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2017 (4) TMI 970 - MADRAS HIGH COURT

2017 (4) TMI 970 - MADRAS HIGH COURT - TMI - Entitlement to deduction of Bad Debts written off in the books - Held that:- The claim of bad debts was rejected holding that the assessee had not complied with the provisions of section 36(2) of the Act. To this extent, the order of the tribunal is misconceived for the reason that the embargo placed in section 36(2) would not apply in the case of a non banking financial company which status, the appellant admittedly enjoys. All that remains is to exa .....

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ME COURT ). Substantial question of Law No.1 is decided in favour of the assessee by way of remand. - Claim of deduction of long term capital loss on sale of shares - Held that:- We are of the opinion that the matter has not been considered in the proper perspective and neither of the authorities below have appreciated the materials that were produced or afforded an opportunity to the assessee to produce further details if they were of the opinion that the same were required. This issue is t .....

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regard. In view of the concurrent finding of the authorities to the effect that the claim is wholly unsubstantiated, we do not find any reason to interfere with the conclusion of the tribunal confirming the rejection of the claim. Substantial question of law No.3 stands rejected. - T.C.A. No.1347 of 2009 & C.M.P.No.8615 of 2016 - Dated:- 12-4-2017 - Nooty Ramamohana Rao And Anita Sumanth, JJ. For Appellant : Mr.R.Vijayaraghavan Mr.Subbaraya Aiyar For Respondent : Mr.T.Ravikumar JUDGMENT ( Judgm .....

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nt in the ordinary course of the business of money lending and hence the same is allowable as bad debt or business loss? 3. Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the Appellant is not entitled to claim of Business loss in respect of cancellation of hire purchase agreement the income on which were offered for tax in earlier years and reversed in this year 2. The appellant is a company engaged in the business of hire purchase and lea .....

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bts of an amount of ₹ 95,84,348/-. The assessing officer called for proof that the amounts claimed as bad debts had been offered to tax in the earlier years in accordance with the provisions of section 36(2) of the Act. Since there was no response, the claim was disallowed. 4. The second issue addressed in assessment was a claim of long term capital loss on the sale of shares. Investments had been made by the assessee in two companies by the names of Carbon Dioxide Limited and Kaymo Financ .....

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making companies were to be off loaded. A policy decision was thus taken to dispose of the shares at a nominal value. The claim was however, disallowed on the ground that the transfer of shares was not substantiated. 5. The third Substantial Question of Law relates to a claim of business loss arising out of the cancellation of hire purchase agreement of an amount of ₹ 1,91,24,000/-. The assessing officer sought substantiation of the same which was not forthcoming. The loss was thus disall .....

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he claim of bad debts was rejected holding that the assessee had not complied with the provisions of section 36(2) of the Act. To this extent, the order of the tribunal is misconceived for the reason that the embargo placed in section 36(2) would not apply in the case of a non banking financial company which status, the appellant admittedly enjoys. All that remains is to examine if the debt has been written off in accordance with the mandate of section 36(1)(vii) of the Act. We thus remand the m .....

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s on sale of shares, the tribunal confirms the view of the lower authorities to the effect that there was no document produced to establish sale of shares. The learned counsel appearing on behalf of the assessee would, at this stage, seek to file additional evidence. He would contend that the documents could not be located earlier on account of unavailability of competent staff at the relevant time. We are not convinced with the justification provided. As rightly pointed out by the learned Senio .....

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of year ending 31.3.2003 as well as 31.3.2002 would reveal that the investments, while appearing in the balance sheet for the year ending 31.3.2002, are conspicuous by their absence in the relevant previous year. The logical inference to be drawn would be that the shares, have, indeed been sold during the year and we hold accordingly. This brings us to the aspect of valuation of the shares. A query appears to have been raised at the time of assessment seeking details of capital loss suffered al .....

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ed the material sought for and available with it such as details of brokers, contract note, date of acquisition and amounts. If the assessing officer was of the view that any further substantiation was required, the same could have well been sought. The error is continued by the Commissioner (Appeals) who dismisses the appeal cursorily in the following terms; (iv) I have considered the assessment order, written submissions filed by the appellant. The appellant company has not furnished the detai .....

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