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2010 (3) TMI 853 - AT - Income TaxFinance charges in respect of hire purchase and lease transactions disallowed - difference in method of accounting - AO has accepted the accrual basis of accounting - Held that:- CIT(Appeals) has accepted the cash basis of accounting by following the case of Annamalai Finance Ltd. v. Addl. CIT which has been upheld even by the hon'ble jurisdictional High Court[2004 (10) TMI 51 - MADRAS High Court] by holding that the enabling clause in the finance agreement by itself between the assessee-company and its clients (customers) would not create any income. Against revenue. Long-term capital loss on account of sale of shares disallowed - Held that:- Disallowance of long-term capital gain/loss is not based on any solid/valid grounds. A commercial transaction between two separate legal entities, even if they belong to the same group, cannot be ignored - See McDowell & Co. Ltd. v. CTO [1985 (4) TMI 64 - SUPREME Court] & Azadi Bachao Andolan (2003 -TMI - 6130 - SUPREME Court) - confirm the impugned deletion Bad debts - assessee has submitted that as per section 36(1)(vii) of the Act the entire sum has been written off and conforms with the Reserve Bank of India directions issued in this regard - Held that:- As decided in CIT v. HCL Comnet Systems & Services Ltd. [2008 (9) TMI 18 - SUPREME COURT] provision made towards irrecoverability of the debt can’t be said to be a provision for liability - AO was not justified in adding back the provision for doubtful debts under clause (c) of the Explanation to Section 115JA. Revenue appeal dismissed.
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