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ITO, Ward 8(2), New Delhi. Vs. Showtime Events India (P) Ltd., 52B, Okhla Industrial Estate, Phase-III, Okhla, New Delhi.
April, 10th 2015
         IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCHES : G : NEW DELHI

    BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM

                        ITA No.5522/Del/2013
                       Assessment Year : 2010-11

ITO,                               Vs. Showtime Events India (P) Ltd.,
Ward 8(2),                             52B, Okhla Industrial Estate,
New Delhi.                             Phase-III, Okhla,
                                       New Delhi.

                                           PAN: AABCS7892N

                          CO No.116/Del/2014
                        (ITA No.5522/Del/2013)
                       Assessment Year : 2010-11

Showtime Events India (P) Ltd.,       Vs.     ITO,
52B, Okhla Industrial Estate,                 Ward 8(2),
Phase-III, Okhla,                             New Delhi.
New Delhi.

PAN: AABCS7892N

                                                 (Respondent)
 (Appellant)
               Assessee By     :    Shri Sunil K. Sharma, FCA
               Department By   :    Shri B.R.R. Kumar, Sr. DR

         Date of Hearing               :     08.04.2015
         Date of Pronouncement         :        .04.2015
                                                          ITA No.5522/Del/2013
                                                            CO No.116/Del/2014

                                ORDER
PER R.S. SYAL, AM:
     This appeal by the Revenue and the Cross Objection by the

assessee arise out of the order passed by the CIT(A) on 17.7.2013 in

relation to the assessment year 2010-11.

2.   The first ground of the Revenue's appeal and the only ground of

the assessee's Cross objection is in respect of disallowance on account

of Consultancy charge paid to the related persons made u/s 40A(2)(b) of

the Income-tax Act, 1961 (hereinafter also called `the Act').

3.   The facts apropos this ground are that the assessee paid a sum of

Rs.18 lac (sic. Rs.25 lac) as consultancy charges to Ms. Jean Menezes,

wife of one of the directors. On being called upon to explain as to why

this amount be not disallowed u/s 40A(2)(b), the assessee submitted a

copy of agreement by which consultancy charges were fixed at

Rs.1,50,000/- per month payable to Ms. Jean Menezes. The AO did not

find the amount paid to Ms. Jean Menezes as reasonable and,

accordingly, disallowed a sum of Rs.13 lac. The ld. CIT(A) reduced the





                                    2
                                                         ITA No.5522/Del/2013
                                                           CO No.116/Del/2014

disallowance to Rs.9 lac, thereby allowing relief of Rs.4 lac. Both the

sides are in appeal against the impugned order to the extent it is

prejudicial to their respective interests.

4.    After considering the rival submissions and perusing the relevant

material on record, it is observed from para 7.3 of the impugned order

that the assessee had a fleet of 30 persons working in the company as

Consultants/retainers and a majority of them were paid less than Rs.5 lac

per annum. The ld. CIT(A) has held that the services rendered by Ms.

Jean Menezes were mainly for decoration and arranging of gift items.

These recordings have not been controverted by the either side.

Considering the totality of facts and circumstances of the instant case,

we are satisfied that the ld. CIT(A) was justified in restricting the

addition to Rs. 9 lac. No interference is, therefore, warranted in the

impugned order on this score. The grounds taken by the assessee as well

as the Revenue stand dismissed.

5.    The second ground of the Revenue's appeal is against the deletion

of addition of Rs.21,60,144/- made by the AO on account of bad debts.

                                       3
                                                        ITA No.5522/Del/2013
                                                          CO No.116/Del/2014

Briefly stated, the facts of this ground are that the assessee claimed

deduction for a sum of Rs.21,60,144/- as bad debt written off. The AO

made disallowance for the said sum on the ground that the assessee

could not produce any evidence or details about the efforts made for the

recovery the debts. The ld. CIT(A) overturned the assessment order on

this issue.

6.    We have heard the rival submissions and perused the relevant

material on record. There is no dispute on the fact that the assessee

wrote off the amount of bad debts in its books of account. The AO

disallowed the amount simply for the reason that the assessee could not

point out any efforts made for the recovery of the amount.             The

otherwise deductibility of the amount of bad debt was not objected to.

The Hon'ble Supreme Court in the case of T.R.F. Ltd. Vs. CIT (2010)

323 ITR 397 (SC) has held that after 1.4.1989, the assessee is not

required to establish that the debt became bad in the previous year

relevant to the assessment year under consideration. A simple write off

of the bad debt is sufficient to grant deduction. In view of the direct


                                   4
                                                             ITA No.5522/Del/2013
                                                               CO No.116/Del/2014

judgment of the Hon'ble Supreme Court on this issue, we are convinced

that the ld. CIT(A) was justified in deleting this addition. This ground

fails.

7.       The last effective ground is against the deletion of disallowance of

Rs.9,58,407/- made by the AO on account of adjustment of brought

forward business losses. The assessee claimed adjustment of brought

forward business loss of Rs.9.58 lac. The AO, on a perusal of tax audit

report, observed that the auditors mentioned `Not applicable' against

column no. 25 of Form no. 3CD. He, therefore, did not allow the credit

for the brought forward loss. The ld. CIT(A) overturned the assessment

order on this issue.




8.       After considering the rival submissions and perusing the relevant

material on record, we find that the assessee gave complete details of

brought forward loss in its income-tax return and also claimed

adjustment on account of such brought forward losses, etc. Simply on

the basis of a column of the tax audit report, not properly filled by the

auditor, the AO ought not to have rejected the claim when there was

                                       5
                                                             ITA No.5522/Del/2013
                                                               CO No.116/Del/2014

sufficient material on record to indicate that there was, in fact, a brought

forward business loss to this extent.          We, therefore, approve the

impugned order on this issue.

9.        In the result, the appeal of the Revenue and the Cross Objection of

the assessee stand dismissed.

          The order pronounced in the open court on 09.04.2015.

               Sd/-                                         Sd/-

        [C.M. GARG]                                [R.S. SYAL]
     JUDICIAL MEMBER                           ACCOUNTANT MEMBER

Dated, 09th April, 2015.
dk
Copy forwarded to:
     1.   Appellant
     2.   Respondent
     3.   CIT
     4.   CIT (A)
     5.   DR, ITAT

                                                   AR, ITAT, NEW DELHI.




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