The Income Tax Appellate Tribunal’s Chennai bench has held in the case of Repute Logistics Pvt. Ltd. vs. ITO that VAT Credit which has lapsed in the hand of the assessee cannot be allowed as a deduction.
- Since the input VAT Credit had lapsed, it had been written off in the books of account and hence should be allowed as a deduction under the head of bad debt.
- Also, the same should be allowed as a business loss u/s 37 of the Income Tax Act.
- The Tribunal rejected both the contentions of the assessee, holding that the lapsed credit could not be allowed as a bad debt deduction since the condition precedent that the same should have formed part of the income in the earlier years was not satisfied in the present case.
- The Tribunal also ruled that the assessee had not discharged the onus to show that the claim had lapsed during the previous year relevant to the assessment year, and hence the same could not be allowed as a business loss.