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2020 (7) TMI 398 - HC - Income TaxBad debt written off as admissible u/s 36(1)(vii) - Investment made by the assessee in a sister concern for purchase of equity shares which into liquidation can be written off as bad debt - HELD THAT:- AO has not examined the fact whether or not the assessee has entered an amount as written off as bad debt. In the appeal, the remand report was called for by the Commissioner of Income Tax (Appeals) and the assessing officer has submitted report - from the order passed by the Commissioner of Income Tax (Appeals) also it is evident that he has not recorded a specific finding that the assessee had written off the debt in the books of account. Tribunal also has not recorded a specific finding by assigning reasons that in the books of account the debts have been written off. Only in a single sentence, it is stated that the assessee had in its books of account written off its debt as irrecoverable. Loss of shares in a company which went under liquidation was considered by Gujarat High Court in CIT VS. JAI KRISHNA [1997 (2) TMI 65 - GUJARAT HIGH COURT] and it was held that a person who gets nothing on account of liquidation of a company and suffers loss, his loss has to be treated as capital loss by virtue of Section 46(2) of the Act. The tribunal has followed the aforesaid decision and has held that the assessee is entitled to benefit under Section 46(2) of the Act in respect of an amount of ₹ 32,25,000/- for diminution of value of investment made in Gujarat Instruments Ltd. We concur with the view taken by Gujarat High court. In view of preceding analysis, the impugned order passed by the Income Tax Appellate Tribunal is modified and the finding that the assessee is entitled to the benefit of capital loss is set aside. The matter is remitted to the assessing officer who shall decide the same in the light of law laid down by the Supreme Court in the case of T.R.F [2010 (2) TMI 211 - SUPREME COURT].
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