The ACIT, 1 (1), v. M/s Natraj Proteins Ltd,

ITA 297/IND/2008 | misc
Pronouncement Date: 24-02-2010 | Result: Dismissed

Appeal Details

RSA Number 29722714 RSA 2008
Assessee PAN AAACN8277H
Bench Indore
Appeal Number ITA 297/IND/2008
Duration Of Justice 1 year(s) 7 month(s) 17 day(s)
Appellant The ACIT, 1 (1),
Respondent M/s Natraj Proteins Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 24-02-2010
Date Of Final Hearing 02-02-2010
Next Hearing Date 02-02-2010
Assessment Year misc
Appeal Filed On 07-07-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JM AND SHRI V.K. GUPTA AM ITA NO.297/IND/2008 AY: 2003-04 ACIT-1(1) BHOPAL APPELLANT VS. M/S. NATRAJ PROTEINS LTD. GANDHI NAGAR ITARSI (PAN AAACN 8277 H) RESPONDENT CO NO.59/IND/2008 (ARISING OUT OF ITA NO.297/IND/2008) AY: 2003-04 M/S. NATRAJ PROTEINS LTD. GANDHI NAGAR ITARSI (PAN AAACN 8277 H) OBJECTOR VS. ACIT-1(1) BHOPAL RESPONDENT FOR DEPARTMENT : SMT. APARNA KARAN SR. DR FOR ASSESSEE : NONE ORDER PER V.K. GUPTA A.M. BOTH THE APPEAL & CROSS-OBJECTION FILED BY THE REVE NUE AND ASSESSEE RESPECTIVELY ARISE OUT OF ORDER OF THE LD. CIT(A)- I BHOPAL DATED 20.3.2008 FOR THE ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. 2 3. FIRST WE SHALL TAKE UP APPEAL OF REVENUE IN ITA NO.297/IND/2008. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE OF SERVICER OF NOTIC E HENCE WE PROCEED TO DECIDE THIS APPEAL AFTER HEARING THE LD. SR. AR AND MATERIAL ON RECORD . 4. GROUND NO.1 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.34 501/- MADE ON ACCOUNT OF DONATION IN CONTRAVENTION OF THE PROVISIONS OF SEC. 37(1) AS TH E ASSESSEE COULD NOT ESTABLISH THAT THE DONATION MADE HAD ANY DIRECT CON NECTION WITH THE BUSINESS OF THE ASSESSEE. 5. THE FACTS IN BRIEF ARE THAT THE AO IN THE COU RSE OF ASSESSMENT PROCEEDINGS FOUND THAT ASSESSEE HAD CLAIMED AN AMOUNT OF RS.34 501/- INCURRED ON ACCOUNT OF DONATIONS AS BUSINESS EXPENDITURE. HOWEVER THERE WAS NO BUSINES S CONNECTION INVOLVED IN THE INCURRENCE OF SUCH DONATIONS HENCE THE AO DISALLOWED THE SAM E. 6. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LD. CIT(A) WHEREIN THE DETAILS OF SUCH DONATION WERE SUBMITTED AND IT WAS SPECIFICALLY ARGUED THAT ASSESSEE WAS BASED AT SMALL TOWN WHERE THE RAW MATERIAL (SOYBEAN ) HAD TO BE PROCURED FROM NEARBY VILLAGES AND ASSESSEE HAD TO KEEP GOOD RELATIONS WI TH LABOUR AS WELL HENCE SUCH DONATIONS WERE MADE HAVING REGARD TO THE COMMERCIAL INTEREST AND BUSINESS NECESSITIES. THE LD. CIT(A) AGREEING WITH THE CONTENTIONS MADE BY THE ASSESSEE DELETED THE DISALLOWANCE. