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2016 (7) TMI 450 - ITAT MUMBAIAddition to tax interest income on accrual basis - Held that:- The Assessing Officer in assessment years 2002-3 to 2004-05 has accepted the plea of the assessee that no interest income accrues with respect to the impugned deposits made with MCCL on account of its poor financial health and, therefore, in the absence of change in facts and circumstances in the instant year, the addition in this year does not survive. On this aspect of the matter, Ld. Departmental Representative has not made any argument considering the order of the Assessing Officer for assessment years 2002-03 to 2004-05. Amount written off in the books of account as not recoverable be allowed as deduction as a bad debt - Held that:- Interest income accruing for assessment year 2001- 02 has been offered to tax and the debt is to be understood as comprising of not only interest, but also the principal amount of deposit/advances. In this manner, following the ratio of the judgment of the Hon'ble Bombay High Court in the case of Pudumjee Pulp & Paper Mills Ltd.,(2015 (8) TMI 719 - BOMBAY HIGH COURT ) the test contained in section 36(2)(i) of the Act stands satisfied, inasmuch as, debt or part thereof has been taken into consideration for computing the profit for an earlier year. In this view of the matter, the other aspect as to whether the assessee was engaged in the business of money lending and/banking is not relevant to adjudicate the controversy. - AO directed to grant appropriate relief. - Decided in favor of assessee.
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