The Dy CIT, C-2, Indore V. M/s Keti Sangam Infrastructure (I) Ltd. , Indore

ITA 834/Ind/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4769 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-04-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 14-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOEL
• Assessee Lawyers: AJAY TULASIYAN; AMITESH JAIN CAS
• Keywords: Business expenditure; Earning of tax free income; Bad and doubtful debts; Capital expenditure; Rule 8D
• Section: 143(3); 142(1); 14A; 37

Judgement Text

KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.834/IND/2017 ASSESSMENT YEAR 2014-15 REVENUE BY SHRI K.G. GOEL , SR.DR ASSESSEE BY S HRI AJAY TULASIYAN & AMITESH JAIN, CAS DATE OF HE ARING 09. 04 . 201 9 DATE OF PRONOUNCEMENT 30 .0 5 . 201 9 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2014-15 AND DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-III (IN SH ORT LD.CIT(A)], INDORE DATED 29.09.2017 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 29.12 .2016 FRAMED BY ACIT (CENTRAL), UJJAIN. AC IT (CENTRAL) - II , INDORE VS. M/S KETI SANGAM INFRASTRUCTURE LTD, 15/31 VIDHYYADEEP, MANORAMAGANJ, INDORE ( APPELLANT ) (RESPONDENT ) PAN A A DCK0129Q KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 2 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,86,82,431/- MADE BY T HE AO ON ACCOUNT OF DISALLOWANCE U/S 14A R.W.R 8D. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.50,36,528/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF WRITE-OFF OF SUNDRY BALANCES IN PRO FIT & LOSS ACCOUNT. 3 . BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RE CORDS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS BUILT-O PERATE-TRANSFER (BOT) PROJECTS. E-RETURN OF INCOME FILED ON 30.11. 2014 SHOWING LOSS OF RS.10,01,60,335/-. CASE SELECTED FOR SCRUTINY THRO UGH CASS FOLLOWED BY SERVING OF STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT. VARIOUS INFORMATION WERE ASKED BY LD. A.O TO WHICH WRITTEN REPLY WAS SUBMITTED WITH DETAILS. LD. A.O ON OBSERVING THAT THE INVESTM ENT AS ON 31.3.2014 STOOD AT RS.35,32,01,628/- WHICH INCLUDED EQUITY IN VESTMENTS, EXAMINED NECESSARY DETAILS IN LIGHT OF THE PROVISIONS OF SEC TION 14A OF THE ACT R.W.S. RULE 8D OF I.T. RULES. SUBMISSIONS MADE BY THE ASS ESSEE WERE NOT FOUND SATISFACTORY BY THE LD. A.O AS THERE WAS NO DECLARA TION OF LIST OF UNLISTED COMPANY AS FAR AS INVESTMENT IN SHARES ARE CONCERNE D. LD. A.O ACCORDINGLY COMPUTED THE DISALLOWANCE U/S 14A OF TH E ACT AT KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 3 RS.1,86,82,431/-. LD. A.O ALSO OBSERVED THAT IN TH E PROFIT & LOSS ACCOUNT ASSESSEE HAS CLAIMED EXPENDITURE OF SUNDRY BALANCE WRITTEN OFF AT RS.50,36,528/-. LD. A.O DENIED THE CLAIM U/S 37 OF THE ACT TREATING THE ALLEGED LOAN AND ADVANCE WRITTEN OFF TREATING THE A LLEGED EXPENDITURE TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE B USINESS PURPOSES. ACCORDINGLY INCOME ASSESSED AT (-) RS.7,64,41,376/- . AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND SUCCEEDED. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE WILL FIRST TAKE UP GROUND NO.1 RELATING TO DELET ION OF ADDITION OF RS.1,86,82,431/- MADE BY THE LD. A.O ON ACCOUNT OF DISALLOWANCE U/S 14A R.W.R. 8D. 5. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ISSUE RAISED BY THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED V/S CIT (2015) 387 ITR 033 (DELHI) AS WELL AS ANOTH ER JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P) LTD (2015) 372 ITR 0097 (GUJ) WHEREIN IT HAS BEEN HELD THAT IN CASE THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEA R, NO DISALLOWANCE U/S 14A OF THE ACT IS CALLED FOR. LD. COUNSEL FOR THE ASSESSEE HAS ALSO KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 4 MADE REFERENCE TO THE WRITTEN SUBMISSIONS PLACED ON RECORD. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY ARGUED SUPPORTING THE ORDER OF LD. A.O BUT COULD NOT CONTR OVERT THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE CONTENDING ON T HE STRENGTH OF JUDICIAL PRONOUNCEMENTS THAT IN CASE OF NIL EXEMPT INCOME DISALLOWANCE U/S 14A OF THE ACT IS NOT CALLED FOR. 7 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE R ECORDS PLACED BEFORE US. THROUGH THIS GROUND NO.1 REVENUE HAS CHA LLENGED THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.1,86,82,4 31/- MADE BY LD. A.O ON ACCOUNT OF DISALLOWANCE MADE U/S 14A OF THE ACT. FROM PERUSAL OF THE AUDITED BALANCE SHEET PLACED IN THE PAPER BOOK, WE OBSERVE THAT OS ON 31.3.2014, INVESTMENT IN UNQUOTED SHARES STANDS AT RS.35,32,01,628/-. DURING THE YEAR BANK INTEREST OF RS.3,18,07,503/- H AS BEEN CHARGED TO THE PROFIT AND LOSS ACCOUNT. ON 31.3.2014 SHARE CA PITAL STOOD AT RS.9,24,00,000/- AND ACCUMULATED RESERVE AND SURPLU S STOOD AT RS.217,90,24,214/-. ON GOING THROUGH THE PROFIT & LOSS ACCOUNT WE FIND THAT DURING THE YEAR ASSESSEE HAS NOT EARNED ANY EX EMPT INCOME. INVESTMENTS SHOWN IN THE BALANCE SHEET ARE ONLY TOW ARDS UNQUOTED SHARES OF KALYAN TOLL INFRASTRUCTURE LTD WHICH IS T HE GROUP COMPANY AND KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 5 NOT FETCHING ANY EXEMPT INCOME TO THE ASSESSEE. 8. THE FACT THAT NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSESSEE DURING THE YEAR IS NOT DISPUTED AT ANY STAGE BY THE REVENUE AUTHORITIES. HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED (SUPRA) HELD THAT WHERE NO EXEMPT INCOME HAS BEEN RECEIVED BY TH E ASSESSEE IN THE PREVIOUS YEAR, DISALLOWANCE U/S 14A OF THE ACT IS N OT WARRANTED. THIS VIEW WAS ADOPTED BY THE CO-ORDINATE BENCH IN THE CA SE OF PR. CIT V/S OIL INDUSTRIES DEVELOPMENT BOARD IN ITA NO.197/2018 ORD