Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (11) TMI 672 - AT - Income TaxBad debts claimed u/s. 36(1)(vii) - Assessee has advanced a sum of Rs.30.00 lakhs to another public limited company in the financial year 1996-97. According to the assessee, it has accounted for interest income arising from the above said advance fom financial year 1996-97 to the financial year 2005-06 and offered the same as business income. The aggregate amount of interest so offered works out to Rs.23,76,274/-. The contention of the assessee is that the bad debt claim of Rs.30.00 lakhs is allowance u/s 36(1)(vii) of the Act, since it has advanced the said amount of Rs. 30 lakhs in the regular course of its business as required u/s 36(2)(i) of the Act – Held that:- Assessee has not furnished any material to show that the amount of Rs. 30.00 lakhs was advanced in the regular course of business activity of lending money. The agreement, if any, entered between the assessee company and M/s Peermade Tea Company Ltd was not furnished to prove that it was a loan transaction. Assessee has simply placed reliance on Clause 22 of the object clause to contend that it is authorised by Memorandum of Association to carry on money lending activity. However, the Tribunal in the case of Poysha Oxygen (P) Ltd. [2007 (12) TMI 304 - ITAT DELHI] has held that the object clauses mentioned in the Memorandum of Association are not relevant for considering whether the activity undertaken by the limited company amounts to business activity or not - In the instant case, as stated earlier, no material was placed before us to show that the amount of Rs. 30.00 lakhs was advanced with the intention of lending money in the ordinary course of business and not as investment. The assessee has also not shown that he was carrying on this kind of transactions repeatedly. Hence, in the facts and circumstances of the case, the condition laid down u/s. 36(2)(i) has not been satisfied by the assessee in this regard - Decided against the Assessee. Bad debt claim of interest amount of Rs. 23,76,274/- - The contention of the assessee is that it has accounted for the accrued interest in all the years and offered the same for taxation – Held that:- This aspect has not been examined by the tax authorities. They have rejected the claim of the assessee only for the reason that the assessee could not substantiate that the interest amount was offered for tax in the earlier years. Since the assessee has filed the copies of the interest received account for various years, this matter requires fresh examination at the end of the Assessing Officer – Decided partly in favor of Assessee.
|