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2014 (2) TMI 179 - HC - Income TaxDeletion of disallowance on account of bad debts - Capital expenditure incurred Amount written off as business expenditure Advances made to sister concern Business loss OR business expenditure Held that:- The amounts in question were incurred by the assessee for the business expediency of the wholly owned subsidiary companies and when it is not disputed that there existed a business nexus between the assessee and the subsidiary companies, such expenditure should be treated as having been incurred for the purpose of business and directly relatable to the business of the assessee and thus eligible for deduction as business expenditure in their return of business income - The assessing authority and the Commissioner of Income-tax (Appeals) failed to appreciate the claim in proper perspective. The Tribunal has given a cogent and convincing reasons for reaching a finding of fact that expenditure incurred was directly relatable to the business of the assessee and should be allowed as business expenditure Relying upon T. R. F. Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] and Director of Income-tax (International Taxation) v. Oman International Bank [2009 (2) TMI 54 - BOMBAY HIGH COURT] - it was sufficient to record in the books as an irrevocable debt and not necessary for the assessee to establish that the debt had become irrevocable - as long as the debt established and written off in the books the assessee is not required to establish that it was a bona fide and not based on commercial wisdom or expediency Decided against Revenue. Slump sale - Whether slump sale could be treated as 'noncompete fee' and not liable to tax as a capital receipt Held that:- The decision in CIT v. Real Image P. Ltd [2012 (7) TMI 48 - MADRAS HIGH COURT] and Guffic Chem Pvt. Ltd. v. CIT [2011 (3) TMI 6 - Supreme Court] followed - the receipt in the nature of a non-compete fee should be treated only as a capital receipt and not a revenue receipt there was no infirmity in the order passed by the Tribunal in setting aside the order of the authorities below and treating the whole non-compete fee as capital receipt not liable to tax Decided against Revenue.
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