Manori Properties Pvt Ltd vs. ITO (ITAT Mumbai)

DATE: (Date of pronouncement)
DATE: May 23, 2011 (Date of publication)

Click here to download the judgement (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“.

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