The Income Tax Appellate Tribunal (ITAT), Chennai bench ruled that the short payment of invoices would be treated as a business loss if the claim is not verified with precise invoices.
The taxpayer, M/s India Pistons ltd availed the business loss for the amount of the cost difference/ discounts deducted. It was indeed mentioned that it was a normal exercise of any government transport undertaking to deduct the amount via invoices as the volume discounts or turnover discounts during the time of payments release.
Assisting the taxpayer it submitted the ledger extract of the customers in which the short payment was incurred and finally wrote off that as poor debts. Thus AO has eliminated the avail holding in which the taxpayer can not furnish information like copies of the invoices to prove the claim concerning the claim of discounts and any resemblance to mentioned that the government enactment avail discounts upon invoices that are being raised via the taxpayer.
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The bench comprising Shri Mahavir Singh, Vice President, and Shri Manoj Kumar Aggarwal, Accountant Member, “The same is evident from the ledger extract furnished by the assessee. Undisputedly, these undertakings are the customer of the assessee and the shortfall of the amount so received by the assessee has been claimed as bad debts/discounts. In our considered opinion, to claim the same, it was not necessary for the assessee to map each of the amounts against particular invoices. It was sufficient to show that there was a shortfall in receipt of the amount against the invoices. This fact has already been established by the assessee. Therefore, the expenditure is clearly allowable as business loss,” the Tribunal stated.
