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2019 (11) TMI 863 - AT - Income TaxAddition on account of bad debts claimed in computation of income - assessee is NBFC registered with RBI under the category of investment company and the loan advance to M/s. VTL was not in the ordinary course of business - CIT(A) deleted the disallowance by accepting the additional evidence - HELD THAT:- We find the Hon'ble Delhi High Court in the case of Global Capital Ltd. [2007 (5) TMI 235 - DELHI HIGH COURT] as held that under the provisions of section 36(1)(vii) of the IT Act, as amended w.e.f. 1st April, 1989, the assessee is not required to establish that the concerned debt has actually become bad in the relevant year for the purpose of claiming deduction under this section and the only requirement for claiming the deduction is that the assessee has to write off the relevant debt in its books of account. The various decisions relied on by the ld. DR are distinguishable and not applicable to the facts of the present case in view of the decision of the Hon'ble Supreme Court in TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] and the binding decisions of the jurisdictional High Court cited supra. In view of the above discussion and in view of the detailed reasoning given by the ld.CIT(A) on this issue, we find no infirmity in the order of the CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. Addition being the advance given to Mrs. Anuradha Shyam Chandani which was written off as bad debt on its forfeiture by the party during the year - claim of the appellant if not allowable as bad debt u/s 36(1)(vii), is allowable as business/trading loss under section 37(1 )/28 - HELD THAT:- CIT(A) upheld the action of the Assessing Officer on the ground that the advance given by the assessee for purchase of property which was later written off is not allowable under the provisions of section 36(1)(iii) as bad debt as the same is not a trading debt which was taken as income in earlier years or money advanced in the ordinary course of business of money lending, hence, also not in the ordinary course of business. It is the submission of the assessee that in view of the various decisions cited by him, even if the same is not treated as bad debt, the same should be allowed as business loss. It is an admitted fact that the assessee does not fulfill the conditions prescribed u/s 36(1)(vii) or 36(2) so as to claim the amount as bad debt. It is the alternative contention of the assessee that the same should be allowed as a business loss. However, the assessee has to prove before the Assessing Officer that the amount can be allowed as a business loss. We deem it proper to restore this issue to the file of the Assessing Officer with a direction to grant an opportunity to the assessee to substantiate its claim that it fulfills the conditions required for allowing the above amount of ₹ 1 crore as business loss. Disallowance u/s 14A - HELD THAT:- As held by the Assessing Officer himself, the assessee has received a dividend income on shares held as stock-in-trade which has been claimed as exempt. It is also held by the Assessing Officer that the assessee has made suo motu disallowance u/s 14A of the Act. Therefore, we find merit in the argument advanced by the ld. counsel that when the assessee has himself disallowed an amount of ₹ 55,32,603/- and no satisfaction has been recorded by the Assessing Officer, therefore, the disallowance made by the Assessing Officer and sustained by the CIT(A) is not correct. We, therefore, set aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the addition. Disallowance under Rule 8D(2)(i) being the amount of custodian fee paid in relation to shares held both as stock in trade and investments - HELD THAT:- We find merit in the argument of the ld. counsel for the assessee that the provisions of section 14A is not applicable in respect of the shares held as stock-in-trade as the profit therefrom is taxable as business income and dividend income thereon is incidental. Further, the assessee itself has disallowed an amount of ₹ 55,32,603/- and the Assessing Officer has not recorded any satisfaction and the assessee has received dividend income of only ₹ 39,97,165/- on the shares held as stock-in-trade. Since no satisfaction has been recorded by the Assessing Officer, therefore, we find merit in the argument of the ld. counsel for the assessee that the disallowance made by the Assessing Officer and sustained by the CIT(A) is not proper. We accordingly set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. The ground raised by the assessee is accordingly allowed. Addition to the book profit u/s 115JB being the amount of estimated expenditure disallowed under Section 14A / Rule 8D - HELD THAT:- We find, the Special Bench, Delhi, of the Tribunal in the case of VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] has held that the computation under clause (f) is to be made without resorting to the computation as contemplated u/s 14A r.w. Rule 8D of the Incometax Rules, 1962. Since the issue has been decided in favour of the assessee by the decision of the Special Bench of the Tribunal, therefore, in absence of any contrary material brought to our notice by the ld. DR, we set aside the order of the CIT(A) on this issue and allow the ground raised by the assessee.
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