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2016 (3) TMI 318 - AT - Income TaxAddition made on account of bad debt - under section 36(2) [section 36(1)(vii) – SIC] or as business loss under section 28 - Held that:- if at all any loss incurred by the partner of the firm Mr. Khadeer Ahmed towards any transaction, then, he has to bear the loss and not by the assessee firm. General authorization given in the partnership deed to carry out “any other activity” is no longer res integra in the absence of specific authorization is required in acquisition of capital assset when lakhs of rupees involved. So much so, when lakhs of rupees of public are involved, it is the duty of the assessee to get legal entity before entering into any transaction for acquisition of any property. It is a layman statement that the assessee has committed a mistake, out of which, it has incurred the loss, which cannot be accepted in the present case. Since there is no iota of evidence that the assessee firm was involved in the above transaction having paid advance for the purpose of purchase of land, it cannot be said that any loss incurred in the course of business is a business loss or business expenditure. It is nothing but the assessee is trying to enjoy the benefit of section 36(1)(vii) of the Act through back door, which is not permissible under law. As per agreement for sale, it is only a money diversion from the accounts of MAX VALUE HOUSING to purchase the land by the individual Mr. M. Khadeer Ahmed and not for the assessee firm. Therefore, any loss incurred by the individual partner, he has to bear the same in view of the terms of partnership deed, so agreed upon by the partners of firm while executing the partnership deed. Thus, the claim has no locus standi, as stated to have been a business loss of the assessee firm. Under the above facts and circumstances, we reverse the order of the ld. CIT(A) and restore that of the Assessing Officer. - Decided in favour of revenue
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