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2022 (10) TMI 678 - ITAT CHENNAIApplication of provisions of section 41(1) - written off an amount as interest receivable from the assessee for the year ending 31.03.2008 as bad debt - assessee has pointed out that the assessee has not at all charged the amount to profit and loss account and not at all debited to profit and loss account, therefore, the provision of section 41(1) of the Act has no application - Only case of AO is that because M/s. V.S. Net Ltd., to whom the assessee has to pay the interest amount has written off the amount as bad debt, thereby the provision of section 41(1) of the Act as to be applied automatically - HELD THAT:- In this case, AO has invoked section 41(1) on the ground that the other party M/s. V.S. Net Ltd. has written off the interest amount as bad debt and therefore, section 41(1) of the Act has to be applied in assessee's case. As per section 41(1) assessee was not allowed deduction in respect of the loss or expenditure revenue or capital for trading liability incurred by the assessee. In the present case, the assessee has not claimed any deduction in earlier years in respect of loss or expenditure or trading liability. Assessing Officer invoked the section 41(1) of the Act presuming that the assessee has got benefit is not correct. We find that section 41(1) of the Act as no application to the facts of the assessee's case. Without considering the provision of section 41(1) of the Act, in sprit, the Ld. CIT(A) has simply confirmed the order of the Assessing Officer. Accordingly, we reverse the order passed by the Ld. CIT(A) on this issue and allow the ground raised by the assessee.
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