Case Law Details
Genesis Color Pvt. Ltd. Vs DCIT (ITAT Delhi)
Conclusion: Advances rent during the course of opening of showroom were given in the course of business by assessee and for the purpose of commercial expediency. Therefore, forfeiture of the same by the concerned party had rightly claimed by assesseee as business loss.
Held: Assessee claimed Rs. 30,37,439/- on account of advances written off. The money was given as an advance rent during the course of business for opening of showrooms in various places. The Company was not able to open the show rooms as it could not procure requisite license for opening the same. The amount was forfeited by the concerned party and company had to written off such advances from its accounts. The expenditure was made in ordinary course of business and same was allowable u/s 28 as a trading loss even allowable u/s 37 as business loss. AO disallowed the advances of rent written off by the assessee which was sustained by CIT (A), was no dispute with regard to the fact that the advances were given through banking channel. It was held that in support of the claim that the amount was given for hiring of the premises for opening showroom, the correspondence exchanged between the parties was also filed before the authorities below. Revenue had not rebutted these evidences by placing any contrary material on records. Assessee filed sufficient evidences in support of the claim of hiring of commercial premises for opening of shop/showroom. Therefore, advances were given in the course of business by the assessee and for the purpose of commercial expediency. Assessee had rightly claimed it as business loss. Therefore, AO was directed to delete the addition.
FULL TEXT OF THE ORDER OF ITAT DELHI
These three appeals filed by the assessee and the Revenue pertaining to Assessment Years 2010-11 & 2011-12 are directed against the different orders of the Ld. CIT(A)-16, New Delhi, all dated 01.03.2017. Since identical grounds have been raised, all three appeals were taken up together for hearing and are being disposed off by way of consolidated order for the sake of brevity.
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