TMI Blog2017 (5) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... f Bad Debts - Held that:- The Revenue is not disputing that ₹ 12,00,000/- was towards Bad Debts due and payable by NIFCL with whom the assessee did the business upto 2000-01. It appears that thereafter the same was not recoverable and therefore, in the year under consideration the assessee treated it as a Bad Debt and claimed the deduction under Section 36(1) (vii) of the IT Act. Considering the decision of the Bombay High Court in the case of Shreyas S. Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT ), such claim is allowable. Under the circumstances, no error has been committed by the learned ITAT in deleting the disallowance of deduction of Bad Debt - Decided against revenue Present Tax Appeal is ADMITTED to consider the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i S.N. Soparkar, learned Counsel appearing on behalf of the assessee, present Tax Appeal is ADMITTED to consider the following substantial question of law. Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in deleting the disallowance of deduction u/s 40(a)(ia) of Income Tax Act, 1961? [3.0] Now, so far as proposed question No.(2) is concerned, at the outset, it is required to be noted and it does not seem to be in dispute that assessee was already having a surplus reserve Interest free fund out of which investment was made. Therefore, the learned Assessing Officer was not justified in making the disallowance of deduction of ₹ 2,10,788/- under Section 14A of the Income Tax Act, 1961 (here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in computing income under Section 28. This is subject to the provisions of subsection (2). In view of the judgment of the Supreme Court in TRF Ltd. Vs. CIT [2010] 323 ITR 397 (SC), it is now a settled position in law that after April 1, 1989, it is not necessary for the assessee to establish that the debt has in fact become irrecoverable and it would be sufficient if the bad debt is written off as irrecoverable in the accounts of the assessee. The essence of the controversy in the present appeal is whether the requirements of section 36(2)(i) have been fulfilled. What clause (i) of subsection (2) of Section 36 stipulates is that a deduction for a bad debt or part thereof shall not be allowed unless (a) the debt has been taken into acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute a part of the debt due to the assessee since both arise out of the same transaction. The test is whether the debt or part thereof has been taken into account in computing the income of the assessee. The answer to that test has to be in the affirmative. That being the position, the requirements of Section 36(2)(i) are duly fulfilled. [4.2] The Revenue is not disputing that ₹ 12,00,000/- was towards Bad Debts due and payable by NIFCL with whom the assessee did the business upto 2000-01. It appears that thereafter the same was not recoverable and therefore, in the year under consideration the assessee treated it as a Bad Debt and claimed the deduction under Section 36(1) (vii) of the IT Act. Considering the decision of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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