Short-Payment of Invoices can be treated as Business Loss even If Claim is not substantiated with Specific Invoices: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the short payment of invoices can be treated as business loss even if the claim is not substantiated with specific invoices.

The assessee, M/s. India Pistons Ltd claimed business loss in respect of the amount of price difference / discounts deducted by the Government undertakings which were written off as bad debts since they were not recoverable though they were in the nature of discounts. It was also submitted that it was normal practice of any government transport undertaking to deduct amounts from invoices as volume discounts / turnover discounts at the time of releasing the payments. In support, the assessee submitted ledger extract of the customers wherein short-payment was made and finally wrote-off the same as bad-debts. However, the AO rejected the claim holding that the assessee could not produce any details such as copies of invoices to prove the claim relating to the claim of discounts and any correspondence to show that the Government undertaking claimed discounts on the invoices raised by the assessee.

The bench comprising Shri Mahavir Singh, Vice President and Shri Manoj Kumar Aggarwal, Accountant Member observed that the undisputed position that emerges is that the assessee has received short-payment against invoices from various transport undertakings.

“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 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 shortfall in receipt of amount against the invoices. This fact has already been established by the assessee. Therefore, the expenditure is clearly allowable as business loss,” the Tribunal said.

Shri R. Vijayaraghavan (Advocate) appeared for the assessee.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.