The Tax Publishers2019 TaxPub(DT) 2714 (Kol-Trib) : (2019) 176 ITD 0609

INCOME TAX ACT, 1961

Section 28 Section 36(1)(vii) Section 36(2)

As assessee could not produce any evidence either by way of purchase order or a money receipt, it failed to prove that concerned advances were trade advances given to the parties in the ordinary course of business and, therefore, write off of the same could not be allowed either under section 36(1)(vii) read with section 36(2) or as a trading loss under section 28.

Business loss - Allowability - Debit balances written off - No evidence to prove nature of written off amounts claimed as trade advances

Assessee engaged in manufacture and sale of industrial gas wrote off certain debit balances and submitted that same was allowable under section 36(1)(vii) read with section 36(2) or as a trading loss under section 28. AO required assessee to explain its claim. According to assessee, in normal course of business it had paid advance to few of the suppliers and since neither they supplied materials nor returned the money, even though assessee tried its level best to realize it could not materialize, the assessee wrote off the same during the year under consideration. AO not satisfied with this, rejected assessee's claim.Held: As assessee could not produce any evidence either by way of purchase order or a money receipt, it failed to prove that concerned advances were trade advances given to the parties in the ordinary course of business and, therefore, write off of the same could not be allowed either under section 36(1)(vii) read with section 36(2) or as a trading loss under section 28.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2006-07


INCOME TAX ACT, 1961

Section 36(1)(v)

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