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE. I HAVE ALSO GONE THROUGH THE ORDER OF THE ASSESSING OFFICER. I FIND THAT THE ASSESSING OFFICER HAS SIMPLY MENTIONED THAT THERE IS NO BUSINESS CONNECTION INVO LVED AND THEREFORE THE SAME IS DISALLOWED. THE COUNSEL HAS MADE A REFERENC E OF THE ITAT MUMBAI BENCH IN THE CASE OF HINDUSTAN PETROLEUM CORPORATIO N V/S. DCIT REPORTED IN 96 ITD 186 (MUM). IN THIS DECISION THE APPELLATE T RIBUNAL AFTER RELYING ON THE DECISIONS REPORTED IN 223 ITR 101 (SC) 266 ITR 170 (MAD) AND SUPREME COURT DECISION REPORTED IN 38 ITR 601 (SC) HELD TH AT EVEN IF AN EXPENSE IS 3 INCURRED VOLUNTARILY IT MAY STILL BE CONSTRUED AS WHOLLY AND EXCLUSIVELY. JUST BECAUSE THE EXPENSES ARE VOLUNTARY IN NATURE AND ARE NOT FORCED ON THE ASSESSEE BY ANY STATUTORY OBLIGATION THESE EXPENSE S CANNOT CEASE TO BE BUSINESS EXPENDITURE. I ALSO FIND THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF MADRAS REFINERIES LIMITED 266 ITR 170 (SU PRA) HELD THAT MONIES SPENT BY THE ASSESSEE AS A GOOD CORPORATE CITIZEN AND TO EARN THE GOODWILL OF THE SOCIETY HELP CREATING AN ATMOSPHERE IN WHICH TH E ASSESSEE CAN SUCCEED IN A GREATER MEASURE WITH THE HELP OF SUCH GOODWILL. T HE MONIES SO SPENT THEREFORE ARE REQUIRED TO BE TREATED AS BUSINESS EX PENDITURE ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT. I FURTHER FIND THAT IN THE CASE OF HINDUSTAN PETROLEUM CORPORATION LIMITED (SUPRA) THERE IS ALS O A REFERENCE OF APEX COURT DECISION IN THE CASE OF CIT VS. CHANDULAL KES HAVLAL & CO. REPORTED IN 38 ITR 601 (SC) IN WHICH THE OBSERVATIONS ARE THAT THE SUM OF MONEY EXPENDED NOT WITH NECESSITY AND WITH A VIEW TO DIRE CT AND IMMEDIATE BENEFIT TO THE TRADE BUT VOLUNTARILY AND ON THE GROUNDS OF CO MMERCIAL EXPEDIENCY AND IN ORDER TO INDIRECTLY FACILITATE CARRYING ON OF T HE BUSINESS MAY YET TO BE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE TRADE. KEEPING ALL THESE FACTORS AND CONSIDERING THE NATURE OF EXPENSE S AND THE JUDICIAL GUIDELINES ON THE RELATED ISSUES I AM NOT INCLINED TO SUSTAIN THE DISALLOWANCE OF RS.34 501/- AND THEREFORE THE DISALLOWANCE IS HE REBY DELETED IN THE RESULT THE APPEAL IS ALLOWED. 7. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEF ORE US. THE LD. SR. AR PLACED STRONG RELIANCE ON THE ORDER OF THE AO. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE GENUINENE SS OF THE INCURRENCE OF SUCH EXPENDITURE IS IN NOT DISPUTE. IT IS ALSO NOTED THAT THE DONATIONS HAVE BEEN MADE IN SMALL DEMONITIONS TO THE LOCAL PARTIES WHICH IN TURN HELPS THE ASSESSEE IN CARRYING OF ITS BUSINESS OPERATIONS IN A SMOOTH MANNER. HAVING STATED SO WE ALSO FIND THAT THE LD. CIT(A) HAS ALSO EXAMINED THIS ISSUE IN DETAIL AND HAS ALSO DRAWN SUPPORT FROM VAR IOUS JUDICIAL DECISIONS AND WE ARE IN 4 AGREEMENT IN SUCH FINDINGS OF THE LD. CIT(A). ACCOR DINGLY WE DISMISS THIS GROUND OF THE REVENUE. 