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2015 (10) TMI 2060 - BOMBAY HIGH COURT

2015 (10) TMI 2060 - BOMBAY HIGH COURT - TMI - Disallowance u/s. 14A - Tribunal restored back the issue of disallowance to the Assessing Officer for fresh consideration - Held that:- As decided in assessee's own case on similar issue [2015 (10) TMI 1752 - BOMBAY HIGH COURT ] the impugned order of the Tribunal has restored both the issue to the Assessing Officer i.e. with regard to the applicability of Section 14A of the Act with a direction that in case the RespondentAssessee fails to satisfy th .....

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revenue. No substantial question of law. - Decided against revenue.

Claim of bad debts - Tribunal allowing written off amount as irrecoverable as the same has to be allowed as bad debt u/s 36 (1) (vii) r.w.s.36 (2) - Tribunal held that investment in ICDS was part of the business activity as interest accrued therefrom has been treated as business income and loss arising on such investment was allowed as business loss? - Held that:- In view of the above acceptance of the interest recei .....

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dent has necessarily to be in the course of its activity of business and therefore allowed as business loss. The contention on behalf of the revenue that the amount received on settlement should have been first adjusted towards the principal amount and only thereafter the interest amount is not acceptable as there is nothing on record to indicate that debtors had directed the respondent to adjust the amount being repaid in a particular manner. Therefore, in view of sections 60 of the Indian Cont .....

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l Jasani ORDER P. C. This appeal under section 260A of the Income Tax Act, 1961 (for short the Act) by the revenue challenges the order dated 31st October, 2012 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of A.Y.2002-03. 2. The revenue has urged the following question of law for our consideration : 1. "Whether on the facts and in the circumstances of the case and in law the Tribunal is right in restoring back the issue of disallowance u/s 14A .....

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e and loss arising on such investment was allowed as business loss?" 3. So far as Question No.1 is concerned, Mr.Tejveer Singh learned counsel for the revenue very fairly states that the same stand settled against the revenue and in favour of the respondentassessee by an order of this Court rendered on 6th October, 2013 in an appeal filed by the revenue in respect of the same respondentassessee being Appeal No.1894 of 2013 relating to A.Y.2001-02. Consequently, Question no.1 does not give r .....

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7; 2.30 crores which had accrued to the assessee was offered as income for tax under the head of 'income from business. However, the respondent was unable to recover a part of the principal amount of ICDs as well as interest thereon. Thus, they entered into a settlement with their debtors under which they received part of the amounts due in full and final settlement. The amount which had remained to be received/recovered was written off in the Books of Account mostly on account of interest t .....

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Tax (Appeals. By an order dated 5th July 2010 the Commissioner of Income Tax (Appeals) confirmed and upheld the order dated 31st March 2015 of the Assessing Officer t the extent it directed the claim for deduction on account of write off as ICDS. 6. On further appeal by the respondent-assessee the Tribunal by the impugned order dated 31st October 2012 held that it is an admitted position that from Assessment year 199596 onwards the respondentassessee had shown interest it had received on ICDs as .....

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iness. Thus, the principal amount of ₹ 32 lacs has to be allowed as business loss so far as the interest amount on the ICDs is written off as irrecoverable has to be allowed under section 36 (1) (vii) read with section 36 (2) of the Act as the interest on accrual basis had in the earlier assessment year been offered to tax. Thus allowing the appeal of the respondent assessee. ' 7. Mr.Tejveer Singh learned counsel appearing for the revenue in support of the appeal submits that it was no .....

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uted position that the respondentassessee has made ICDs during the A.Y.1995-96. The interest received on these ICDs was on accrual basis and shown in its Profit and Loss account and offered to tax as part of profits of business. This was accepted from Assessment year 1995-96 onwards up to the assessment year 2001-02. In view of the above acceptance of the interest received as 'business income' by the revenue in the earlier years it is not open to it to now take up a plea that the amount .....

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oss. The contention on behalf of the revenue that the amount received on settlement should have been first adjusted towards the principal amount and only thereafter the interest amount is not acceptable as there is nothing on record to indicate that debtors had directed the respondent to adjust the amount being repaid in a particular manner. Therefore, in view of sections 60 of the Indian Contract Act it is at the option of the person receiving money to adjust the same either against the princip .....

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