Ipfonline Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that no TDS is liable to be deducted when payment is made for serving food in a restaurant in the normal course of running of the restaurant/café. Accordingly, appeal allowed to that extent.
Facts- The case of the assessee was selected for scrutiny and three additions/ disallowances in respect of bad and doubtful debts written off; non-deduction of TDS on payments made under various heads of expenditure and disallowance on account of prepaid expenses and provisions of expenses were made. Commissioner dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that from the CBDT circular, it is clear that for claiming deduction of bad debts u/s 36(1) (vii) r.w.s. 36(2) of the Act, the Assessee is only supposed to make the debt or part thereof as admissible u/s 36(1)(vii) of the Act, as written off as irrecoverable in its books of accounts for the previous year on fulfilling the conditions stipulated in sub section 2 of sub section 36(2) of the Act but not to establish the reason of irrecoverable of debt. Admittedly, in the Assessee’s case, the conditions as prescribed in the provisions of section 36(2) of the Act are fulfilled and the Assessee by producing the relevant documents has been able to establish the written off of the bad debt on account of interest, as irrecoverable in its books of accounts for the previous year, hence no addition as made by the AO and affirmed by the Ld. Commissioner, is sustainable.
