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2022 (4) TMI 1272 - AT - Income TaxDisallowing the deduction of irrecoverable advances which turned bad and written off in the books of accounts - assessee is an NBFC and is in the business of financing, investment and in real-estate development - HELD THAT:- We find, while the assessee is stating that the advances made by the assessee to Bhayana Interiors & Furniture Pvt. Ltd. and Wig Brothers Projects Pvt. Ltd. were in relation to the development of Goa property which is in trading account forming part of its business, the ld.CIT(A) has given a finding that these advances given to the above two parties were capital in nature as they were given for the construction of business assets in Goa. Thus, there is a contradiction between the statement made by the assessee that it is on account of trading account forming part of its business whereas the CIT(A) has given a finding that it is capital in nature being given for construction of business assets in Goa. Under these circumstances, we deem it proper to restore the issue to the file of the AO with a direction to verify the past records and decide the issue as per fact and law including the claim of the assessee to allow the same as business loss after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground of appeal No.1 raised by the assessee is accordingly allowed for statistical purposes. Disallowing long term capital loss which arose from permanent write off share capital - AO was not satisfied with the arguments advanced by the assessee on the ground that written off amounts of investments so made in the books of account are not a transfer in the eye of law u/s 2(47) of the IT Act and it is a notional loss as the shares remained with the assessee - HELD THAT:- It is the submission of the ld. Counsel for the assessee that since the value of investment in the shares had extinguished, therefore, it amounts to transfer and, accordingly, the capital loss so incurred by the assessee deserves to be allowed along with its indexation. It is also his argument that in the alternative, it should be allowed as business loss. Further, it is also the contention of the ld. Counsel that in the FY 2020-21, relevant to AY 2021- 22, the assessee had recovered a part of the amount invested in Sanskar Homes Pvt. Ltd. by way of transfer of shares for a consideration of ₹ 2,30,00,000/- against the amount invested of ₹ 1,00,00,000/- and such recovered amount has been credited in the miscellaneous income of the assessee and has been offered for taxation purpose. In our opinion, the issue needs re-adjudication at the level of the AO in view of the fact that has emerged subsequent to the assessment and appeal proceedings that assessee had offered such sale proceeds to taxation in the year of sale. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh and in accordance with the law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - HELD THAT:- Since the AO, in the instant case has also not recorded any satisfaction before making the disallowance, therefore, respectfully following the order of the Tribunal in assessee’s own case for AY 2014-15, we set aside the order of CIT(A) and direct the AO to delete the addition. The ground raised by the assessee is accordingly allowed.
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