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2020 (5) TMI 78 - AT - Income TaxAllowing capital loss claimed by the assessee on the debts - HELD THAT:- We are in agreement with the argument advanced by the Ld. A. R. that merely because the assignee company had not disclosed business income in their income tax returns for subsequent years in the year of recovery of debts, that would not prejudice the right of the assessee company to claim capital loss in the year of extinguishment of their right in favour of the assignee company. We find that CIT(A) had given a categorical finding in page- 22 of his order that MCC Finance Ltd., came out of liquidation by an order of Madras High Court dated 09. 11. 2012, Mr. Rajamani became a director in MCC Finance Ltd., only on 15. 11. 2012. We find that Mr. Rajamani upon becoming a Director in MCC Finance Ltd., had signed the share certificates which were allotted to the assignee company M/s. Golden Star Asset Consultants (P) Ltd. It is normal practice that the lender company would propose a Director to the board of borrowing company. The borrowing company in the instant case would be MCC Finance Ltd., pursuant to the assignment of debt. Hence, the event that had happened after the date of assignment of debt, cannot be used to judge the transaction, which had happened on the date of assignment in assessment year 2011-12. Accordingly, the argument of the Ld. D. R. is dismissed. To sum up, the transactions in respect of assignment of debt recoverable from API, is remitted back to the file of A. O. and transactions in respect of debt recovery from MCC Finance Ltd., is decided in favour of the assessee. Accordingly, the grounds raised by the Revenue are disposed off in the aforesaid manner. - Appeal of Revenue is allowed for statistical purposes.
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