Aditya Birla Power Company Limited Vs ACIT (ITAT Mumbai)
The undisputed position that emerges out of the above discussion is that the assessee undertook a project and incurred certain expenditure which was reimbursable to him along with development fees upon financial closure of the project. However, the project was ultimately aborted by the assessee and the management decided to write-off the stated expenditure in the books of account during the impugned AY. The said claim, in our opinion, is clearly not available to assessee in terms of Section 36(i)(vii) read with Section 36(2) since the amount written-off is in not in the nature of bad debts for the assessee, the income of which has been taken into account by the assessee. The stand of lower authority, to that extent, in our opinion, was correct.
Regarding assessee’s claim u/s 37(1) / 28, the assessee has placed reliance on certain judicial pronouncements to submit that the same was allowable as Business Loss. Our attention has also been drawn to the order of this Tribunal in assessee’s own case for AY 2003-04 wherein the aforesaid expenditure as claimed by the assessee in that year has been disallowed for want of matching principle and on the premise that the same could be allowed only upon financial closure of the project. We find out that the assessee was engaged in developing various projects and the project activities was the business of the assessee. Therefore, any loss incurred by the assessee on this count, being Business Loss for the assessee and part and parcel of the business activities being carried out by the assessee, was allowable to him in terms of Section 37(1) read with Section 28(1) provided the same was ascertained liability.
