Income Tax Appellate Tribunal - Delhi
Dy. Cit vs Pasupati New Tec. Ltd. on 16 March, 2006
Equivalent citations: [2006]7SOT107(DELHI)
ORDER
Revenue had filed an appeal against the order dated 28-2-2001 of the Commissioner (Appeals)-XIV, New Delhi for assessment year 1997-98. On a difference of opinion between the learned Members of the Delhi Bench-D, New Delhi, who heard the appeals, the Hon'ble President has nominated me as a Third Member in regard to the following points of difference :-
(1) Whether, on the facts and in the circumstances of the case, Commissioner (Appeals) was justified in allowing the business loss of Rs. 53,57,968 during the assessment year 1997-98 on account of money advanced by the assessee to BWA without controverting the finding of assessing officer that the said sum had not become irrecoverable during the assessment year 1997-98.
(2) Whether for claiming deduction by way of business loss, the onus lies on the assessee to establish that the amount advanced by it has become irrecoverable.
I have heard the parties and perused the records.
2. The relevant facts briefly stated are that the assessee is in the business of manufacture and export of readymade garments. For assessment year 1997-98, return of income had been filed declaring income of Rs. 14,92,760. The assessing officer vide order dated 28-3-2000 completed the assessment under section 143(3) at an income of Rs. 75,27,175. The addition made by the assessing officer, inter alia, included the disallowance of bad debts claimed at Rs. 53,57,968. The addition of Rs. 6,76,444 was also made on account of foreign travelling expenses. Assessee appealed to the Commissioner (Appeals) and the latter deleted the addition of Rs. 6,76,444 out of the foreign travelling expenses. In regard to the disallowance of deduction on account of bad debts, the Commissioner (Appeals) vide para 5 of the impugned order agreed with the assessee's representative that after the amendment of section 36(1)(vii) with effect from 1-4-1989, there is no need for the assessee to establish that the debt has become bad in the previous year. The Commissioner (Appeals) has, however, referred to section 36(2)(i) to support the view that a bad debt could be allowed as a deduction under section 36(1)(vii) only if it had been taken into account in computing the income or represented money lent in the ordinary course of business of banking or money lending carried on by the assessee. The Commissioner (Appeals) has further held that the assessee was not in the business of banking or money lending and, therefore, the bad debt could be allowed as a deduction only if the same had been taken into account in computing the total income of the assessee. Further, relying upon the decision of the Supreme Court in the case of A.V. Thomas & Co. Ltd. v. CIT (1963) 48 ITR 67 (SC), the Commissioner (Appeals) held that debt can be allowed as a deduction if it was a part of net profit of any of the assessment years and that a debt must be one which if recovered would swell the profits of the assessee. The Commissioner (Appeals) further held that an advance given even for the purchase of raw materials cannot be treated as that includible in the profit and loss account or that which would be taken into account in computing the income or that which if recovered would swell the profits of the assessee. The Commissioner (Appeals) accordingly held that assessee is not eligible to deduction under section 36(1)(vii). However, the Commissioner (Appeals) has allowed the claim of the assessee as a trading loss on the authority of the following decisions
(i) CIT v. Abdul Rajak &Co. (1982) 136 ITR 825 (Guj.);
(ii) P. Satyanarayana v. CIT (1979) 116 ITR 803 (AP);
(iii) CIT v. Mysore Sugar Co. Ltd. (1962) 46 ITR 649 (SC).
The Commissioner (Appeals) has thus allowed the deduction of sum of Rs. 53,58,967 to the assessee as a business loss. Revenue is in appeal to the Tribunal against the decision of the Commissioner (Appeals).
3. As pointed out earlier, the appeal of the revenue was heard by the Delhi Bench-D, New Delhi. The learned Judicial Member had proposed an order dismissing the appeal of the revenue. The ground on which the appeal of the revenue was proposed to be dismissed indicated by the learned Judicial Member is that the assessee is entitled to deduction on account of business loss as the transactions between the assessee and M/s. Body Wrap Apparel were business transactions. The learned Accountant Member did not agree with the conclusion drawn by the learned Judicial Member for the reasons given in his dissenting order. It has been pointed out by the learned Accountant Member that if any assessee incurs a loss in the course of carrying on of business, the same will be permissible as a deduction under section 37. So, however, the learned Accountant Member has pointed out that the assessing officer had disallowed the deduction on the ground that the assessee had not established that the amount of Rs. 53,57,968 had become irrecoverable as at the end of the previous year. The learned Accountant Member has further pointed out that the Commissioner (Appeals) has allowed deduction to the assessee merely on the basis of legal angle without addressing himself to the finding of the assessing officer about the debt not having become irrecoverable. The learned Accountant Member has also held that there is no material available on record on the basis of which one could come to a reasonable belief that there was no hope for recovery of the amount of Rs. 53,57,968 from M/s. Body Wrap Apparel. He has accordingly decided the issue in favour of the revenue by restoring the disallowance deleted by the Commissioner (Appeals).
