE SAID AMOUNT WAS NOT ALLOWED AS BUSINESS LOSS. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT WHERE THE ADVANCE HAD BEEN FO R THE PURCHASE OF CAPITAL ASSET, WRITING OFF OF SUCH ADVANCE WAS NOT ALLOWABLE IN VIEW OF THE SPECIFIC PROV ISIONS OF SECTION 37(1) OF THE ACT. NO SUCH ALLOWANCE OF CAPITAL NATURE COULD BE MADE UNDER SECTIONS 28 AND 29 OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE STRESSED THAT THE INTENTION OF THE ASSESSEE WAS TO PURCHASE CAPITAL ASSET A ND HENCE, THE SAID ADVANCE. HE FURTHER POINTED OUT THAT THE RATIO LAID DOWN BY THE APEX COURT IN HASIMARA INDUSTRIES LTD. VS. CIT (SUPRA) WAS SQUARELY APPLICABLE AND THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 7 ANJANI KUMAR CO. LTD. (SUPRA) DID NOT CONS IDER THE SAID RATIO AND HENCE, NOT APPLICABLE. ANOTHER ASPECT RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT ITALIAN COMPANY FILED THE LIQUIDATION APPLICATION ON 20.07.2009 AND CONSEQUENTLY, WRITING OFF OF THE SAID AMOUNT WAS PREMA TURE. REFERENCE WAS MADE TO THE ORDER OF CIT(A) IN PARA 10, WHEREIN, HE HAD GIVEN A FINDING THAT THE SAID LOSS WAS AN UNASCERTAINED LOSS AND EVEN OTHERWISE, THE CLAIM OF DEDUCTION @ 30% OF THE TOTAL ADVANCE WAS ON AN ADHOC BAIS. SINCE THE AMOUNT NO T RECE IVED BY THE ASSESSEE , WAS NOT TRADING LOSS, THE SAME COULD NOT BE ALLOWED UNDER SECTIONS 28 AND 29 OF THE ACT. FURTHER, IT WAS STRESSED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE ASSESSEE HAD MADE A PROVISION IN THE BOOKS OF ACCOU NT AND HAD NOT WRITTEN OFF THE SAID AMOUNT IN THE BOOKS OF ACCOUNT. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER POINTED OUT THAT THE ADVANCE PAID FOR PURCHASE OF MACHINERY IN THE YEAR 2006 AND 2008 DID NOT MATERIALIZE IN THE DEL IVERY OF THE MACHINERY, WHICH WERE AND 2008 DID NOT MATERIALIZE IN THE DEL IVERY OF THE MACHINERY, WHICH WERE TECHNICAL MACHINES AND WERE THE REQUIREMENT OF BUSINESS OF THE ASSESSEE COMPANY. SINCE THE ITALIAN COMPANY HAD GONE INTO LIQUIDATION, THE ASSESSEE COMPANY TOOK A DECISION TO WRITE OFF PART OF THE AMOUNT AS UNRECOVERABLE AND THE BUSINESS LOSS WAS TO BE ALLOWED IN THE YEAR WHEN IT WAS CLAIMED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF AUTOMOBILES, SIGNALING LIGHTS AND OTHER ELECTRIC ITEMS. ORIGINALLY, THE RETURN OF INCOME FILED BY THE ASSESSEE ON 27.09.2009 WAS RS.16.41 CRORES. THEREAFTER, THE REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 09.06.2010 DECLARING TOTAL INCOME OF RS.15.97 CRORES. IN THE SAID REVISED RETURN OF INCOME, THE ASSESSEE CLAIM ED AN EXPENDITURE OF RS.43.35 LAKHS. THE ASSESSEE FOR THE NEEDS OF ITS BUSINESS, HAD ORDERED TWO EQUIPMENTS FOR ITS PRODUCTION PLANT FROM M/S. GALILEO VACUUM ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 8 SYSTEMS , SPA, AN ITALIAN COMPANY. THE FIRST ORDER WAS PLACED BY THE ASSESSEE VIDE ORDER NO. 04947 /C, DATED 12.08.2006 AND ADVANCE OF EURO 1,58,400 EQUIVALENT TO RS.90.50 LAKHS WAS PAID BY THE ASSESSEE. FURTHER, AN ORDER FOR PURCHASE OF ANOTHER EQUIPMENT WAS PLACED VIDE ORDER NO. 09135, DATED 16.06.2008 AND ADVANCE OF EURO 80,000 EQUIVALENT TO RS.55.50 LAKHS WAS PAID BY THE ASSESSEE. THE COMPANY GALIL E O VACUUM SYSTEMS WAS WELL KNOWN FOR THE SAID EQUIPMENT AND HENCE, THE ADVANCE PAID TO THE SAID CONCERN FOR PURCHASING THE EQUIPMENTS. THE PURCHASE ORDER OF THE FIRST EQUIPMENT IS PLACED AT PAGES 1 TO 5 O F THE INDEX, UNDER WHICH BOTH THE PAYMENTS AND DELIVERY TERMS HAVE BEEN PROVIDED. THE TECHNICAL SPECIFICATIONS OF THE EQUIPMENT ARE PART OF THE CONTRACT ENTERED INTO BY THE ASSESSEE WITH M/S. GALILEO VACUUM SYSTEM S , WHICH AGREED TO SUPPLY TO THE ASSESSEE AT ITS CHAKAN PLANT THE EQUIPMENT AND SERVICES OF GALILEO VA CUUM BATCH COATERS, MODEL V2 01 VZ. IT WAS AGREED THAT ONE TECHNICIAN FROM M/S. GALILEO VACUUM SYSTEM WOULD BE IN ASSESSEES PLANT FOR INSTALLATION AND TRAINING OF THE OPERATOR . IT WAS ALSO AGREE D THAT DURING THE INSTALLATION AND COMMISSIONING OF THE CHAKAN UNIT , THE ASSESSEE WAS TO BEAR ROUND AIR TICKETS, BOARDING AND LODGING CHARGES OF THE SAID PERSONS. OUT OF THE TOTAL PRICE FOR THE EQUIPMENT, 20% WAS TO BE PAID AS DOWN PAYMENT AND FURTHER 20% WITHIN TWO MONTHS AFTER THE DOWN PAYMENT. THE EQUIPMENT WAS TO BE DELIVERED AT MUM B AI ON OR BEFORE 24.10.2008. FURTHER, THE ASSESSEE ON 12.08.2006 AND M/S. GALILEO VACUUM SYSTEM HAD ENTERED INTO ANOTHER CONTRACT FOR THE SUPPLY OF HIGH VACUUM BATCH METAL LIZING MACHINE MODEL V201VZ/99 . THE TERMS OF THE AGREEMENT WERE SLIGHTLY AT VARIANCE I.E. THERE WERE MORE SPECIFICATIONS OF THE ITEMS TO BE SUPPLIED AND THE SCOPE OF WORK AND TECHNICAL SPECIFICATIONS. THE TERMS OF PAYMENT WERE 10% AFTER PO ACCEPTANCE AND 30% FOUR MONTHS BEFORE THE SHIPMENT OF THE MACHINE. THE DELIVERY DATE AS PER THE AGREEMENT WAS NOT TO BE LATER THAN 31.12.2007. THE PURCHASE ORDER IS PLACED AT PAGES 7 ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 9 TO 12 OF THE PAPER BOOK I. THE DELIVERY OF THE EQUIPMENT S W ERE DELAYED AND THE ASS ESSEE DEPUTED ITS ENGINEERS TO VISIT ITALY, WHO IN TURN REPORTED THAT THE CONCERN M/S. GALILEO VACUUM SYSTEM HAD FILED INSOLVENCY AND LIQUIDATION PETITION. THE ASSESSEE, IN TURN TOOK LEGAL RECOURSE AND FILED BANKRUPTCY C LAIM OF THE SAID CONCERN BEFORE THE PRATO . THE COPY OF THE INSOLVENCY PETITION FILED BY THE ASSESSEE ON GALILEO VACUUM SYSTEM IN SPA, IS PLACED AT PAGES 4 TO 6 WITH ITS ENGLISH TRANSLATION AT PAGES 1 TO 3 OF THE PAPER BOOK II. THE ASSESSEE, IN VIEW OF THE SAID SCENARIO MADE PROVISIONS O F 30% OF THE ADVANCE RECOVERABLE AS DOUBTFUL TOTALING RS.43,35,000/ - IN THE ORIGINAL RETURN OF INCOME . N O CLAIM OF DEDUCTION WAS MADE IN THE ORIGINAL RETURN OF INCOME ON ACCOUNT OF THE SAID PROVISION FOR DOUBTFUL ADVANCE. HOWEVER, SUBSEQUENTLY, THE ASSES SEE FURNISHED REVISED RETURN OF INCOME CLAIMING THE SAID DEDUCTION OF WRITE OFF OF RS.43.35 LAKHS AS BUSINESS LOSS. THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE NON - ALLOWANCE OF THE AFORESAID BUSINESS LOSS. 11. THE CLAIM OF THE ASSESSEE BEFORE US IS TWO - FOLD THAT FIRST IT WA S A LOSS 11. THE CLAIM OF THE ASSESSEE BEFORE US IS TWO - FOLD THAT FIRST IT WA S A LOSS WHILE CARRYING ON OF THE BUSINESS ACTIVITIES AND HENCE, ALLOWABLE UNDER SECTIONS 28 AND 29 AND / OR 37 OF THE ACT . THE SECOND CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND BEFORE US IS THAT THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT ARE NOT APPLICABLE SINCE IT IS NOT THE CLAIM OF BAD DEBTS I.E. WRITE OFF OF ANY DEBTORS ON ACCOUNT OF RAW MATERIAL OR MACHINERY. THE ASSESSEE HAD GIVEN ONLY AN ADVANCE FOR PURCHASE OF MACHINERY, WHICH ADMITTEDLY, WA S A CAP ITAL ASSET, BUT SINCE THE SAID CAPITAL ASSET HAD NOT COME INTO EXISTENCE I.E. NO MACHINERY / EQUIPMENT WAS DELIVERED TO THE ASSESSEE, THEN THE ISSUE TO BE DECIDED A S WHETHER THE ADVANCE PAID FOR THE ACQUISITION OF CAPITAL ASSET CAN BE ALLOWED AS DEDUCTION , W HERE THE MACHINERY HAS NOT BEEN DELIVERED TO THE ASSESSEE . THE CLAIM OF THE ASSESSEE HAS TO BE SEEN FROM THE ANGLE OF THE PROVISIONS OF SECTION 37(1) OF THE ACT, WHEREIN IT IS PROVIDED THAT ALL EXPENDITURE RELATING TO CARRYING ON OF THE BUSINESS IS TO B E ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 10 ALLOWED AS DEDUCTION WHILE COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT FROM BUSINESS OR PROFESSION , W HERE THE EXPENDITURE IS NOT IN THE NATURE DESCRIBED IN SECTIONS 30 TO 36 OF THE ACT AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE . T HE PR OVISION MADE BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT ON ACCOUNT OF NON - RECOVERY OF ADVANCE MADE FOR THE PURCHASE OF MACHINERY CANNOT BE SAID TO BE A PROVISION MADE ON ACCOUNT OF BAD DEBTS AND HENCE, THE PROVISIONS OF SECTION 36(1)(VII) OF THE ACT ARE NOT A TTRACTED. THE SAID ADVANCE THOUGH WAS FOR THE PURCHASE OF A CAPITAL ASSET, BUT SINCE THE CAPITAL ASSET NEVER CAME INTO EXISTENCE, THE B AR ENVISAGED IN SECTION 37(1) OF THE ACT DO NOT APPLY. THE EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT COVERED BY ANY OF THE PROVISIONS OF SECTIONS 30 TO 36 OF THE ACT AND BEING NOT A CAPITAL EXPENDITURE AND HAVING BEEN INCURRED FOR THE PURPOSE OF CARRYING ON OF THE BUSINESS, IS ELIGIBLE FOR DEDUCTION UNDER SECTION 37(1) OF THE ACT. THE ADVANCE MADE BY THE ASSESSEE FOR THE PURCHASE OF EQUIPMENTS, WHICH IN TURN, WAS TO BE USED IN THE LINE OF BUSINESS CARRIED ON BY THE ASSESSEE AND IN THE ABSENCE OF MACHINERY HAVING BEEN DELIVERED TO THE ASSESSEE AND ALSO BECAUSE OF INSOLVENCY PROCEEDINGS FILED, WHERE THERE IS NO CHANCE OF RE COVERY OF ADVANCE MADE BY THE ASSESSEE, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE IN WRITING OFF OF THE SAID ADVANCE AS BUSINESS LOSS IN ITS HANDS. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. ANJANI KUMAR CO . LTD. (SUPRA) , WHEREIN, IT WAS HELD AS UNDER: - 5. THE ADMITTED FACTS ARE THAT THE ADVANCE WAS PAID FOR ACQUIRING THE AGRICULTURAL LAND TO SET UP A FACTORY, BUT WHEN THE AGRICULTURAL LAND WAS NOT ACQUIRED, NO CAPITAL ASSET CAME INTO EXISTENCE, THEREFORE, THERE IS NO QUESTION OF ALLOWING DEPRECIATION ON SUCH ASSET. IF ANY ASSET IS REQUIRED AND IF IT IS A BENEFIT OF ENDURING NATURE, THEN OF COURSE ASSESSEE CANNOT GET THE DEDUCTION OF AMOUNT FOR ACQUISITION OF LAND AS REVENUE EXPENDITURE. WHEN LAND WAS NOT ACQUIRED, NO CAPITAL ASSET HAS BEEN ACQUIRED, THEREFORE, THE PAYMENT OF RS.50,489/ - IS TO BE ALLOWED AS BUSINESS LOSS 12. FURTHER, MUMBAI BENCH OF TRIBUNAL IN PIK PEN PRIVATE LIMITED VS. ITO (SUPRA) HAD HELD AS UNDER: - ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 11 8. WE HAVE HEARD THE PARTIES. THE ASSESSEE HAS DEBITED TO THE PROFIT & LOSS A/C. AN AMOUNT OF RS.2,96,135/ - ON ACCOUNT OF BAD DEBTS/BALANCE WRITTEN OFF. THE ASSESSEE EXPLAINED THAT THE SAID AMOUNT REPRESENTED THE AMOUNT ADVANCED TO BALAJI PENS PVT. LTD., FOR MACHINERY AND AS THE MACHINER Y WAS NOT SUPPLIED, AND HENCE, THE UN - RECOVERED AMOUNT WAS WRITTEN OF TREATING THE SAME AS AN EXPENDITURE FOR THE PURPOSE OF BUSINESS U/S. 37(1) OF THE ACT. THE A.O REJECTED THE CLAIM OF THE ASSESSEE ON THE REASON THAT THE AMOUNT WAS PAID FOR PURCHASE OF THE MACHINERY AND THEREFORE, ANY LOSS INCURRED ON A/C OF SAME IS A CAPITAL LOSS. THE LD CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE. THE LD COUNSEL RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT V/S. ANJANIKUMAR CO. LTD., 259 ITR 114 (RAJ.). HE ALTERNATIVELY PLEADED THAT IF THE LOSS IS NOT ALLOWED AS A BUSINESS EXPENDITURE, THEN THE A.O. MAY BE DIRECTED TO ALLOW THE CARRY FORWARD LOSS AS PER PROVISIONS OF LAW. WE HAVE HEARD THE LD D.R. THE FACTS AR E NOT IN DISPUTE THAT THE ADVANCES WERE MADE FOR PURCHASE OF MACHINERY BUT AS THE MACHINERY WAS NOT SUPPLIED, AND HENCE THE ASSESSEE WRITTEN OFF THE SAID ADVANCES TREATING THE SAME AS A REVENUE EXPENDITURE U/S. 37(1). 9. IN THE CASE OF ANJANIKUMAR CO. LTD . (SUPRA), THE APPELLANT HAD WRITTEN OFF THE ADVANCES MADE TO THE AGRICULTURISTS FOR PURCHASE OF THE AGRICULTURAL LAND AND THE LAND WAS TO BE ACQUIRED TO SET UP A FACTORY BUT ULTIMATELY THAT WAS NOT MATERIALIZED AND THE AGRICULTURISTS TO WHOM THE ADVANCE W AS GIVEN ALSO REFUSED TO GIVE THE AMOUNT. ON THE ABOVE FACTS, THEIR LORDSHIPS HELD THAT THE SAME HAS TO BE TREATED AS A REVENUE EXPENDITURE. WE, ACCORDINGLY, FOLLOWING THE PRINCIPLES LAID DOWN IN THE CASE OF ANJANIKUMAR CO. LTD. (SUPRA) ALLOW THE GROUND TAKEN BY THE ASSESSEE AND DELETE THE ADDITION OF RS.2,96,135/ - TREATING THE SAME AS A REVENUE EXPENDITURE U/S. 37(1) OF THE ACT AS ADMITTEDLY, NO CAPITAL ASSET CAME INTO EXISTENCE. 13. THE MUMBAI BENCH OF TRIBUNAL IN DCIT VS. EDELWEISS CAPITAL LTD. (SUP RA) FURTHER HELD AS UNDER: - (SUP RA) FURTHER HELD AS UNDER: - 8. ON MERITS, THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. ANJANI KUMAR CO. LTD. (SUPRA) SUPPORTS THE ASSESSEES PLEA. IN THIS CASE THE ASSESSEE INTENDED TO ACQUIRE AGRICULTURAL LAND TO SET UP A BOILER FACTO RY AND MADE ADVANCES TO THE AGRICULTURISTS FOR PURCHASE OF THE LAND. THE PROJECT DID NOT MATERIALIZE. THE AGRICULTURISTS HOWEVER REFUSED TO REFUND THE ADVANCES. THE ASSESSEE FILED THE SUIT BUT LOST IT. THE AMOUNTS WERE WRITTEN OFF IN ITS BOOKS OF ACCOU NT AND WERE CLAIMED AS REVENUE LOSS. THE RAJASTHAN HIGH COURT HELD THAT IN THESE CIRCUMSTANCES NO CAPITAL ASSET HAS BEEN ACQUIRED AND, THEREFORE, IRRECOVERABLE ADVANCES WERE TO BE ALLOWED AS BUSINESS LOSS. THIS JUDGMENT OF THE HIGH COURT HAS BEEN APPLIED BY THE MUMBAI BENCH OF THE TRIBUNAL IN ITS ORDER DATED 28 TH JANUARY 2010, IN ITA NO:6847/MUM/2008, IN THE CASE OF M/S. PIK PEN PRIVATE LIMITED VS. ITO. THERE ADVANCES WERE MADE FOR THE PURCHASE OF MACHINERY, WHICH WAS NOT SUPPLIED. THE ASSESSEE WROTE OF F THE ADVANCES AND CLAIMED DEDUCTION AS REVENUE EXPENDITURE, WHICH CLAIM WAS ALLOWED BY THE TRIBUNAL. IN THE PRESENT CASE, WE ARE OF THE OPINION THAT EVEN IF THE WEBSITES HAD MATERIALIZED, THE EXPENDITURE COULD NOT HAVE BEEN VIEWED AS CAPITAL EXPENDITURE BECAUSE THE WEBSITE IS PUT UP FOR THE PURPOSES OF DAY - TO - DAY RUNNING OF THE BUSINESS AND EVEN IF ONE WERE TO VIEW THAT SOME ENDURING BENEFIT IS OBTAINED BY THE ASSESSEE, THE BENEFIT CANNOT BE SAID TO ACCRUE TO THE ASSESSEE IN THE CAPITAL FIELD. A WEBSITE IS SOMETHING WHERE FULL INFORMATION ABOUT THE ASSESSEES BUSINESS IS GIVEN AND IT HELPS THE ASSESSEES CUSTOMERS IN DEALING WITH IT. A WEBSITE CONSTANTLY NEEDS UPDATING, OTHERWISE IT MAY BECOME OBSOLETE. IT HELPS IN THE SMOOTH AND EFFICIENT RUNNING OF TH E DAY - TO - DAY BUSINESS. THE EXPENDITURE WOULD HAVE BEEN ALLOWABLE AS REVENUE EXPENDITURE; AS A COROLLARY, WHEN THE WEBSITE DID NOT MATERIALIZE, THE AMOUNTS ADVANCED TO THE COMPANIES WHO WERE ENGAGED TO DEVELOP THE WEBSITES, WHEN THEY BECAME IRRECOVERABLE, CAN BE WRITTEN OFF AND CLAIMED AS LOSS INCIDENTAL TO THE ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 12 BUSINESS. THE LOSS IS THUS ALLOWABLE AS BUSINESS LOSS IN TERMS OF SECTION 28 OF THE ACT. WE ACCORDINGLY UPHOLD THE ASSESSEES ALTERNATIVE PLEA. IN THE RESULT, THE ULTIMATE DECISION OF THE CIT(A) I S UPHELD, THOUGH NOT AS A VALID CLAIM OF BAD DEBT BUT ON GROUNDS OF BUSINESS LOSS. THE APPEAL OF THE DEPARTMENT IS ACCORDINGLY DISMISSED. 14. BOTH THE AUTHORITIES BELOW AND ALSO THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE BEFORE US HAD PLACE D RELIANCE ON THE RATIO LAID DOWN BY THE APEX COURT IN HASIMARA INDUSTRIES LTD. VS. CIT (SUPRA) . THE HONBLE SUPREME COURT HELD AS UNDER: - 8 IT IS CLEAR FROM THE FINDINGS RECORDED BY THE TRIBUNAL AND THE HIGH COURT THAT THE ASSESSEES BUSINESS IS MANUFAC TURE AND SALE OF TEA AND IS NOT ENGAGED IN COTTON MANUFACTURING BUSINESS AT ALL; THAT WHILE IT INTENDED TO ENTER INTO COTTON MANUFACTURING PURPOSES DID NOT SET UP A COTTON MILL, BUT OBTAINED OPERATING RIGHTS FROM ANOTHER COMPANY UNDER THE LEAVE AND LICENCE AGREEMENT FOR THE PURPOSE OF ACQUIRING THE PRO F IT - MAKING APPARATUS FOR A DURATION OF THREE YEARS OR A LITTLE MORE; THAT THE BUSINESS OF RUNNING A COTTON MILL WAS NOT ITS OWN, BUT WAS ONLY OPERATING THE SAID MILL UNDER LEAVE AND LICENCE AGREEMENT; THAT THE AMOUNT OF ADVANCE IN A SUM OF RS. TWENTY LAKHS WAS GIVEN NOT FOR ITS OWN PURPOSE BY WAY OF BUSINESS EXPENDITURE FOR MODERNIZING THE MILL, BUT AS CAPITAL TO THE LESSOR WHO IN TURN HAD TO MODERNIZE THE MILL. IN THE RESOLUTIONS MADE BY THE BOARD OF DIRECTOR S, IT WAS CLEAR THAT THE TRANSACTION ENTERED INTO WAS NOT IN THE NATURE OF A LOAN TRANSACTION OR A MONEY LENDING TRANSACTION AND THUS THE LOSS SUFFERED BY THE ASSESSEE WAS A CAPITAL LOSS AND HENCE, THE AMOUNT COULD NOT BE DEDUCTED FROM THE ASSESSEES INCOM E AS BUSINESS LOSS. 15. THE PERUSAL OF THE FACTS BEFORE THE APEX COURT REFLECTS THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF TEA. THE ADVANCE WAS GIVEN IN LINE WITH LEAVE AND LICENCE AGREEMENT ENTERED INTO WITH ANOTHER CONCER N FOR RUNNING OF COTTON MILL. THE SAID ADVANCE OF RS.20 LAKHS WAS NOT GIVEN FOR OWN PURPOSE BY WAY OF BUSINESS EXPENDITURE, BUT AS CAPITAL TO THE LESSOR, WHO HAD TO MODERNIZE THE MILL , WAS THE FINDING OF THE TRIBUNAL, WHICH WAS CONSIDERED BY THE APEX COUR T AND IT WAS HELD THAT THE LOSS SUFFERED BY THE ASSESSEE WAS A CAPITAL LOSS. HOWEVER, IN THE FACTS OF THE PRESENT CASE AS POINTED OUT BY US IN THE PARAS HEREINABOVE, THE ASSESSEE HAD MADE THE AFORESAID ADVANCE FOR PURCHASE OF EQUIPMENT / MACHINERY, WHICH IN TURN WAS TO BE UTILIZED BY THE ASSESSEE IN ITS CHAKAN PLANT. EVEN THE TERMS OF CONTRACT BETWEEN THE ASSESSEE AND THE ITALIAN COMPANY REFLECT THAT THE EQUIPMENT HAD TO B E INSTALLED AT THE CHAKAN PLANT, AGAINST WHICH IT WAS ALSO AGREED THAT M/S. ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 13 GALILEO VACUUM SYSTEM WOULD SEND PERSONNEL FROM ITALY FOR ITS INSTALLATION AND ALSO FOR START UP OF THE UNIT. THE FACTS OF THE PRESENT CASE BEFORE US ARE AT VARIANCE TO THE FACTS BEFORE THE APEX COURT AND CONSEQUENTLY, THE RATIO LAID DOWN BY THE HONBLE SUPREME C OURT IS NOT APPLICABLE TO THE PRESENT CASE BEFORE US. HOWEVER, THE FACTS BEFORE THE HONBLE HIGH COURT OF RAJASTHAN ARE IDENTICAL TO THE FACTS BEFORE US AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDU CTION ON ACCOUNT OF WRITE OFF OF THE ADVANCE PAID TO ITALIAN COMPANY AGAINST PURCHASE OF MACHINERY, WHICH WAS NEVER DELIVERED TO THE ASSESSEE. 16. ANOTHER OBJECTION RAISED BY THE ASSESSING OFFICER WAS THAT WHERE THE ORDER FOR FIRST MACHINERY WAS PLACED ON 12.08.2006 , WAS NOT DELIVERED TO THE ASSESSEE, THERE WAS NO REQUIREMENT FOR PAYING ANOTHER ADVANCE ON 16.06.2008 . THE ASSESSEE IS THE BEST PERSON TO TAKE DECISION FOR RUNNING ITS BUSINESS AND IT IS TRITE LAW THAT THE REVENUE AUTHORITIES CANNOT SIT IN JUD GMENT OVER THE DECISION TAKEN BY THE BUSINESSMAN WHILE CARRYING ON ITS BUSINESS. OVER THE DECISION TAKEN BY THE BUSINESSMAN WHILE CARRYING ON ITS BUSINESS. WE FIND NO MERIT IN THE ABOVE SAID STAND OF THE ASSESSING OFFICER AND CIT(A) AND DISMISSING THE SAME , WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. 17. ANOTHER ASPECT OF THE ISSUE IS THE YEAR OF ALLOWABILITY OF EXPENDITURE. THE ASSESSEE HAD RECOGNIZED THE SAID EXPENDITURE IN THE YEAR UNDER CONSIDERATION. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AND EVEN THE CIT(A) OBSERVED THAT CLAIM OF DEDUCTION OF THE SAID ADVANCE WAS PREMATURE AND ALSO IT WAS AN UNASCERTAINED LOSS. RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE CIT(A) ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT GWALIOR RAYONG SILK MFG. (WVG) CO. LTD. (1999) 237 ITR 253 (BOM) WAS NOT APPLIED SINCE THE SAID DECISION DEALT WITH THE YEAR OF WRITE OFF AND NOT WITH THE ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 14 DEDUCTIBILITY OF THE AMOUNT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US HAS CLARIFIED THAT R ELIANCE WAS PLACED ON THE SAID DECISION OF HONBLE BOMBAY HIGH COURT VIS - - VIS YEAR OF ALLOWABILITY AND NOT THE QUESTION OF DEDUCTIBILITY. IN VIEW THEREOF, WE FIND NO MERIT IN THE ORDER OF CIT(A) IN THIS REGARD. 18. THE CIT(A) FURTHER PLACED RELIANCE ON CERTAIN CASE LAWS FOR DECIDING THE QUESTION OF DEDUCTIBILITY UNDER SECTION 37(1) OF THE ACT. IN VIEW THEREOF, WHERE FACTS OF THE CASES RELIED UPON BY THE CIT(A) ARE AT VARIANCE TO THE FACTS OF THE ISSUE BEFORE US AND THE FACTS AND ISSUE ARE SQUARELY COVER ED BY THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF RAJASTHAN, WHICH IN TURN HAS BEEN APPLIED BY THE MUMBAI BENCH OF TRIBUNAL IN TWO DECISIONS REFERRED TO HEREINABOVE, ACCORDINGLY, WE FIND NO MERIT IN THE ORDER OF CIT(A) IN THIS REGARD. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. BY THE ASSESSEE IS THUS, ALLOWED. 19. THE CONNECTED ISSUE VIDE GROUND OF APPEAL NO.2 IS THE OBSERVATION OF CI T(A) VIDE PARA 15 OF THE APPELLATE ORDER. 20. THE CIT(A) WAS OF THE VIEW THAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE DOES NOT FULFILL THE CONDITIONS LAID DOWN UNDER SECTION 139(5) OF THE ACT. IT MAY BE CONSIDERED AT THIS JUNCTURE THAT IN TH E ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD NOT MADE ANY CLAIM OF DEDUCTION ON ACCOUNT OF WRITE OFF OF THE ADVANCE PAID TO ITALIAN COMPANY , SUCH CLAIM WAS MADE ONLY IN THE REVISED RETURN OF INCOME. IN CASE, THE REVISED RETURN OF INCOME IS NOT ACCEPTED, THEN HOW CAN THE ISSUE BE SO ELABORATELY DECIDED ON MERITS? ONCE THE MERITS OF DEDUCTION HAVE BEEN CONSIDERED BY BOTH THE ASSESSING OFFICER AND CIT(A), WHICH ADMITTEDLY WAS CLAIMED ONLY IN THE REVISED RETURN OF INCOME, WE FIND NO ITA NO. 608 /PN/201 3 RINDER INDIA. PVT. LTD. 15 MERIT IN THE ORDER OF CIT (A) IN THIS REGARD AND ACCORDINGLY, WE ALLOW THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE. FURTHER, THE PERUSAL OF THE ASSESSMENT ORDER ITSELF REFLECTS THAT THE WORKING OF INCOME IS , AS P ER THE REVISED RETURN OF INCOME, RS. 15.97 CRORES AND IN THESE CIR CUMSTANCES, THERE IS NO MERIT IN REJECTING THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE. 2 1 . THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS GENERAL IN NATURE, HENCE THE SAME IS DISMISSED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER P RONOUNCED ON THIS 1 ST DAY OF DECEMBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL M EMBER / ; ST . / PUNE ; DATED : 1 ST DECEMBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - V , PUNE ; 4. / THE CIT - V, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE
Other Referred Cases
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