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2012 (9) TMI 448 - HC - Income TaxDisallowance claim u/s. 36(1)(vii) r.w.s. 36(2) - AO invoked Section 14A for disallowance - assessee is a statutory corporation established under the SIDBI Act, 1989 - ITAT allowed the claim - Held that:- Section 14A of the Act would have no application to the present facts. It is not the revenue's case that bad debts have been incurred in relation to income which does not form part of the total income. Section 50 of SIDBI Act,1989 only exempts payment of income tax. It does not provide that such income of the SIDBI Bank will not be a part of the total income. As the assessee carried on business of banking and the amounts being written off as bad debts was the money lent in the ordinary course of its business. In terms of Section 36(1)(vii) the assessee is entitled to claim deduction of an amount of debt or part thereof written off as irrevocable in the year in which business claims that a particular debt is not recoverable. In this case, the respondent-assessee in the assessment year 2003-04 had taken a business decision that the amount of Rs.178/- crores had become bad and had to be written off as bad debt. This decision has to be of the business alone. However, this bad debt is allowable under Section 36(1)(vii) subject to satisfaction of Section 36(2)(i). In this case admittedly the respondent-assessee satisfies the same. The debt which is being written off represents money lent in its ordinary course of business of banking - no substantial question of law arises - in favour of assessee.
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