4. The learned Counsel for the assessee contended before me that the learned Accountant Member has admitted in para 6 of the proposed order that the transaction with M/s. Body Wrap Apparel was a business transaction and, therefore, the non-recovery of the same was a business loss. It was contended that when the goods supplied by M/s. Body Wrap Apparel were found defective, the agreement for the manufacture and supply of goods to the assessee was cancelled. It was pointed out that the money advanced to M/s. Body Wrap Apparel was only upto 27-9-2004 and thereafter no money was advanced to the said party. It was contended that the loss suffered by the assessee on account of rejection of goods sold by the assessee has been accepted by the Tribunal as a genuine loss. According to Id. Counsel, this supports the claim of the assessee about the genuineness of the business loss. It was further contended that if assessee is given an opportunity, it would not be difficult for them to establish the loss. When it was pointed out to the learned Counsel for the assessee that none of the Id. Members of the Division Bench have expressed the opinion of setting aside the issue for further opportunity to the assessee, it was pleaded that the Third Member can take a different view even not expressed by the learned Members of the Division Bench. It was accordingly pleaded that either the view of the learned Judicial Member may be concurred with or the matter remitted back to the assessing officer for the purpose of giving opportunity to the assessee to establish the genuineness of loss.
5. The learned Departmental Representative on the other hand, contended that the question before the Third Member is restricted to determine as to whether the Commissioner (Appeals) was justified in allowing the business loss of Rs. 53,57,968 without controverting the finding of the assessing officer that the said sum had not become irrecoverable during the assessment year 1997-98. It was also pointed out that the Third Member has also to consider as to whether the onus to establish that the amount had become irrecoverable was upon the assessee. It was also pointed out that the Third Member has also to consider as to whether the onus to establish that the amount had become irrecoverable during the assessment year 1997-98 has been discharged. The learned Departmental Representative further contended that the Commissioner (Appeals) has placed wrong interpretation on the amended provisions of section 36 to the effect that a mere claim of debt is permissible as a deduction. It was contended that deduction is permissible to the assessee on account of a bad debt and not of any debt written off in the books of account. It was contended that the previous year of the assessee ended on 31-3-1997. At the end of the previous year, the assessee had not filed any suit for recovery of a huge sum of Rs. 53,57,968. The suit had been filed by the assessee on 26-3-1998. According to the learned Departmental Representative the facts clearly establish that the assessee had a strong hope of recovery of the amount from the debtor.
6. My attention was also invited to the fact that the suit of the assessee was dismissed by the Hon'ble Delhi High Court on 13-1-2005 on account of non-appearance of the petitioner. It was contended that in order to get a deduction on account of business loss, the burden is upon the assessee to establish that it has suffered such loss and that the assessee had miserably failed to discharge the onus. My attention was invited to para 4 of the proposed order by the learned Accountant Member and also his findings in para 5.1 to the effect that specific query was made during the course of hearing of the appeal as to on what material the assessee had come to the conclusion at the end of the previous year that the advance paid to M/s. Body Wrap Apparel could not be recovered. The assessee had emphatically replied that there was no material on the basis of which the assessee could establish that he had no reasonable hope of recovering the amount from the party. According to the learned Departmental Representative the assessee has contested the issue on the legal principles and not on facts. The assessee had not contested before the Commissioner (Appeals) or before the Tribunal that the amount recoverable from M/s. Body Wrap Apparel was a bad debt. On the other hand, it was argued that mere writing off of the debt in the books of account was sufficient for grant of deduction under section 36. Reliance was placed on the decision of Supreme Court in the case of CIT v. Calcutta Agency Ltd. (1951) 19 ITR 191, and in the case of Associated Banking Corpn. of India Ltd. v. CIT (1956) 56 ITR 1, in support of the contention that when there is a reasonable possibility of recovery of a debt, the same cannot be termed a bad debt. It was further contended that the assessee had not produced any material to establish that there was no reasonable possibility of recovery of the amount from the party. The financial position of the party is not available on record. No correspondence has been produced between the assessee and the debtor.
