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2016 (9) TMI 590 - AT - Income TaxDisallowances of bad-debts and other expenses - application of explanation 1 to section 37 (1) - assessee is a NRI, citizen of USA and claimed to have carried on money lending as business activity in India - Held that:- We find merit in the contentions of the ld. DR. As observed that:- (1) The assessee himself offered the interest from private loans under the head “income from other sources”. The assessee having filed the return and not filed the revised returns, the Assessing Officer while accepting his income has acted perfectly in accordance with law; (2) The assessee’s contention that it was into illegal money lending business apart from being unbelievable is highly deplorable as a US citizen cannot be supposed to violate Indian Laws, i.e., Gujarat Money-Lenders Act and FEMA regulations. The Assessing Officer has been more than reasonable in not intimating these facts to concerned authorities; otherwise, the assessee would have been in deep trouble. (3) Assuming the assessee was into illegal money lending business then also in view of the Explanation 1 to Section 37, the assessee’s business being an offence and prohibited by law, the expenditure cannot be allowed. In view of the above, I have no hesitation to uphold the orders of the authorities below. - Decided against assessee.
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