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2018 (5) TMI 1480 - AT - Income TaxDisallowance of bad debts due to failure of rental payments - disallowance of amount paid on out of court settlement by the assessee on behalf of the subsidiary company - set off and carry forward of unabsorbed depreciation- Held that:- assessee is a NBFC and was advancing loans to its customer as one of its objects - the decision of the assessee to write off ₹ 4. 71 crores was a commercial/business decision - The AO cannot question the business prudence of an assessee - thus the transaction is a business transaction and therefore loss suffered by the assessee has to be allowed as deduction u/s 36 - decided in favor of assessee. Amount paid on out of court settlement on behalf of subsidiary company - Held that:- assessee paid the amount on behalf of the subsidiary company and thus incurred an expenditure - assessee has not acquired any capital asset - relying upon the case of Madras Auto Services Private Ltd [1998 (8) TMI 1 - SUPREME COURT] - decided in favor of assessee Unabsorbed depreciation - Held that:- As per the decision of Gujarat High Court in General Motors India Pvt. Ltd. v. Deputy CIT reported in [2012 (8) TMI 714 - GUJARAT HIGH COURT] - any unabsorbed depreciation would be dealt with in accordance with the provisions of section 32(2) - thus the amount of business loss and unabsorbed depreciation to be carried forward for the set of against income of the subsequent years - decided in favor of assessee.
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