7. The learned Departmental Representative also pointed out that the decision cited by the Judicial Member for allowance of business loss are distinguishable on facts insofar as in none of the cited cases was there any dispute about the incurring of the loss. According to the learned Departmental Representative in this case, there is a dispute about the incurring of loss. Mere debt, according to the learned Departmental Representative is not sufficient to establish that assessee had suffered a loss. It was further contended that that assessee had made recovery from the said party even at the end of March, 1996. The booking of flat in DLF had also been transferred in the name of the assessee, In the absence of any evidence placed on record, the assessing officer was justified in denying deduction to the assessee contended the learned Departmental Representative.
8. The Id. Counsel for the assessee in counter reply contended that assessee had filed a suit in the year 1998 as otherwise the limitation for filing of the suit would have been expired. Assessee has not been in a position to recover a penny till date from the said party. The booking of flat that was transferred in favour of the assessee was subsequently sold by the assessee and loss suffered in the said transaction. It was accordingly pleaded that the view expressed by the Id. Judicial Member may be concurred with and deduction allowed to the assessee.
9. I have given my careful consideration to the rival contentions. It is not disputed that assessee had claimed deduction on account of bad debt. The assessing officer denied the deduction for the following reasons as contained in the assessment order:-
"Now, the assessee has during the relevant assessment year claimed Rs. 53,57,965 as bad debts of M/s. Body Wrap Apparels. It is essential that to claim that a debt has become bad, it must actually have become bad and irrecoverable. But so long as there is any ray of hope left to recover a debt, however, dim it may be, and so long as a debt is in the process of realisation, it cannot be said that the debt has become irrecoverable G.C.G..A. (Punjab) Ltd. v. CIT (1997) 5 ITR 279, 307 (Lahore). Whether a debt is bad is a factual matter which depends on actual facts relevant thereto and not on the hopes, fears or judgment of the creditor himself R.S.PLP Chidambaram Chettair v. CIT(1967) 64 ITR 181 (Mad.).
In the case of the assessee coy, bad debts of Rs. 53,57,968 have been claimed and
(a) an agreement which was signed by the assessee company was terminated by the assessee company itself and the amount lying with M/s. Body Wrap Apparels was asked to be refunded.
(b) No other effort in the form of correspondence etc. has been filed by the assessee company for recovery of the amount.
(c) However, the assessee by such little effort has been able to recover Rs. 4.18 lakhs.
(d) The assessee company has also obtained a flat in DLF Qutab Enclave in lieu of this bad debt. However, the assessee company has claimed on Rs. 2,37,276 against the bad debts in lieu of this flat.
(e) The assessee company has also filed a summary suit in the High Court of Delhi, which has not been decided yet.
Hence, it cannot be said that the amount of Rs. 53,57,968 lying with M/s. Body Wrap Apparels is 'actually bad'. Although the assessee company has claimed only advance of Rs. 2,37,276 paid by Mrs. Poonam Singh a payment against bad debt, it should also be noted that in totality the assessee company now owns a flat in DLF Qutab Enclave, Gurgaon. The assessee company has also recovered a sum of Rs. 4.18 lakhs. The assessee has also filed a summary suit against M/s. Body Wrap Apparels in Delhi High Court which has not been decided yet. Taking all these factors into account, it cannot be said that the amount of Rs. 53,58,967 recoverable from M/s. Body Wrap Apparels is actually a 'bad' debt. Hence, it is disallowed."
It is evident from the finding of the assessing officer that the disallowance was made by the assessing officer on the ground that the debt claimed as a deduction was not a "bad debt". On appeal, the Commissioner (Appeals) vide para 5 of his order has expressed an opinion that after the amendment from 1-4-1989 in section 36(1)(vii), there is no need for the assessee to establish that the debt has become bad in the previous year. So, however, vide para 6 of his order, the Commissioner (Appeals) has expressed the opinion that the assessee does not satisfy the condition imposed under section 36(2)(i) of the Income Tax Act, 1961 insofar as the said amount had not been taken into account in computing the income nor did it represent money spent in the ordinary course of business of banking of money lending, if any, carried on by the assessee. Paras 5 and 6 of the order of the Commissioner (Appeals) being relevant are reproduced hereunder :
"5. Under section 36(1)(vii) of the Act, the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee is allowed deduction. I agree with the learned Authorised Representative that after the amendment with effect from 1-4-1989 there is no need for the assessee for this allowance to establish that the debt has become bad in the previous year. It is enough if the debt has been written off as irrecoverable in the accounts of the assessee. To that extent, I agree with the learned Authorised Representative that the bad debt could not have been disallowed. (Emphasis supplied)
6. However, under section 36(2)(i) such books of account debt can be allowed only if it has been taken into account in computing the income or represents money lent in the ordinary course of the business of banking or money lending which is carried on by the assessee. It is apparent that the appellant is not in the business of banking or money lending and, therefore, the bad debt can be allowed if it has been taken into account in computing the income. The question arises as to the meaning and scope of the expression 'taken into account in computing the income', whether it would mean that the sum must have appeared on the credit side of the Profit and Loss Account of the previous year or of any earlier years. My opinion is in affirmative. In other words, a bad debt can be claimed only if it is a part of net profit of any of these years. In A.V. Thomas & Co. Ltd. v. CIT(1963) 48 ITR 67 (SC) it was held that to be claimable as bad debt, debt must be one which if recovered would swell the profits of the assessee. An advance is given even for the purchase of raw materials cannot be treated as that includible in the Profit and Loss Account or that which would be taken into account in computing the income or that which if recovered would swell the profits of the assessee. Therefore, the loss claimed by the appellant may not be strictly allowable under section 36(1)(vii)."
It is evident from the finding of the Commissioner (Appeals) that the claim made by the assessee on account of bad debt was disallowed by the Commissioner (Appeals) in terms of section 36 of the Income Tax Act, 1961 notwithstanding the ground taken by the assessing officer for disallowance was totally different than the ground taken by the Commissioner (Appeals) for holding that the assessee was not entitled to deduction under section 36 of the Income Tax Act, 1961.
In paras 7 and 8 of the order, the Commissioner (Appeals) has referred to various decisions for coming to the conclusion that assessee would be entitled to deduction under section 37 on account of business loss. He has accordingly deleted the addition. Paras 7 and 8 of his order are reproduced hereunder :
"7 However, a bad debt may also be a trading loss which has a wider connotation. A bad debt may also be a trading loss but a trading loss need not necessarily be a bad debt. A bad debt may well be regarded as one eligible to deduction in the computation of the net profits to tax because such bad debt will have to be taken into account on the side of the debit which will reduce the net profits. It has been held, for example, that advances to the principals or another persons on his behalf can be claimed as trading loss because commission against employed for sale of principal's goods usually makes such advances CIT v. Abdul Razak & Co. (1982) 136 ITR 825 (Guj.). If the distributors fail to realize the money given by it to the producers for completion of the film, it can be claimed as business loss P. Satyanarayan v. CIT (1979) 116 ITR 803 (AP). In CIT v. Mysore Sugar Co. Ltd. (1962) 46 ITR 649 (SC) it was held that when an assessee carries on business in an agricultural produce, and he has to advance money to borrowers under an agreement to have the advances adjusted towards the price of the produce to be delivered to the assessee it amounts to making a forward arrangement for the next year's crops and paying an amount in advance out of the price; the losses incurred on such advances becoming irrecoverable arise out of the business and are allowable.
8. The issue can be looked at from another point of view also. Had the other party manufactured the goods and given it to the appellant, the price would have been claimed in the Profit and Loss Account in the year of receipt of goods though the actual payment in that year would have been adjusted or reduced by the amount of advance. The appellant would have thus claimed the full cost, even though the actual amount paid was less. In other words it can be said that the amount paid in advance was claimable subsequently in the year of receipt. When the other party fails to deliver the goods and also does not pay back the sum of advance, the advance does not cease to be claimable. It would represent the cost of the goods though not received and that would be allowable for arriving at the profit. Therefore, when such an advance is claimed as bad debt, what in effect is done is that the advance is treated as the cost of goods, On a careful consideration of all the facts and circumstances of the case, I am of the opinion that the sum of Rs. 53,58,967 has to be allowed to the appellant. The addition is deleted."
10. On appeal, the learned Accountant Member has concurred with the view of the Commissioner (Appeals) that deduction would be permissible to the assessee on account of business loss as all the transactions of the assessee with M/s. Body Wrap Apparel were business transactions. However, no opinion has been expressed about the allow ability of the claim under section 36. It is also noteworthy that the Commissioner (Appeals) has also not expressed any opinion about the finding of fact recorded by the assessing officer that the deduction claimed by the assessee was not of a "bad debt" but only of a debt. As stated earlier, the Commissioner (Appeals) had also expressed the view in para 5 of his order that it was not necessary for the assessee to establish that the debt had become bad in the previous year.
11. In my considered view, whether after the amendment in section 36(1)(vii) with effect from 1-4-1989 deduction is permissible to the assessee in respect of any debt written off in the books of account or of a bad debt is a matter on which there is divergence of opinion amongst various Benches of the Tribunal. In my considered view, the amendment in section 36(1)(vii) has given the option to the assessee to claim the deduction of a bad debt in any previous year notwithstanding the fact that the debt had become bad in any other preceding year(s). The view expressed by the learned Commissioner (Appeals) that after the amendment in section 36(1)(vii) with effect from 1-4-1989, deduction is permissible to the assessee in respect of any debt written off in the books of account and that it is not necessary for the assessee to establish that the debt had become bad is, in my view, not well founded. It may be pertinent to mention that before the amendment to section 36(1)(viii) with effect from 1-4-1989, the language used in the section was "a debt which is established to have become bad in the previous year". In view of the peculiar language used in section 36(1)(vii) some assessees were denied the deduction even in respect of bad debt on the ground that debt had not become bad in the previous year notwithstanding the fact that the assessee had established that the debt had become bad in any other year. The assessee has not been given the right to write off any debt in the books of account of the purpose of deduction under section 36(1)(viii) is amply demonstrated by the fact that the Legislature in its wisdom has used the words 'bad debts' in section 36(1)(vii) after the amendment on 1-4-1989 as against any debt which is actually established to have become bad in the previous year. In my view, a deduction would be admissible to the assessee under section 36(1)(vii) of a bad debt written off in the previous year and not of any debt which is written off by the assessee. The intention of the Legislature cannot be presumed to allow deduction of any debt written off by the assessee in the books of account but of a 'bad debt'. Therefore, the assessing officer would be justified in verifying the claim of deduction made by any assessee under section 36(1)(vii) as to whether the deduction is claimed of debt or of a bad debt. It would be for the assessee to establish that the deduction claimed is of 'bad debt' and not only a debt which may not be a bad debt.
12. However, in the present case, the Commissioner (Appeals) having rejected the claim of the assessee under section 36(1)(vii) on a different ground the controversy may not be relevant for the disposal of the appeal insofar as the Commissioner (Appeals) has agreed with the conclusion of the assessing officer that deduction under section 36(1)(vii) is not allowable to the assessee though on different grounds.
13. The next question that arises for consideration is as to whether the assessee is entitled to deduction under section 37 in respect of a business loss. As rightly argued by the learned Departmental Representative there is no difference of opinion amongst the learned Members of the Division Bench that if the assessee has incurred a business loss, the same is permissible as a deduction in computing the profits and gains of business under section 37 of the Act. -Therefore, it is unnecessary for me to refer to the various decisions which have rightly been cited by the learned Judicial Member in the proposed order to support the view that if the assessee has suffered a loss in the course of carrying on of his business, the same would be permissible as a deduction under section 37(1) of the Act. It is also not disputed that if the assessee has advanced money to any trader in the course of carrying on his business and the amount has become irrecoverable, the assessee would be entitled to deduction in respect of such irrecoverable amount as a business loss under section 37(1). This, however, is the accepted principle of law. However, I have no hesitation to admit my ignorance of any decision laying down the principle of law that the assessee would be entitled to deduction in respect of any amount which is advanced to the party in the course of business in respect of which there are reasonable hopes of recovery. The learned Judicial Member has perhaps inadvertently overlooked the finding of the assessing officer that deduction claimed by the assessee is not of a bad debt but of debt in respect of which no material was placed by the assessee that the same had become irrecoverable (This finding of fact recorded by the assessing officer has not been overruled either by the Commissioner (Appeals) or by the learned Judicial Member).
14. Though the Commissioner (Appeals) while considering the claim of deduction under section 36(1)(vii) held that it was not necessary for the assessee to establish that debt had become bad in the previous year, yet while considering the claim of the assessee under section 37, he has overlooked the fundamental aspect of the matter as to whether deduction could be allowed to the assessee under section 37 notwithstanding the finding of fact recorded by the assessing officer that no evidence was produced to establish that the debt had become bad in the previous year.
15. In my considered view, there may be a divergence of opinion in regard to interpretation of section 36(1)(vii) as to whether after 1-4-1989 it is necessary for the assessee to establish that the debt had become bad for the purpose of claiming deduction, yet there is no scope for two opinions in respect of deduction under section 37(1) insofar as a deduction would be permissible to the assessee of business loss and the burden to prove the loss is undoubtedly upon the assessee. What is permissible to the assessee as a deduction is of a business loss - whether the assessee has suffered a loss or not, is a question of fact which is to be decided on the basis of evidence on record. The burden to establish that the assessee has suffered a loss, in my view, is undoubtedly upon the assessee. Their Lordships of the Supreme Court in the case of Associated Banking Corpn. of India Ltd. (supra) have held, "So long as there is a reasonable prospect of recovery of the amounts embezzled, trading loss in a commercial sense cannot be deemed to have resulted."
In the case of Calcutta Agency Ltd. (supra). It was held that burden of proving necessary facts in order to entitle the assessee to claim exemption was on the assessee. It was further held that the assessee had not established the necessary facts and, therefore, the High Court was in error to apply the principles of law on the assumption of facts which were not proved.
In my considered view, the principle laid down by the Hon'ble Supreme Court in the aforementioned cases is aptly applicable to the present case. The learned Commissioner (Appeals) has applied the principle of law laid down in various decisions of the Hon'ble Supreme Court and other High Courts overlooking the necessity of establishment of factum of loss. The learned Judicial Member has also concurred with the view of the Commissioner (Appeals). The learned Accountant Member has also concurred with the legal opinion expeessed by the learned Judicial Member and I also concur with my learned brothers and the Commissioner (Appeals) that deduction is permissible to an assessee of a business loss under section 37(1). So, however, the necessity of establishing the loss cannot be overlooked. As pointed out earlier, the assessing officer has recorded a finding of fact that assessee has failed to establish that the debt was irrecoverable. In other words, the assessing officer has not accepted the factum of loss. The learned Accountant Member has also recorded a finding of fact that the assessee has no evidence to establish that it had suffered a loss in the previous year relevant to assessment year under appeal. Mere cancellation of agreement, in my view, was not sufficient to establish that assessee had suffered a loss. It is also relevant to point out that assessee had filed suit for recovery of the amount in December, 1998 though the amount has been written off in financial year 1996-97. Though, not filing of a suit for some time may not be conclusive for determining as to whether a debt had become bad or not, yet the conduct of the assessee would be a relevant factor for determining the issue. It is observed from the copy of order of the Hon'ble High Court passed on 13-1-2005 that assessee had not seriously pursued the matter in the court of law for the recovery of the amount in question. It has been observed by Their Lordships. 'There being no appearance on behalf of the plaintiff, the suit is dismissed for default. 'The assessee has not only failed to furnish evidence to establish that the debt had become bad for the purpose of deduction under section 37 but the necessary correspondence between the parties was also not placed on record. The assessee had recovered some amount by cheques and was given allotment of flat in Gurgaon by the debtor. What was the understanding between the assessee and the debtor has not been disclosed to the revenue or to the appellate authorities what are the reasons for not pursuing the suit for recovery is also shrouded with mystery. The claim of the assessce that it has suffered a loss is not supported by any evidence except that there was a debt outstanding against the party. The debt is not of a small amount but more than Rs. 50 lakhs. Mere statement that the amount has become bad, in my considered view, would not be enough for allowance of deduction under section 37. The request of the assessee that an opportunity may be given to establish that assessee has actually suffered a loss at this stage is too late in the day, more so in the light of finding of fact recorded by the learned Accountant Member that the Authorised Representative had submitted before the Division Bench that he has no evidence to prove that the amount had become irrecoverable at the time of write off. The assessee never sought this opportunity either before the Commissioner (Appeals) or before the Division Bench. I therefore, do not entertain such a request at this stage.
16. Taking the totality of facts and circumstances of this case into consideration, I hold that the Commissioner (Appeals) was not justified in allowing the deduction of Rs. 53,57,968 in assessment year 1997-98 on account of money advanced by the assessee to M/s. Body Wrap Apparel as business loss without controverting the finding of the assessing officer that the said sum had not become irrecoverable during the previous year relevant to assessment year 1997-98, also hold that it was for the assessee to establish that the amount advanced to M/s. Body Wrap Apparel had become irrecoverable in the previous year relevant to assessment year under appeal and accordingly, no deduction is permissible to the assessee in respect of the said amount.
17. The matter may now be placed before the regular Bench in announcing the decision in accordance with the majority opinion.