Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (1) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 625 - HC - Income TaxWrite off the loan and claim the same as bad debts - Assessee had advanced interest bearing loans to its subsidiary company who became loss making company - HELD THAT:- Assessee had advanced loans to its subsidiary company. The loan was interest bearing. Assessee claimed that the subsidiary company became loss making company and the Assessee took a decision to write off the loan and claim the same as bad debts. The said claim has been denied by the Assessing Officer on two counts (i) that the Respondent- Assessee was not in the business of giving loans and, therefore, conditions of section 36(2) were not satisfied and (ii) that the claim of the Assessee of loan becoming bad debts was not genuine as the Assessee was knowing that the loan was not recoverable. The Commissioner of Income Tax (Appeals) confirmed the decision of the Assessing Officer, however, the Tribunal held in favour of the Respondent- Assessee holding that the claim of the Assessee was allowable. The decision of the Supreme Court in the case of S.A.Builders Ltd. v. Commissioner of Income Tax (Appeals), Chandigarh (2006 (12) TMI 82 - SUPREME COURT) holds the field on the issue of the assessee not being in the business of giving loans. The decision of the Madras High Court in the case of Commissioner of Income Tax v. Y.Ramakrishna & Sons Ltd. (2009 (12) TMI 100 - MADRAS HIGH COURT) relied upon by the Tribunal deals with genuineness of the claim of loan being a bad debt. In the decision decision of this Court in the case of Commissioner of Income-tax v. Star Chemicals (Bombay) (P) Ltd. (2008 (2) TMI 399 - BOMBAY HIGH COURT) and in the decision of the Supreme Court in the case of T.R.F. Ltd. v. Commissioner of Income-tax [2010 (2) TMI 211 - SUPREME COURT], it is laid down that after the amendment of 1 April 1989, it is not necessary for the Assessee to establish that the debt has, in fact, become irrecoverable and if the Assessee writes off the same as bad debts, it would serve the purpose.
|