TMI Blog2011 (6) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that such an investment is an integral part of the business. In these circumstances, ITAT, therefore, came to the conclusion that the assessee is entitled to the amount as deduction under Section 36(1)(iii). Assessee's submission that amount paid to subsidiary company must be treated as loan is not acceptable since the assessee has nowhere stated that the amount has been paid to subsidiary company must be treated as loan neither there is anything to support the contention that the assessee is now claiming that the amount be added as an interest receivable on bad debts. We find that the reasoning of the ITAT that the overdraft was not operated only for investing in the shares of subsidiary company and the fact that it was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal against disallowance of provision for doubtful debts is withdrawn before the ITAT, the claim of assessee towards bad debts written off amounting to ₹ 94,00,000/- be allowed as bad debts, without verifying whether they fulfil the condition laid down under Section 36(1)(iii) read with Section 36(2)? 2. It is a common ground that the only question (a) has been decided against the respondent no.1- assessee by judgment dated 30.08.2010 in Tax Appeal No. 58 of 2002 by this Court and as far as question (c) is concerned, by consent the matter is remanded on this point to the Assessing Officer for verifying whether the amount of ₹ 94,00,000/- can be claimed as bad debts after verifying whether the alleged bad debts fulfil the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... talised in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. Explanation.-Recurring subscriptions paid periodically by shareholders, or subscribers in Mutual Benefit Societies which fulfil such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause; ...... 5. The Assessing Officer held that since the investment of ₹ 3,70,00,000/- is out of borrowed funds for business, the proportionate interest is to be disallowed. The Assessing Officer further observed that since the assessee is entitled to receive an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but not to earn dividend on interest. Before ITAT, it was not disputed that such an investment is an integral part of the business. In these circumstances, ITAT, therefore, came to the conclusion that the assessee is entitled to the amount as deduction under Section 36(1)(iii ) of the Income-tax Act. 10. Ms. Desai, learned Counsel for the appellant submitted that the amount made over by the assessee to Phil Photo Corporation must be treated as loan given to Phil Photo Corporation and since the amount was drawn directly from the overdraft account and paid to Phil Photo Corporation, it is attributed a pledging of debt on which the assessee would be entitled to earn interest since the assessee now seeks to claim addition as bad debts, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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