The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the AO for a fresh examination concerning the write-off of loans amounting to Rs. 29.52 crore advanced by the assessee to its overseas associated enterprise ( AE ), Titan International Holdings BV (TIHBV) due to additional evidence brought by the assessee.
There were 3 grounds raised by TIitan in this case and one of them was with regard to the denial of the assessee’s claim under Sections 37 and 28(i) of the Income Tax Act, 1961, for writing off these advances by the assessing officer ( AO ).
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It was contended by the assessee that the foreign currency loans were extended to TIHBV for equity investments in overseas companies and sundry expenses and losses incurred by these overseas entities rendered the advances irrecoverable, which resulted in a write-off.
The Departmental Representative ( DR ) argued that the case was identical to the assessee’s own case for the assessment year ( AY ) 2008-09, where the Tribunal upheld a similar disallowance.
Upon review, the Tribunal referred to its earlier decision in ITA No. 2239/Chny/2012, dated 9-9-2022, involving the same parties. In that case, the Tribunal had disallowed a similar claim for the write-off of Rs. 38.15 crore advanced to TIHBV, stating that the loans were of a capital nature, utilized for subscribing to preference shares or other capital purposes.
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In the present appeal, the assessee sought to distinguish the earlier decision by presenting additional evidence under Rule 29 of the ITAT Rules. These new documents, the assessee argued, were important in proving that the advances were trade-related and incurred in the course of business. It was contended that their non-production earlier was unintentional.
The ITAT remitted the disallowance of loans written off by the assessee to TIHBV back to the AO for fresh adjudication, directing a detailed reassessment in accordance with the law and a speaking order.
The ITAT, comprising SS Viswanethra Ravi ( Judicial Member ) and Amitabh Shukla ( Accountant Member ) remanded the matter to the AO for a fresh examination.
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