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TMI Blog2017 (3) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, a statutory Corporation created in 1948 and restructured in 1993, is engaged in financing companies and ventures. It lent finances through rupee loans, foreign currency loans, under writin, direct subscription (of equity), issuing guarantees and equipment leasing services to various borrowers. These fall under the outgoings given to its clients/borrowers and are broadly shown as "investments as assistance" to industrial concerns in the form of equity shares, preference shares, convertible debentures and non-convertible debentures. This is in accordance with the provisions of the Companies Act. The assessee also separately maintains an investment portfolio in respect of 17 of its financial assistance transactions; the assessee repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than same is allowable as deduction to the appellant while computing its business income. All these losses have been demonstrated by the appellant by showing various notes and committee meetings that such losses have been determined and accepted in the current year. The reliance placed by the appellant on circular dated 24.11.1965 issued by CBDT on the basis of law laid by Hon'ble Supreme Court in case of Badridas Daga Vs. CIT 34 ITR 10 and associated Banking Corporation of India Ltd. Vs. CIT 56 ITR 1 wherein case of embezzlement it is stated that the loss should be allowed as deduction in the year in which it is discovered. Therefore, in the year in which the loss is discovered and determined by the assessee same should be allowable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the loss for which a deduction could be made under Section 10(1) must be one that springs directly from the carrying on of the business and is incidental to it and not any loss sustained by the assessee, even if it has some connection with his business....." 5. Applying to the facts of the present case, the above decision instructs that where monies were advanced through the mechanism of equity participation, the intention of the lender - in the present case, the assessee, was to derive income rather than to increase its investment on the capital side. Such being the case, if there were profits, with the assessee/lender from the investment, it would properly lie in the Revenue side of income and conversely, if there were losses - as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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