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2010 (12) TMI 284 - AT - Income TaxDisallowance – Set off and carry forward of loss - Book profit u/s 115JB – Applicability of section 43B – Addition - the assessee had advanced earnest deposit of Rs. 40 crores to Fortune Holdings in order to acquire rights in and for development of the said property as per the terms and conditions reduced in the Memorandum of agreement - since there has been no proper investigation of the matter nor has been any examination of genuineness of business loss claimed and in the interests of natural justice to mitigate the assessee’s grievance that it was not provided with proper or sufficient opportunity to put-forth its view on the issue either by the AO or by the CIT(A), the matter is remitted back on the file of the AO with a specific direction to look into the issue afresh, of course, by providing a reasonable opportunity to the assessee of being heard and to take appropriate action in accordance with the provisions of the Act Restructuring of loan - section 43B - Though actual cash did not change hands and the transaction was completed through book adjustments and that the interest liability had been paid off through giving the creditor a share in the owner ship of the assessee company and, thus, the assessee was entitled to claim the amount so paid off u/s 43B of the Act as a deduction and also in respect of applicability of restructuring expenses, even then if such expenditure were not to be termed ‘interest’, it would still be allowable as it had been incurred with the objective of squaring off a liability that was on revenue account and would thus acquire the character of a revenue expense. - decided in favor of assessee Irrecoverable interest on inter-corporate deposits - The Revenue’s claim that the assessee does not carry on the business of money lending and therefore, the principal of inter-corporate deposits written off was not allowable as business expenditure - the assessee had made efforts at its command to recover the dues from the above parties - Even with its best efforts to retrieve the balance interests from those parties went astray, the assessee had resorted to write off the balance amount as irrecoverable - Assessee had fulfilled the conditions laid down under the provisions of s.36(l)(vii) r.w. s.36(2) of the Act - Assessee's Appeal is treated as allowed
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