9. GROUND NO.2 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.1 019/- MA DE BY THE AO ON ACCOUNT OF CLAIMS WRITTEN OFF BY THE ASSESSEE EVEN THOUGH THE ASSESSEE COULD NOT SUBSTANTIVE ITS CLAIM INSPITE OF SPECIFIC QUERY RAI SED BY THE AO. 10. THE FACTS IN BRIEF ARE THAT ASSESSEE CLAIMED BAD DEBTS AT RS.1 019/- WHICH WERE DISALLOWED BY THE AO FOR WANT OF VERIFICATION. 11. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS SUBMITTED THAT NECESSARY DETAILS HAD BEEN FURNI SHED BEFORE THE AO AND ALSO SUCH AMOUNT REPRESENTED PETTY AMOUNT OF TRADE DEBTORS WHICH WER E ACTUALLY WRITTEN IN THE BOOKS OF ACCOUNT AS THE SAME WERE NOT RECOVERABLE. THE LD. CIT(A) HE LD THAT THE AOS OBSERVATION THAT NO DETAILS WERE FURNISHED WAS NOT CORRECT AND AS PER T HE DETAILS FURNISHED BY THE ASSESSEE SUCH CLAIM WAS FULLY ALLOWABLE. 12. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. THE LD. SR. AR PLACED STRONG RELIANCE ON THE ORDER OF THE AO WHEREAS THE LD. COU NSEL FOR THE ASSESSEE BESIDES PLACING RELIANCE ON THE SUBMISSION MADE BEFORE LD. CIT(A) P LACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 13. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES WE FIND NO MERIT IN THIS GROUND OF THE REVENUE HENCE THE SAME IS DISMISSED. 14. GROUND NO.3 READS AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.5 17 257/- MADE BY THE AO ON ACCOUNT OF BACK DATES WRITTEN OFF EVEN THOUGH NO SU PPORTING DOCUMENTS WERE FURNISHED BY THE ASSESSEE REGARDING THE EFFORTS TAK EN FOR RECOVERY OF THE DEBTS. 5 15. THE FACTS IN BRIEF ARE THAT ASSESSEE CLAIMED BAD DEBTS AT RS.5 17 257/- UNDER THE HEAD SELLING AND DISTRIBUTION EXPENSES. ON A QUERY FRO M THE AO THE ASSESSEE EXPLAINED THAT THESE AMOUNTS MOSTLY PERTAIN TO EARLIER YEARS AND A ROSE DUE TO DISPUTE REGARDING QUALITY DIFFERENCE OR RATE DIFFERENCE. IT WAS ALSO SUBMITTE D THAT SOME OF THE PARTIES WERE NOT TRACEABLE AND INSPITE OF BEST EFFORTS NO RECOVERY COULD BE M ADE. THE AO HOWEVER REJECTED THESE CLAIM OF THE ASSESSEE AND DISALLOWED THE IMPUGNED S UM. 16. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHEREIN DETAILED SUBMISSIONS WERE MADE BY FURNISHING PARTY- WISE DETAILS AND REASONS FOR NON- RECOVERY WHICH ARE REPRODUCED BY THE LD. CIT(A) AT PAGE 6 & 7 OF THE APPELLATE ORDER. THE ASSESSEE ALSO PLACED RELIANCE ON VARIOUS JUDICIAL D ECISIONS AS REGARD TO LEGAL POSITION IN SUPPORT OF ITS CLAIM. THE LD. CIT(A) DELETED THE DI SALLOWANCE SO MADE BY THE AO. THE RELEVANT FINDINGS OF THE LD. CIT(A) IS REPRODUCED A S UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. I HAVE ALSO GONE THROUGH THE