ER DATED 16.02.2018. IT IS ALSO BROUGHT TO OUR NOTICE THAT THE SPECIAL LEAVE PETITION PREFERRED BY THE DEPARTMENT AGAINST THE JU DGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMEINVEST LIMITED (SUPRA) HAS RECENTLY BEEN DISMISSED BY THE HONBLE APEX COURT BY ORDER D ATED 08.02.2019. THEREFORE WE CAN SAFELY CONCLUDE BY RESPECTFULLY FO LLOWING THE JUDGMENT OF HONBLE APEX COURT AND HONBLE DELHI HIGH COURT AS MENTIONED HEREIN ABOVE THAT AS THE ASSESSEE HAS NOT EARNED ANY EXEMP T INCOME DURING THE YEAR THEREFORE NO DISALLOWANCE U/S 14A OF THE ACT I S CALLED FOR. WE THEREFORE FIND NO REASON TO INTERFERE IN THE FINDIN G OF LD. CIT(A) DELETING THE DISALLOWANCE OF RS.1,86,82,431/- MADE BY LD. A. O U/S 14A R.W.R.T RULE 8D. THIS GROUND OF REVENUES APPEAL IS DISMIS SED. KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 6 9. NOW WE TAKE UP GROUND NO.2 CHALLENGING THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.50,36,528/- MADE BY THE LD. A.O ON ACCOUNT OF DISALLOWANCE OF WRITE OFF OF SUNDRY BALANCE IN P ROFIT & LOSS ACCOUNT. BRIEF FACTS OF THE CASE ARE THAT THE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS LD. A.O NOTICED THAT THE ASSESSEE HAS D EBITED RS.50,36,528/- UNDER THE HEAD SUNDRY BALANCE WRITTEN OFF. THE ASS ESSEE WAS ASKED TO JUSTIFY THE CLAIM AND SUBSTANTIATE WITH DOCUMENTARY EVIDENCE. ASSESSEE FILED WRITTEN SUBMISSION GIVING PARTY WISE DETAILS OF THE AMOUNTS OUTSTANDING AS WELL AS SHOWING THE BALANCE CONTENDI NG THAT THE OUTSTANDING CANNOT BE RECOVERED AND THE SAME ARE TO BE CLAIMED AS EXPENSES U/S 37 OF THE ACT AS SUNDRY BALANCE WRITTE N OFF. LD. A.O HOWEVER WAS NOT CONVINCED AND IN HIS VIEW THE IMPUG NED AMOUNT WAS IN THE NATURE OF BAD DEBTS ON WHICH PROVISIONS OF SECT ION 36(1)(VII) OF THE ACT APPLIES AND AS THE ALLEGED DEBIT BALANCE WERE NOT O FFERED FOR INCOME IN ANY PREVIOUS YEAR THE SUNDRY BALANCE WRITTEN OFF NE EDS TO BE DISALLOWED. 10. WHEN THE MATTER CAME UP BEFORE LD. CIT(A), THE EVI DENCE WERE PLACED ON RECORD SHOWING THE ADVANCE TO HAVE BEEN M ADE FOR BUSINESS PURPOSES, LD. CIT(A) APPRECIATED THE SAME AND FOLL OWING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF MYSORE SUGAR CO. LTD (1962) 46 ITR KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 7 0649 AS WELL AS THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF MOHAN MEAKIN LIMITED VS. COMMISSIONER OF INCOME TAX (2011) 79 CCH 0397, DELETED THE DISALLOWANCE. 11 . NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LD. A.O. ON THE OTHER HAND LD. COUNSEL F OR THE ASSESSEE SUPPORTED THE FINDING OF LD. CIT(A) AS WELL AS WRIT TEN SUBMISSION PLACED ON RECORD. 13. