TMI Blog2014 (4) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... of business with an intention to lend money or something else - Unless factual material is looked into, one cannot straightaway come to conclusion that a particular transaction is either money lending activity or not - there has to be fresh consideration of the matter, so far as lending of ₹ 30 lakhs and also the interest accrued with reference to whether it was disclosed in the earlier assessment years or not as interest due – the order of the Tribunal is set aside and the matter us remitted back to the AO for fresh adjudication as to the amount claimed as bad debt – Decided in favour of Assessee. - ITA. No. 40 of 2014 - - - Dated:- 20-3-2014 - CJ Dr. Manjula Chellur And A. M. Shaffique,JJ. For the Petitioner : Sri. Joseph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est in previous assessment years while computing the income of the assessee. 4. The assessing officer for assessment year 2007-08 opines that appellant/assessee is not engaging in the business of banking or money lending as it is mainly dealing in shares and hence the loan advanced cannot be held as having lent in the ordinary course of business of banking or money lending. This opinion of the assessing officer further substantiated saying major portion of income returned by the assessee is from sale of shares as well as dividend. However, he also refers to nature of ₹ 30 lakhs advanced by appellant/assessee to another public limited company as an inter-corporate loan. Ultimately, the assessee's claim of principal amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity. However, the Tribunal in the case of Poysha Oxygen (P) Ltd. (supra) has held that the object clauses mentioned in the Memorandum of Association are not relevant for considering whether the activity undertaken by the limited company amounts to business activity or not. The Head notes reported in 19 SOT 711 are extracted below, for the sake of convenience. Business income--Business--Relevancy of Memorandum of Association of company--In considering whether an activity undertaken by a limited company amounts to business or not it is irrelevant to consider whether it is within its powers under its Memorandum of Association- CITs of Inland Revenue vs. Hyndland Investment Co.Ltd.(1929) 14 Tax Case.694, Kishan Prasad Co.Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave rejected the bad debt claim of interest amount of Rs.23,76,274/-. The assessee has filed before us a paper book, wherein he has attached account copies of interest received account for financial years 1996-97 to 2005-06 relating to the assessment years 1997-98 to 2006-07 respectively. The contention of the assessee is that it has accounted for the accrued interest in all the years and offered the same for taxation. We notice that this aspect has not been examined by the tax authorities. They have rejected the claim of the assessee only for the reason that the assessee could not substantiate that the interest amount was offered for tax in the earlier years. Since the assessee has filed the copies of the interest received account for var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant contends that the assessing officer who had the opportunity of analyzing the factual situation never opined that there was deficit material or no material, so far as transaction of lending ₹ 30 lakhs to another corporate company by the assessee company. In that view of the matter, there was no justification on the part of the first appellate authority and the tribunal to opine that no material was placed by the appellant-assessee in support of their contention that ₹ 30lakhs was lend to another company in the normal course of business as money lending. So far as the opinion of the first appellate authority and 2nd appellate authority, object clauses in the Memorandum of Association cannot be the basis to come to such conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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