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2018 (12) TMI 218 - KARNATAKA HIGH COURTAllowability of bad debts - carried forward and set off of loss as claimed by the assessee for the current assessment year - Revenue to contest the claim of the assessee even after passing of the order under Section 171 cannot be accepted - Held that:- The reason for entering into a family arrangement was with the hope to avoid all future disputes and litigations inter se between the members of the HUF. It is for this reason, the family arrangement was entered into. Therefore, it cannot be said that it is a colorable device and, therefore, the allowance should not be granted to the assessee. Both the authorities were right in holding that the amount claimed as bad debts to an extent of ₹ 6,03,08,000 should be treated as bad debts. Insofar as the Circular is concerned, we are of the view that the contentions of the Revenue cannot be accepted. The Circular clearly suggests that all pending appeals should be withdrawn. Merely relying on the first sentence of the Circular, that it pertains only with regard to filing of appeals on the issue of allowability of bad debts that are written off as irrecoverable cannot be accepted. The matter pertains to grant of disallowance with regard to bad debts. Hence, even insofar as the Circular is concerned, the appeal would have to be dismissed.
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