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US AND ALSO CAREFULLY GONE THROUGH THE JUDIC IAL PRONOUNCEMENTS REFERRED BY THE LD. COUNSEL FOR THE ASSESSEE. IN G ROUND NO.2 REVENUES GRIEVANCE IS AGAINST THE FINDING OF LD. CIT(A) DELE TING THE DISALLOWANCE OF RS.50,36,528/- MADE BY THE LD. A.O ON ACCOUNT OF DI SALLOWANCE OF WRITE OFF OF SUNDRY BALANCE IN THE PROFIT AND LOSS ACCOUN T. WE OBSERVE THAT LD. CIT(A) DELETED THE DISALLOWANCE GIVING FOLLOWING FI NDING OF FACT; 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE APPELLANT'S CONTENTIONS. DURING THE YEAR UNDER CONSIDERATION TH E APPELLANT COMPANY TREATED CERTAIN DEBTORS / ADVANCES AS IRRECOVERABLE AND ALSO CERTAIN CREDITORS/ CREDIT BALANCES AS NOT PAYABLE AND ACCOR DINGLY AN AMOUNT OF KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 8 RS. 50,36,528/- BEING NET OF DEBIT BALANCES IN THE NATURE OF DISCOUNT/BAD DEBTS/TRADE ADVANCES WRITTEN OFF AND C REDIT BALANCES WRITTEN BACK BEING NO MORE PAYABLE, WAS DEBITED TO THE P&L A/ C. LEDGER OF SUNDRY BALANCES WRITTEN OFF ALONG WITH LE DGER ACCOUNTS OF RELEVANT PARTIES HAVE BEEN PLACED ON RECORD TO SHOW THAT IT HAS ACTUALLY WRITTEN THEM OFF AND DEBITED THESE BALANCES IN ITS BOOKS OF ACCOUNTS. 6.1 THE MAJOR BALANCE WRITTEN OFF PERTAINS TO THE FOLLO WING TWO PARTIES: PARTY O/S AMOUNT OUTSTANDING SINCE BHARAT UDYOG LIMITED RS.27,00,000/- A.Y.2009-10 ESCORP COMMODITIES LLC RS.29,86,625/ -. A.Y.2009-10 6.1.1 THE APPELLANT IS ENGAGED IN THE BUSINESS OF ROAD DE VELOPMENT ACROSS VARIOUS STATES OF LNDIA. ]T HAD MADE ADVANCE PAYMENTS OF RS. 27,00,000/- TO BHARAT UDYOG LIMITED IN F.Y. 200809 FOR THE SUPPLY OF HIGH GRADE BITUMEN REQUIRED FOR ROAD CONSTRUCTION A ND DEVELOPMENT. IT IS SUBMITTED THAT BHARAT UDYOG LIMITED FAILED TO SU PPLY THE BITUMEN DESPITE OF PERSISTENT ORAL AS WELL AS WRITTEN FOLLO W UP MADE BY THE APPELLANT COMPANY. THE APPELLANT HAD ALSO FILED LEG AL NOTICE FOR SUPPLY OF SAID GOODS OR REFUND OF THE ADVANCE MONEY PAID BY I T. THE APPELLANT DECIDED TO WRITE OFF THE SAID AMOUNT OF RS. 27,00,0 00/- IN ITS BOOKS OF ACCOUNTS IN F.Y. 2013-14 . 6.2. REGARDING ESCARP COMMODITIES LLC, THE APPELLANT HAS SUBMITTED THAT IT HAD PLACED ORDER OF 850 MT BITUMEN TO ESCORP COMMODITIES LLC AND GAVE AN ADVANCE OF RS. 1,30,31,349/ - IN F.Y. 2008-09. ONLY 605 MT BITUMEN WAS SUPPLIED BY THE SAID COMPANY TO THE APPELLANT COMPANY AMOUNTING TO RS.1,00,44,724/-. IT US SUBMITTED THAT EVEN AFTER THE PERSISTENT FOLLOW UPS, EITHER THE SUPPLY OF THE BAL ANCE AMOUNT WAS MADE NOR THE BALANCE AMOUNT OF RS.29,86,625/- REFUNDED AND THEREFORE, THE KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 9 SAID OUTSTANDING AMOUNT HAS BEEN WRITTEN OFF IN ITS BOOKS OF ACCOUNTS DURING THE YEAR UNDER CONSIDERATION. 