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2019 (9) TMI 1070 - AT - Income TaxDisallowance u/s 36(l)(vii) r.w.s. 36(2) - bad debts written off in the P & L account - CIT-A deleted the addition treating giving and taking of loans as normal business activity of the Assessee Company - HELD THAT:- Assessee apart from being a builder and developer is also engaged in the business of financing/money lending. CIT(A) has also given a finding to this effect. This is also supported by the fact that the loans were granted by the assessee in earlier years and the income there from has been offered to tax. When these loans are becoming irrecoverable the writing off of the same is eligible for deduction under section 36(2). We note that section 36 (2) posits that, in making any deduction for a bad debt or part thereof the following provisions shall apply. No such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof written of more often earlier previous year, or represents money lent in the ordinary course of business of banking or money lending which is carried on by the assessee. Writing off of sums which represent money lent in the ordinary course of business is allowed as deduction. AO has clearly erred in not considering the later part of the aforesaid section. He is clearly into error in holding that for writing off of money lent in ordinary course of business the allowance/deduction can be allowed only if the sum has been computed as income in the earlier assessment year.- Decided against revenue.
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