Nature of write off of sundry advances for computation of income

Last updated: 09 October 2021

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Quick Summary

This Income Tax Appellate Tribunal case concerns whether sundry advances written off by M/s Matrix Cellular International Services Ltd. should be disallowed for tax purposes. The Tribunal has restored the matter to the Assessing Officer. The officer must verify if these written-off advances were already accounted for in previous years' income calculations. If confirmed, no disallowance will be made.

Court :
ITAT Delhi

Brief :
The present appeal has been preferred by the assessee against the order dated 26.09.2017 of the Ld. Commissioner of Income Tax (Appeals)-37, New Delhi, (hereinafter referred to ‘CIT(A)’) for the Assessment Year 2013-14.

Citation :
ITA No.7226/Del/2017

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI “E” BENCH: NEW DELHI
(THROUGH VIDEO CONFERENCING)
BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER
AND
SHRI SANJAY GARG, JUDICIAL MEMBER
ITA No.7226/Del/2017
Assessment Year : 2013-14

M/s Matrix Cellular
International Services
Ltd.,7-Khullar Farms,
Mandi Road, Mehrauli,
New Delhi-110030

PAN-AAECM5169M

The Addl. CIT,
Special Range-6,
C.R. Building,
New Delhi-110002

Appellant by Sh. A. K. Khanna, CA
Respondent by Sh. Gaurav Pundir, Sr. DR
Date of Hearing : 28.09.2021
Date of Pronouncement :01.10.2021

ORDER

1. A perusal of the grounds of appeal reveals that the assessee is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the Assessing Officer on account of disallowance made in respect of sundry advances written off of Rs.10,26,158/-.

2. The Ld. DR on the other hand, has relied upon the findings of the lower authorities. Considering the above submissions of the assessee, the matter is restored to the file of the Assessing Officer with a direction to verify the contention of the assessee that the sundry advances written off were taken into account in the year under consideration or in earlier years for computing the income of the assessee and if the above contention of the assessee is found correct, then no disallowance will made on this issue.

3. In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order was pronounced in the Open Court on 01/09/2021.

Please find attached the enclosed file for the full judgement

FAQ :

The appeal concerned the disallowance of Rs. 10,26,158/- made by the Assessing Officer for sundry advances that the company had written off.

The Assessing Officer made an addition to the company's income by disallowing the write-off of sundry advances.

The company contended that the sundry advances written off had already been taken into account in the computation of income, either in the current year or in earlier years.

The Tribunal restored the matter to the Assessing Officer to verify the company's contention regarding the accounting of the sundry advances.

If the Assessing Officer finds that the sundry advances were indeed accounted for in previous income computations, then no disallowance will be made on this issue.

The appeal has been allowed for statistical purposes, pending the verification by the Assessing Officer.