Case Number: ITA 1125/DEL/2020
Appellant: Matrix Cellular (International) Services Ltd., New Delhi
Respondent: Addl. CIT, Special Range-6, New Delhi
Assessment Year: 2015-16
Result: 2015-16
Case Filed On: 2020-03-19
Order Type: Final Tribunal Order
Date of Order: 2022-11-15
Pronounced On: 2022-11-15
This case involves Matrix Cellular (International) Services Ltd.’s appeal against the order of the Additional Commissioner of Income Tax (Addl. CIT), Special Range-6, New Delhi, pertaining to the assessment year 2015-16. The appeal was filed to contest the disallowance of a claim of bad debt/business loss amounting to Rs. 6,61,34,424/-.
Matrix Cellular (International) Services Ltd. filed its return of income for the assessment year 2015-16, declaring a taxable income of Rs. 21,28,68,520/- on 30.11.2015. The case was selected for scrutiny assessment, and the assessment under Section 143(3) of the Income-tax Act, 1961 (the Act), was framed on 26.10.2017. The Assessing Officer (AO) disallowed the claim of bad debt amounting to Rs. 6,61,34,424/-, adding it to the income of the assessee. As a result, the AO assessed the income at Rs. 27,90,02,940/-. The assessee appealed this decision before the Commissioner of Income Tax (Appeals) [CIT(A)], who sustained the addition. Consequently, the assessee brought the appeal to the Income Tax Appellate Tribunal (ITAT).
During the hearing on 20.10.2022, the appellant’s counsel argued that the authorities below failed to appreciate the facts correctly. The amount in question was given as an advance to meet various expenses relating to common facilities, such as office rent, electricity expenses, security expenses, office maintenance, salary, and general repair and maintenance. The appellant had entered into a Memorandum of Understanding (MoU) with Matrix Cellular Service Private Limited (MCSPL) for sharing these common facilities. Due to the termination of operations by MCSPL, an amount of INR 24,00,61,424/- became recoverable. The appellant recovered Rs. 1,73,92,700/- and wrote off Rs. 6,61,33,424/- as business loss against the provision created in the books of account.
The appellant contended that the amount written off should be allowed as a business loss under Section 28 of the Act, even if not allowable under Section 37. The CIT(A) failed to address this contention, leading to the appeal before the ITAT.
The ITAT noted that the CIT(A) had not addressed the appellant’s contention regarding the allowance of the claim as a business loss. The ITAT emphasized that if the taxpayer has a genuine claim, it needs to be allowed. The Tribunal directed the AO to allow the claim of business loss and delete the impugned addition.
The ITAT set aside the appellate order dated 18.02.2020 and remitted the issue to the AO for fresh consideration. The decision was pronounced in the open court on 15th November, 2022, by Narendra Kumar Billaiya, Accountant Member, and Kul Bharat, Judicial Member.
In conclusion, the appeal by Matrix Cellular (International) Services Ltd. was partly allowed. The case was remitted to the AO for fresh consideration, providing the assessee an opportunity to present its case based on the arguments and case laws cited.
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