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Manori Properties Pvt Ltd vs. ITO (ITAT Mumbai)

May 23rd, 2011

(72.8 KiB, 657 DLs)

 Download: manori_bad_debt_biz_loss.pdf


If Not ‘Bad Debt’, ‘Business Loss’ claim sans specific ground invalid

 

The assessee claimed advances of Rs. 10.85 lakhs as a “bad debt” u/s 36(1)(vii). The AO & CIT (A) rejected the claim on the ground that as the debt had not been accounted as income, the conditions of s. 36(2) were not satisfied and the claim was not allowable. The alternate claim as a “business loss” was also rejected by the CIT (A). Before the Tribunal, the assessee raised a ground only on “bad debt” (and not “business loss”). At the hearing, it conceded the claim for “bad debt” and pressed for the claim for “business loss”. HELD dismissing the appeal:

 

The claim regarding “business loss” cannot be entertained because, though the CIT (A) has dealt with the issue, there is no specific ground. The claim is also not maintainable under Rule 27 since that applies only to a Respondent in the appeal.

 

Note: A contra view, in the same fact-situation, was taken in Mohan Meakin vs. DCIT where though the appeal only raised the issue of “bad debt”, the High Court permitted the claim of “business expenditure” to be raised for the first time by observing (para 11) “the right of the assessee to relief is not restricted to the plea raised by him before the departmental authorities or before the Tribunal. If grant of relief on another ground is justified, the Tribunal would be under a duty to grant that relief. The Tribunal is not restricted only to the questions raised before the departmental authorities. All questions, whether on law or fact, which relate to the assessment of the assessee, may be raised before the Tribunal“.

Related Judgements

  1. DCIT vs. Edelweiss Capital Ltd (ITAT Mumbai) 

    On merits, the department’s argument that the amounts paid for development of websites cannot be allowed as business loss because if the websites had been successfully put up, the expenditure would have been capital expenditure is not acceptable. because (a) as the expenditure was abortive, no capital asset has…
  2. Mohan Meakin Limited vs. CIT (Delhi High Court) 

    U/s 28 r.w.s. 29, computation of income has to be in accordance with the provisions contained in s. 30 to 43 which includes s. 37(1). If a loss of a debt does not come within s. 36(1)(vii), a claim can be made u/s 37(1). There is a clear distinction…
  3. DCIT vs. Shreyas S. Morakhia (ITAT Mumbai Special Bench) 

    In Veerabhadra Rao 155 ITR 152 the Supreme Court held in the context of a loan that if the interest is offered to tax, the loan has been “taken into account in computing the income of the assessee” and qualifies for deduction u/s 36(1)(vii). The effect of the judgement…

Posted in All Judgements, Tribunal |

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