INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I”: NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3195/DEL/2017 Assessment Year: 2003-04 ITA No. 3196/DEL/2017 Assessment Year: 2004-05 Geodis Overseas Pvt.Ltd., Vs. Asstt. Commissioner of Building No.5,Tower B, Income Tax, 10^th Floor, DLF Cyber City, Company Circle- II(1), Phase III, Gurgaon Chennai-34 PIN: 122 002 PAN No. AAACC6168L (Appellant) (Respondent)

Assessee by: Shri Vishal Kalra, Adv. & Shri Kashish Gupta, AR Department by: Ms. Neeju Gupta, Sr. DR Date of Hearing: 21.07.2025 Date of pronouncement: 13.08.2025 O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER:

The assessee’s appeals are against common order dated 16.03.2017 of Learned Commissioner of Income-Tax (Appeals)-37, New Delhi (hereinafter referred as “the Ld. CIT(A)”) under Section 250 of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of orders dated 02.03.2006 and 18.12.2006 of the Assistant Commissioner of Income Tax, Company Circle- II(2), Chennai-34 (hereinafter referred as “Ld. AO") for the Act for assessment year 2003-04 and 2004-05 respectively.

2. Both the appeals involve similar facts, grounds and issues. So, both were heard together and for sake of convenience.

3. Brief facts of ITA No.3195/Del/2017 are that assessee company is carrying on business in providing international freight forwarding services to various customers. For the assessment year 2003-04, it filed a return on 01.12.2003 admitting a loss of Rs.6,63,51,190/-. The case was taken up for scrutiny. In response to notices under Sections 143(2) and 142(1) of the Act, Shri D.C.Gupta, Sr. Manager (Finance & Accounts) of the company appeared and filed details.

4. The assessee had international transactions exceeding Rs.5 crores with its associated enterprises. Hence the case was referred to the Transfer Pricing Officer under section 92CA(1) of the Act. The Transfer Pricing Officer passed order under section 92CA(3) on 22-02-2006 wherein he determined an adjustment of Rs.2,23,96,778/- to be made to the value of international transactions entered into by the assessee. Hence, a sum of Rs.2,23,96,778/- is reduced from the loss shown by the assessee.

5. The assessee has claimed a sum of Rs.23,64,550/- as interest on working capital loan. The assessee has availed cash credit facility of Rs.20 million with Credit Lyonasis Bank carrying interest at 13% per annum. Against this loan, the assessee had to receive a sum of Rs.1,35,18,142/-from its own overseas affiliates of Geodis Group and Rs.4,60,639/- was outstanding for more than 6 months. The total foreign currency debt stood at Rs.1.54 crores at the close of the year. Though huge amounts are outstanding from the associate concerns of the assessee on the billed amounts, the assessee was not charging any interest on such belated payments. On the contrary the assessee was paying 13% interest on cash, credit loan. On the above facts it can reasonably be inferred that the payment of interest at 13% on the amount outstanding of Rs.1,35,18,142/-from the associate concerns is not justified and cannot be considered as a reasonable expenditure incurred by the assessee especially when the assessee was not charging interest on the overdue outstanding due from its associated concerns. Therefore disallow 13% interest on the outstanding dues of Rs.1.35 crores as not an admissible deduction. The disallowance works out to Rs. 17,57,358/-.

6. Assessee has claimed a sum of Rs. 1,05,50,624/- as provision for doubtful debts and further claimed a sum of Rs.1,90,57,789/- as bad debts written off which were disallowed. The disallowance works out to be Rs.1,12,76,967/-.

7. The bad debts claimed also included write off of staff advances of Rs.1,47,659/- .To allow a claim of bad debts, one of the conditions laid down in sections 36(2) of the Act is that the debt should have been taken into account while computing the income of the assessee. The staff advances are n