VARIOUS CASE LAWS CITED. THESE GROUNDS ARE ON A DVANCES WRITTEN OFF AND BAD DEBTS WRITTEN OFF. HERE IT MAY BE NOTED THAT THE WRITE OFF MADE BY THE APPELLANT IS ON ACCOUNT OF ADVANCES AS WELL AS BAD DEBTS. THE CONCEPT OF WRITI NG OFF OF BAD DEBTS IS THAT ON MERCANTILE BASIS THOSE HAVE ALREADY SUFFERED TAX ES WHICH WERE WRITTEN OFF IN THE ACCOUNTS AS IRRECOVERABLE. IT MAY HOWEVER BE NOTED THAT BAD DEBTS AS WE DISCUSS HAVE A REVENUE NEXUS WHICH IS NOT TRUE WITH THE ADVANCES MADE THAT HAVE BECOME BAD AND TO BE WRITTEN OFF. BAD ADV ANCES WRITTEN OFF HAVE TO BE CHARGED TO CAPITAL ACCOUNT WHERE AS BAD DEBTS T O REVENUE ACCOUNT. IN VIEW OF THIS I AM UNABLE TO SUBSCRIBE FULLY TO THE HYPOT HESIS PUT FORTH BY THE AR THAT BOTH THE ADVANCES WRITTEN OFF AND BAD DEBTS WRITTEN OFF ARE ELIGIBLE FOR DEDUCTION IN COMPUTING THE TOTAL INCOME FOR THE YE AR. AS SPELT OUT ALREADY WHILE ADVANCES WRITTEN OFF ARE APPROPRIATION OF INC OME BAD DEBTS WRITTEN OFF IS A CHARGE ON INCOME I.E. ADVANCES WRITTEN OFF I S CHARGED TO CAPITAL ACCOUNT WHERE AS BAD DEBTS WRITTEN OFF IS CHARGED TO REVENU E ACCOUNT. THUS THE APPELLANT GETS FULL RELIEF OF BAD DEBTS WRITTEN OFF AT RS.5 17 257/- WHERE AS NO RELIEF OF RS.98 643/- ON ACCOUNT OF BAD ADVANCES WR ITTEN OFF. IN FACT ALL THE 6 CITATIONS ARE IN FAVOUR OF THE REVENUE RATHER THAN THE APPELLANT. IN THE CIRCUMSTANCES THE APPEAL ON THESE ADDITIONS IS PAR TLY ALLOWED. 17. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. THE LD. DR PLACED STRONG RELIANCE ON THE ORDER OF THE AO. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. SR. AR MATERIAL ON RECORD AND ORDERS OF AUTHORITIES BELOW. IT IS NO TED THAT ITEMS CLAIMED AS BAD DEBTS HAVE ALREADY BEEN CONSIDERED IN COMPUTING THE INCOME IN EARLIER PERIOD AND HAVE BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT IN THE YEAR UNDER CONSIDERA TION HENCE THE CONDITIONS OF SEC. 36(1)(VII) R.W. SEC. 36(2) ARE SATISFIED. FURTHER THERE IS NO DISPUTE REGARDING FACTUAL MATRIX AS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A). IN THIS VIEW OF THE MATTER WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITIO N. THUS THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 18. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. 19. NOW WE SHALL TAKE UP CO NO.59/IND/2008 FILED BY THE ASSESSEE. GROUND NO.1 READS AS UNDER: THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE DISALLOWANCE OF LOSS RS.1 61 500/- FOR THE SALE OF VEHICLE IS NOT JUSTIFIED AND THEREFORE THE SAME BE DIRECTED TO BE ALLOWED. 20. THE FACT IN BRIEF ARE THAT ASSESSEE CLAIMED A LOSS OF RS.1 61 500/- ON ACCOUNT OF SALE OF CAR. THE AO REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS OF PURCHASER WHICH THE ASSESSEE FAILED TO SUBMIT HOWEVER THE ASSESSEE SUBMITTED T HE AFFIDAVIT TO SUPPORT ITS CLAIM. THE ASSESSEE ALSO FAILED TO SUBMIT THE DETAILS FROM WHO M THE VEHICLE HAD BEEN PURCHASED. IN THIS BACKGROUND THE AO DISALLOWED SUCH LOSS. 21. ON APPEAL BY THE ASSESSEE THE LD. CIT(A) ALSO CONFIRMED THE ACTION OF THE AO FOR THE REASON THAT AFTER THE INTRODUCTION OF CONCEPT OF BL OCK ASSET NO SUCH LOSS COULD BE ALLOWED AS THE BLOCK HAD REMAINED IN EXISTENCE AND ACCORDINGLY THE DEPRECIATION ON THE REMAINING ASSET IN THAT BLOCK HAD TO BE COMPUTED AFTER REDUCING THE SALE CONSIDERATION. 7 22. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. LD. SR. AR NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT BLOCK OF ASSE TS WHEREIN SUCH CAR HAD BEEN INCORPORATED HAS NOT EXTINGUISHED DURING THE YEAR UNDER CONSIDER ATION HENCE NO SUCH LOSS CAN BE ALLOWED. IN THIS VIEW OF THE ORDER WE UPHOLD THE ACTION OF THE LD. CIT(A). THUS THIS GROUND OF THE CO OF THE ASSESSEE STANDS DISMISSED. 24. GROUND NO.2 READS AS UNDER: THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED AND NOT JUSTIFIED IN SUSTAINING DISALL OWANCE OF RS.98 643/-. THE SAID UNJUSTIFIED DISALLOWANCE BE KINDLY DELETED. 25. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WROT E OFF ADVANCES OF RS.98 643/- WHICH WERE DISALLOWED BY THE AO FOR WANT OF DETAILS. THE ASSES SEE IN APPEAL BEFORE LD. CIT(A) SUBMITTED THE DETAILS OF SUCH ADVANCES WHICH ARE RE PRODUCED HEREUNDER FOR THE SAKE OF REFERENCE: (A) WITH REGARD TO RS.2 640/- IT IS SUBMITTED THA T M.P. STATE MARKETING FEDERATION LTD. IS A GOVERNMENT BODY FROM WHOM THE ASSESSEE PURCHASES SOYABEEN WHICH IS A MAIN RAW MATERIAL OF THE ASSESS EE FOR MAKING OIL AND CAKE. FOR PURCHASE OF SOYABEEN ADVANCE PAYMENTS AR E MADE BY DEMAND DRAFTS AND AGAINST SUCH ADVANCE PAYMENTS; THE SEED IS SUPPLIED TO THE ASSESSEE FROM TIME TO TIME. THE ENCLOSED COPY OF THE LEDGER ACCOUNT OF THE SAID M.P. STATE MARKETING FEDERATION LTD IN THE BOOKS OF ASSE SSEE WOULD SHOW ON ITS DEBIT SIDE SUCH ADVANCE PAYMENTS AND THE CREDIT SID E SHOWS THE ENTRIES OF THE SOYABEEN PURCHASE BILLS AND OTHER CHARGES. THE ASSE SSEE SUBMITS THAT RS.2 640/- WERE NOT REFUNDED DUE TO SOME MISCELLANE OUS CHARGES AND THEREFORE SUCH AMOUNT IS WRITTEN OFF AND CLAIMED A S BUSINESS EXPENDITURE. (B) WITH REGARD TO RS.4 054 IT IS SUBMITTED THAT T O M/S. BALRAM SHUKLA ITARSI COAL ASH WAS SOLD IN THE YEAR 1999-00 FOR R S.4 054/- BUT THE AMOUNT WAS NOT RECOVERED FROM THE SAID PARTY THEREFORE I T WAS WRITTEN OFF IN THE 8 BOOKS OF ACCOUNT AND THE DEDUCTION WAS CLAIMED. THE COPY OF INVOICE AS RAISED IN FY 1999-00 FOR SALE OF COAL ASH IS ALSO