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2012 (12) TMI 287 - AT - Income TaxClaim for Deduction – Whether the loss was incidental to the business of the assessee – Following the decision of Supreme court in case of [Ramachandar Shivnarayan v. CIT 1977 (11) TMI 2 – SUPREME COURT] Held that:- There must be direct and proximate connection and nexus must be between the business operation and the loss. In the present case Biotechnology was the purpose of the joint venture and forward integration of the business of the Assessee. Loan to Rubtech was investment in the capital of Biosift by Rubtech and that Rubtech was only a conduit and that it was the intention of the Assessee to invest in the capital of Biosift. If one were to proceed on the presumption that it was direct investment by Assessee in the capital of Biosift or a loan by the Assessee to Rubtech, the intention of the loan was to further the business interest of the Assessee and it was not a case of making investment with a view to get returns on such investments alone. - The investment in the capital of Biosift through a loan to Rubtech was a strategic investment with a view to enter field of biotechnology. - The fact that the venture did not take off as expected cannot be the basis to say that the loan by the Assessee to Rubtech for making investment in share capital of Biosift was not given without business interest in mind and was a mere investment for returns - Claim of the Assessee for deduction on account of loss on account of write of debts due by Rubtech has to be allowed - appeal of assessee is allowed.
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