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2017 (10) TMI 778 - HC - Income TaxDisallowance of claim for deduction in respect of non-performing assets from its income for the assessment year 2005-06 - main reason for disallowance made by AO was that the assessee’s application for registration as an NBFC was rejected by the RBI - Held that:- This question stands answered against the assessee by the Hon’ble Supreme Court in the case of Southern Technologies Limited Vs. Joint Commissioner of Income Tax reported in (2010 (1) TMI 5 - SUPREME COURT OF INDIA) as held the RBI Directions, 1998, though deviate from accounting practice as provided in the Companies Act, do not override the provisions of the Income-tax Act. Some companies, for example, treat write offs or expenses or liabilities as contingent liabilities. The point which we would like to make is whether such losses are contingent or actual cannot be decided only on the basis of presentation. Such presentation will not bind the authority under the Income-tax Act. Ultimately, the nature of transaction has to be examined. In each case, the authority has to examine the nature of expense/loss. Such examination and finding thereon will not depend upon presentation of expense/loss in the financial statements of the NBFC in terms of the 1998 Directions. Therefore, in our view, the RBI Directions 1998 and the Income-tax Act operate in different fields. - Decided in favour of the Revenue
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