ATTACHED . (C) WITH REGARD TO RS.36 161/- IT IS SUBMITTED THA T THE SAID AMOUNT WAS DUE FROM B.M. AGENCY ITARSI. THE COPY OF LEDGER AC COUNT OF THE SAID PARTY IN THE BOOKS OF ASSESSEE FOR FY 1995-96 TO FY 2002-03 (RELEVANT AY 2003-04) IS ATTACHED. IT IS SUBMITTED THAT FROM THIS PARTY THE ASSESSEE WAS PURCHASING STORES MATERIALS FOR THE CONSUMPTION IN THE SOYA PL ANT AND MAKING PAYMENTS AGAINST THE SAID PURCHASES. ADVANCE PAYMENTS WERE A LSO MADE AGAINST THE PURCHASES. HOWEVER DUE TO DISPUTE THE NON-ADJUSTED ADVANCE PAYMENTS WHICH AGGREGATED TO RS.36 161/- COULD NOT BE RECOVE RED FROM THE SAID PARTY AND THEREFORE WRITTEN OFF IN THE ACCOUNT BOOKS AN D CLAIMED AS BUSINESS EXPENDITURE. (D) WITH REGARD TO RS.54 400/- IT IS SUBMITTED THA T THE SAID AMOUNT WAS DUE FROM SOMAI TRADERS. COPY OF THE LEDGER ACCOUNT IS ATTACHED. AS MAY BE SEEN FROM THE LEDGER ACCOUNT AND THE ENCLOSED COPY OF INVOICE THAT UNDER BILL NO.09 DATED 17.8.2000 BARDANA WAS SOLD TO THE SAID PARTY FOR RS.54 400/- WHICH AMOUNT COULD NOT BE RECOVERED AND THEREFORE THE SAME WAS WRITTEN OFF AND CLAIMED AS A BUSINESS EXPENDITURE. 26. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 27. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. LD. SR. AR PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE ADVANCES WHICH HAVE BEEN GIVEN MAINLY COMPRISE OF ITEMS OF REVENUE NATURE FOR EXAMPLE A SUM OF RS.2 640/- IS IN CONNECTION WITH PURCHASE OF RAW MATERIAL. THE SUM OF RS.4 054/- IS AN OUTSTANDI NG SUM OF COAL ASH SOLD. THE OTHER SUM OF RS.36 161/- IS THE AMOUNT OF ADVANCE DUE FROM A PAR TY FROM WHOM THE ASSESSEE WAS PURCHASING STORES MATERIAL FOR CONSUMPTION IN THE M ANUFACTURING ACTIVITIES. THE REMAINING SUM IS ON ACCOUNT OF BARDANA SOLD TO A PARTY WHICH COULD NOT BE RECOVERED. THUS SOME OF THE 9 ITEMS ARE IN THE NATURE OF ADVANCE OR SOME OF THE I TEMS IN THE NATURE OF BAD DEBTS. BUT ALL ITEMS ARE OF REVENUE NATURE I.E. CONNECTED WITH THE MANUFACTURING ACTIVITIES OF THE ASSESSEE. HENCE IN OUR OPINION SUCH AMOUNTS ARE ALLOWABLE A S A BUSINESS LOSS U/S 28(1) OR AS BAD DEBTS. WE FURTHER FIND THAT LD. CIT(A) HAS NOT GIVE N ANY FINDING ON THIS ASPECT HENCE THE ORDER OF LD. CIT(A) CANNOT BE SAID TO BE CORRECT IN LAW. THUS TAKING INTO CONSIDERATION ENTIRE FACTS AND CIRCUMSTANCES WE ACCEPT THIS GROUND OF C O FILED BY THE ASSESSEE. 29. IN THE RESULT THE CO FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 30. TO SUM UP THE REVENUES APPEAL IS DISMISSED AN D ASSESSEES CO IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.2.2010. SD/- SD/- (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24.2.2010 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE