TaxTMI 
TaxTMI 
2011 (4) TMI 1165
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....f of the amounts lent as bad debt ? (ii) Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the amounts given to the parties were for the purpose of and incidental to the business of the assessee and allowing write off of the same as bad debt ? (iii) Whether, in the facts and circumstances of the case, the transaction between the assessee and M/s. Dyes and Pigments were not for the purpose of evading tax ?" 2. The assessment herein relates to the assessment year 2000-01. The assessee herein is engaged in the manufacture of chemicals of job work basis. Apart from this, the assessee was also stated to have been engaged in money-lending business. Every year, the interest charged ....
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...., the Commissioner of Income-tax (Appeals) agreed with the Income-tax Officer to hold that the assessee advanced money to M/s. Dyes and Pigments India and the same was not in the course of a money-lending business and that the advancing of money was for non-business purpose. The assessee had not given justification for the large advances made to the said firm without any security. Thus, rejecting the plea for writing off of the amount, the appeal was dismissed. The assessee went on further appeal before the Tribunal. The Tribunal considered the claim as regards the assessee carrying on business in money-lending to have the interest income and the writing off of the principal amount as a bad debt as in the course of business. It also conside....
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.... for the manufacture of chemicals. Subsequently, since the purchase of technical know-how did not materialise, the amount advanced was converted as loan and the same was continued in the books of account as a loan. Aggrieved by the same, the present tax case appeal has been filed by the Revenue. 6. Learned standing counsel appearing for the Revenue, although raised serious objection as regards the claim of the assessee that it was carrying on the business of money-lending too, having regard to the finding of fact by the Tribunal, being the highest fact finding body, we do agree with the Tribunal's finding that the assessee was carrying on business in money lending. 7. It is seen from the order of the Tribunal that it had, in....
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....hough the finding of the Tribunal as regards the memorandum and articles of association containing the clause on carrying on of the business may not be correct, yet, there are hardly any material before us to support the Revenue's case that the assessee did not have money-lending business as part of its business. The Tribunal considered the decision of this court reported in Ace Investments (P.) Ltd. v. CIT [2000] 244 ITR 166 (Mad), as regards the need to look at the substance of the transaction for the purpose of finding out whether the assessee could be said to have business in money-lending. The reference as regards the substance of the transaction assumes relevance in a case where the transaction itself is of such a dubious character th....
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....he assessee in respect of the said amount of Rs. 40 lakhs was accepted by the Revenue as income from business. 9. As regards the assessee writing off the principal amount as irrecoverable, the Tribunal found that there was no justification for disallowing the claim of the assessee in respect of the principal amount. The Tribunal rightly rejected the reliance placed on the decision of this court in Ace Investments (P.) Ltd. v. CIT [2000] 244 ITR 166 (Mad) by distinguishing the said case to the facts herein, considering the consistent treatment of the transactions of the assessee as one of business in nature and the income therefrom as a business income. As regards the money lent to the close relatives who happened to be the partners of the ....