6.3 IT IS SEEN THAT THE CLAIM OF RS. 50,36,528/- BEING NET OF DEBIT BALANCES IN THE NATURE OF DISCOUNT/ BAD DEBTS / TRA DE ADVANCES WRITTEN OFF AND CREDIT BALANCES WRITTEN BACK BEING NO MORE PAYABLE, HAS BEEN MADE U/S 37. IT IS SUBMITTED THAT THE AMOUNT OF EXP ENDITURE HAS BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOS ES. THE AMOUNTS WERE ADVANCED FOR INCURRING THE BUSINESS EXPENDITUR E ONLY. 6.4 IT IS NOT THE ASSESSING OFFICERS CASE THAT THE APPE LLANT HAS FAILED TO PRODUCE ANY EVIDENCE REGARDING EFFORTS MADE FOR THE RECOVERY OF THE SAID AMOUNT AND THAT IT IS NOT ESTABLISHED THAT THE SAID AMOUNTS HAVE BECOME BAD DURING THE YEAR. THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE ONLY THE APPELLANT HAS PLACED ON RECORD ENOUGH EVIDENCE TO SHOW THAT THE ADVANCES WERE GIVEN FOR PURCHASE OF BITUMEN WHICH IS REQUIRED FOR ROAD CONSTRUCTION, THE BUSINESS OF THE APPELLANT. THE ADVANCES MADE BY THE APPELLANT WILL CERTAINLY BE WITHIN THE WORDS 'LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS'. AS THE SAID ADVANCE S ARE NOT LOSS OF CAPITAL EXPENDITURE, IT HAS TO BE TREAT ED AS A CASE OF BUSINESS LOSS AND IS THEREFORE ALLOWABLE UNDER THE PROVISION S OF SECTION 37. THE APPELLANT HAS SUBMITTED THAT THE PROPOSITION LAID D OWN BY THE HON'B1E SUPREME COURT IN THE CASE OF CIT VS. MYSORE SUGAR C O. LTD. (1962) 46 ITR 0649 THOUGH REFERRED IN THE CONTEXT INCOME TAX ACT, 1922 APPLIES TO THE INSTANT CASE. THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF MOHAN MEAKIN LTD VS . COMMISSIONER OF INCOME TAX (2011) 79 CCH 0397 DELHI HC IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. 6.5 IN VIEW ' OF THE ABOVE, THE ADDITION OF RS. 50,36,528/- IS DELETED. GROUND NO.2 IS ALLOWED. KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 10 14 . THE ABOVE FINDING OF FACT HAS NOT BEEN CONTROVE RTED BY LD. DEPARTMENTAL REPRESENTATIVE AT ANY STAGE OF HEARING . FURTHER WE OBSERVE THAT THE ALLEGED AMOUNT OF SUNDRY BALANCE W RITTEN OFF AT RS.50,36,528/- IS THE NET BALANCE OF DEBITS AND CRE DITS. THE LD. A.O HAS NOT RAISED ANY DOUBTS ON THE CREDIT BALANCE WRITTEN OFF AND OFFERED TO TAX AND HAS GENERALLY POINTED OUT TO THE NET DEBIT BALA NCE OF RS.50,36,228/- BEING NOT ELIGIBLE AS BUSINESS EXPENDITURE U/S 37 O F THE ACT. FROM PERUSAL OF THE RECORD WE FIND THAT THE MAJOR PORTIO N OF THE DEBIT BALANCE WRITTEN OFF INCLUDES FOLLOWING; NAME OF PARTY AMOUNT OUTSTANDING FROM BHARAT UDYOG LIMITED RS.27,00,000/ - 2009 - 10 SHRI RAM DISTRIBUTORS RS.36,470/ - 2013 - 14 ESCORP COMMODITIES LLC RS.29,86,625/ - 2009 - 10 SHO RT FALL IN TOLL COLLECTION RS.4,97,417/ - 15. WE FIND THAT THE ASSESSEE IS IN THE FIELD OF INFRA STRUCTURE AND BUILD- OPERATE-TRANSFER PROJECTS. IN THE COURSE OF BUSINE SS THE ADVANCES WERE GIVEN TO BHARAT UDYOG LIMITED AND SHRI RAM DISTRIBU TORS BUT THE WORK COULD NOT BE COMMENCED FOR LONG TIME EVEN AFTER PER SISTENT FOLLOW UP BY KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 11 THE ASSESSEE. BOTH THE PARTIES ARE NOT IN THE CATE GORY OF RELATED PARTIES. GENUINENESS OF PAYMENT HAS NOT BEEN DOUBTED. AS RE GARDS THE DEBIT BALANCE OUTSTANDING FROM