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TMI Blog2022 (6) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000-2001. 2. On 03.03.2009, this tax case appeal was admitted by this Court on the following substantial questions of law: "1. 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 deduction in respect of amounts due from M/s.Bangur Finance Limited (BFL) which has become irrecoverable? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the loss incurred in the nature of capital loss and hence not allowable under Section 28 of the Act? 3. Without prejudice to the above, whether the Tribunal ought to have allowed the loss as a capital loss in as much as loss on the sale of shares obtained in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 998 was Rs.8,91,82,466/- which includes a sum of Rs.91,82,466/- towards interest and the same was assessed as part of business income in the relevant assessment years. The amount due was secured by 4,68,630 shares of Bank of Rajasthan held by the appellant as security against the said loan. However, the said firm committed default in repayment of the loan amount and a sum of Rs.7,64,669/- alone was paid by the said firm towards repayment of the debt due and the appellant adjusted Rs.13,56,522/- being dividend received on the Bank of Rajasthan shares held by the appellant against the debt due, leaving the balance due of Rs.7,78,78,809/- as on 31.03.1998. In view of such default committed by the said firm, the appellant made entries in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advances are on capital account and therefore, the loss suffered by the appellant is a capital loss, which is neither admissible under Section 36 (1) (iii) nor under section 37 (1) of the Act. When the same was challenged by way of appeal, the same was dismissed by the Appellate Authority, by confirming the order of the assessing officer, which was also affirmed by the Tribunal. 5. The learned counsel for the appellant further submitted that the appellant is entitled to claim deduction of the amount due from M/s. Bangur Finance Limited and to write off the same. Since the Assessing Officer himself stated that the loss of this kind can be entertained, if it is incurred in the relevant previous year, the loss got crystallised during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o recover the deposit from the BFL company did not amount to transfer of capital assets by mere writing off the debt. In support of the said contentions, the learned counsel placed reliance on the decision of the Allahabad High Court in Commissioner of Income Tax v. Indian Turpentine & Rosin Co. Ltd. [(1980) 124 ITR 830]. Therefore, the learned counsel submitted that the order of the Tribunal does not call for any interference by this court. 7. We have heard both sides and perused the materials placed on record. 8. The issue involved herein is relating to claim of Rs.83,41,614/- towards bad debts made by the appellant / assessee, which was subsequently, enhanced to Rs.4,80,71,436/- during the course of assessment proceedings. The said cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of asset involved and hence, the loss sustained by the assessee is not liable to be carried forward, though it is a capital loss. We do not find any reason to interfere with the said well considered findings of the authorities below, as the same are based on the material evidence available before them. 9. At this juncture, it is pertinent to refer to the decision rendered by the Allahabad High Court in Commissioner of Income Tax v. Indian Turpentine & Rosin Co. Ltd., (1980) 124 ITR 830, cited on the side of the respondent, wherein, it was held as follows:- "8. .....In the instant case, rightly speaking, it was not a case of any trading loss. It was the case of a mistake in passing entries in the books. As noted above, in the previo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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