Advance Write-Off Allowed as Business Loss When Linked to Commercial Purpose: ITAT Delhi

Unison Hotels Pvt. Ltd. Vs ACIT (ITAT Delhi) In this appeal, the Tribunal examined whether advances written off by a hotel company were allowable as deductions, either as bad debts under section 36(1)(vii) or as business losses under sections 28 and 37(1) of the Income Tax Act. The assessee had written off three advances: ₹3.27 crore paid as security deposit for acquiring rights to renovate and operate a restaurant property, ₹1.50 crore advanced to an individual allegedly to secure fabric supply for hotel operations, and ₹11.06 lakh paid as earnest money deposit in a joint bid for natura...