ASSESSMENT YEAR 2009-10 ON WARDS IN THE CASE OF ESCORP COMMODITIES LLC RECORDS SHOWS THAT THE A MOUNT WAS GIVEN AS ADVANCE FOR PURCHASE OF BITUMEN, WHICH IS A MATERI AL REQUIRED IN THE CONSTRUCTION OF ROADS. DURING FINANCIAL YEAR 2008- 09 AGAINST THE PAYMENT FOR PURCHASE OF RS.1,30,31,349/-, THE SUPPL Y WAS MADE ONLY FOR MATERIAL WORTH RS.1,00,44,724/- AND SUPPLIER WAS UN ABLE TO SUPPLY THE REMAINING. ESCORP COMMODITIES LLC DENIED TO PAY BAC K THE OUTSTANDING AMOUNT AND THEREFORE THE ASSESSEE HAD NO OPTION EX CEPT TO WRITTEN OFF THE AMOUNT AS SUNDRY BALANCE WRITTEN OFF. 16. FROM GOING THROUGH THE ABOVE FACTS WE ARE OF THE C ONSIDERED VIEW THAT THE ALLEGED OUTSTANDING DEBIT BALANCE AND ADVA NCES WERE GIVEN DURING THE COURSE OF BUSINESS IN THE CONSTRUCTION P ROJECTS AND WERE NOT RECOVERABLE. THESE AMOUNTS ARE NOT FALLING UNDER TH E CATEGORY OF SUNDRY DEBTORS AND THEREFORE WRITING OFF THESE AMOUNT CANN OT BE COVERED U/S 36(1)(VII) OF THE ACT. THE ASSESSEE HAS RIGHTLY CLA IMED THEM AS BUSINESS EXPENDITURE U/S 37 OF THE ACT. OUR VIEW FINDS OF S UPPORT FROM ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MOHAN KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 12 MEAKIN LIMITED (SUPRA) WHEREIN THE ADVANCES WERE AL SO MADE FOR THE PURPOSE OF BUSINESS AND WERE WRITTEN OFF SUBSEQUENT LY AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS AND CLAIMED AS BUSINESS LOSS, WHICH WAS DISALLOWED BY THE AO. HONBLE HIGH COURT HELD IN FA VOUR OF THE ASSESSEE OBSERVING AS FOLLOWS; THE ADVANCES MADE BY THE ASSESSEE IN THE CASE WERE CERTAINLY OF A TYPE WHICH WOULD BE WITHIN THE CONTEMPLATION OF THE WORDS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. AS NO PORTION OF THE SAID ADVANCES COULD BE STATED TO BE LOSS OF CAPITAL EXPENDITURE, BUT IT IS BEING A PLAIN CASE O F BUSINESS LOSS, IT WOULD CERTAINLY BE ALLOWABLE TO BE DEDUCTED UNDER T HE PROVISIONS OF SECTION 37. HONBLE COURT ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT V/S MYSORE SUGAR CO. LTD ( 1962) 46 ITR 0649 AND ANOTHER JUDGMENT OF HONBLE APEX COURT IN THE C ASE OF CIT V/S MAHALAKSHMI TEXTILE MILLS LTD (1967) 66 ITR 710. 17. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDGMENTS REFERRED ABOVE FIND NO REASON TO INTERFERE IN THE FINDING OF LD. CIT9A) DELETING THE DISALLOWANCE OF SUNDRY BALANCE WRITTEN OFF AT RS.50,36,528/- AS IN OUR VIE W THIS AMOUNT HAS KETI SANGAM INFRASTRUCTURE LTD ITA NO.834/IND/2017 13 BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF BUSINESS AND IS ELIGIBLE FOR DEDUCTION U/S 37 OF THE ACT. GROUND N O.2 OF THE REVENUES APPEAL STANDS DISMISSED. 18. IN THE RESULT APPEAL OF THE REVENUE STANDS DISMISS ED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.05.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED 30 TH MAY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE