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2020 (12) TMI 675 - HC - Income TaxDisallowance u/s 36 - entitled to written off the outstanding amount and claimed deduction under Section 36(2) or under Section 37(1) - AO held that the assessee is neither a bank nor a money lender and therefore, is not entitled to written off the outstanding amount and claimed deduction u/s 36(2) or u/s 37(1) - HELD THAT:- From perusal of Clause 13 of the memorandum of Association, it is evident that one of the object's of the assessee is to lend money and the assessee has been engaged in money lending business since its inception from financial year 2004-05. The schedule of loans and advances is a continuing feature in all the past years and has been accepted by the department as part of business by taxing the income under the head 'income from business'. Assessee has been carrying on the money lending business and it has been taxed so under the head business for past 9 years has been over looked. It is pertinent to mention here that holding of money lending licence is not a prerequisite for allowing a claim of bad debts as is held by Supreme Court in TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] and it is enough if the irrecoverable debt is written off in the books of accounts. It is also pertinent to note that non charging of interest is not fatal to the claim for deduction. However, the aforesaid aspect of the matter has not been appreciated by the tribunal. Alternatively, the claim of the assessee under Section 37(1) of the Act has also not been examined. The issue with regard to the claim of the assessee under Section 14A of the Act has not been adjudicated. We therefore, quash the order passed by the tribunal insofar as it pertains to disallowance of the claim of bad debts to the sum and disallowance of claim under Section 14A of the Act and remit the matter to the tribunal for decision afresh in accordance with law. The orders passed by the Commissioner of Income Tax (Appeals) as well as the tribunal with regard to remaining issues are maintained.
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