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2012 (3) TMI 325 - HC - Income TaxClaim of bad debt - Business or Capital loss - In the assessment order dated 29th August, 2006, the Assessing Officer disallowed bad debt of Rs.44,28,000/- on the ground that provisions of Section 36(1)(vii) read with Section 36(2) of the Act were not satisfied as the amount had not been taken into account in computing income of the earlier years - It is not in dispute that the assessee is also in the business of constructing and developing buildings - The amount of Rs.44,28,000/- receivable from M/s. Gulmohar Estate Ltd. paid towards purchase of flats were shown under the head “loans and advances” in the balance sheet as on 31.03.1991 - It is also an admitted position that the possession of the fats agreed to be purchased by the assessee was not given to the assessee and, thus, the transfer of flats within the meaning of Income Tax Act was not completed - the transaction to purchase property from M/s. Gulmohar Estate Ltd. was related or incidental to the assessee’s business. After taking into account the intention of the assessee, it is well settled that it is the intention of the assessee which would matter in deciding as to whether the property purchased were intended for carrying on business or to hold it as an investment coupled with the line of the business carried on by the assessee - Decided in favor of the assessee
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